bcx cover(3with spotuv) - jse · share incentive plans 167 form of proxy attached corporate...

I N T E G R A T E D R E P O R T 3 1 A U G U S T 2 0 1 3

BUSIN

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31 AUG

UST 2013

FUSION, happens when atoms (or entities, or ideas) are compressed with high energy (our passion and knowledge),

joining them into a single nucleus (community or business solution). This fusion process produces or amplifies more energy,

even more power than it took to bring the nuclei together. More energy means growth. At Business Connexion our power

is our people.

Business Connexion believes in developing this power through Connective Intelligence™, making all these

connections count, we grow our innovative culture. Fusion assures we meet all our partners’ information needs

through our people’s knowledge and talent, ultimately creating solution driven innovative business communities.

To enrich communities by making the impossible possible through technology.

Bus iness ConnexionINtEgRAtED REPORt 2013

131/082013

TABLE OF

INtEgRAtED rEPOrT31/082013

GROUP OvERvIEw Page

Core values 2

Corporate profile 4

Group footprint 8

Group financial highlights 9

Group ownership structure 10

Operational overview 11

Group strategy 12

Board of directors 16

Executive committee 20

Chairman’s report 24

Chief executive officer’s report 28

Chief financial officer’s report 32

Group eight-year history 38

Value-added statement 40

OPERATIONAL REvIEwSServices division 42

UCS division 44

Canoa division 46

Technology division 47

International division 48

Innovation division 50

GOvERNANCE, RISKAND SUSTAINABILITy

Page

Corporate governance report 52

Risk management 64

Sustainability report 68

ANNUAL FINANCIAL STATEMENTSAnnual financial statements 82

OTHER INFORMATIONShareholder analysis 151

Definitions 153

SHAREHOLDERMEETING MATTERSNotice of annual general meeting 156

Map to the annual general meeting 166

Appendix A – Summary of proposed new share incentive plans

167

Form of proxy Attached

Corporate information IBC

contEntS


31/082013

1

Bus iness ConnexionINTEGRATED REPORT 2013

31/082013

2

VALUES CORE

PROFILEBusiness Connexion is one of Africa’s largest black empowered information and communications technology companies, with offices in all major South Africancentres, in seven African countries, the UK and Dubai.

VISION

Amplifying the power of our Connective Intelligence.TM

MISSION

To enrich communities by making the impossible possible through technology.


31/082013

3

OUR VALUES

Passion

Innovation

Trust

Integrity

Excellence

Teamwork

Make a difference


31/082013

4

CORPORATE

PRoFiLE

troppuS etisnOtnemeganaM tcejorP

Data Centre Services

Application Development

Business Consulting

Managed Print Solutions

Content Distribution Services

Bandwidth and Internet Protocol services

Network Services

Hardware and Software

Hardware maintenance

ICT Outsourcing

Industrial Solutions

Global ServiceManagement Centre

WORKSPACE CONNEXION ZONE INNOVATION ZONE

Business Connexion

System Integration

We are built on Connective Intelligence™. When it comes to

solving business challenges using the world’s most advanced

information and communication technology (ICT) products

and services, Business Connexion’s insight, experience and

highly qualified individuals lead the way.

Our mission is to enrich communities by making the impossible

possible, through technology.

Our mission statement is reflective of our belief and passion

for making a difference in people’s lives, particularly on

the African continent. We thrive on making the seemingly

impossible happen – and we do this by delivering exceptional

value propositions to our stakeholder communities whether

it is business communities, consumer communities, citizen

communities or geographical communities, essentially through

the use of technology in its broadest definition, including

hardware, software, consulting or services.

Our vision is “Amplifying the power of our Connective

Intelligence™”. This has led to us becoming an industry leader

in our field.

Business Connexion is Africa’s leading black-owned ICT

services provider, with 34 years of operational experience.

We pride ourselves on our service delivery, dependability and

performance and are renowned for our provision of high

quality, high performance solutions.

ABoUt BUSinESS connExion FUSION HAPPENS wHEN ATOMS (OR ENTITIES, OR IDEAS) ARE COMPRESSED wITH HIGH ENERGy (OUR PASSION AND KNOwLEDGE), jOINING THEM INTO A SINGLE NUCLEUS (COMMUNITy OR BUSINESS SOLUTION). THIS FUSION PROCESS PRODUCES OR AMPLIFIES MORE ENERGy, EvEN MORE POwER THAN IT TOOK TO BRING THE NUCLEI TOGETHER. MORE ENERGy MEANS GROwTH. AT BUSINESS CONNExION OUR POwER IS OUR PEOPLE.


531/082013

With just over 7 000 employees across Africa, the UK and

Dubai, we combine global ICT vendor partnerships, extensive

technological resources and commitment to carry through

Connective Intelligence™.

We have an extensive national and international footprint, and

have more Data Centre capacity than any other service provider

in South Africa. We have proven leadership in the creation and

delivery of Cloud Computing solutions.

Our people are our power – It is through the power

of our people, led by a dedicated, knowledgeable and

highly experienced executive team that we continue to

create technology-based business solutions that meet the

information management needs of today and the future for

different communities.

We intend to consistently exceed expectations.

Our clients have always been our focus, and in the future, we

will continue to focus on providing excellent, effective and

innovative solutions that strengthen and improve our clients’

businesses.

We are committed to conducting our business in a manner that

ensures long-term sustainability for the benefit of communities

and all stakeholders. Sustainability is a continuous journey

and requires a multi-disciplinary approach. Good governance,

sound risk management, stakeholder engagement, corporate

social investment, minimising the group’s impact on the

environment and retaining, and improving on, our level 3

Broad-based Black Economic Empowerment rating all form

part of our vision to be a leading emerging markets ICT player.

Further details on our sustainability measures can be found in

the Sustainability report on pages 68 to 79.

Our passion to deliver high quality, high performance business

solutions has given rise to a number of accolades, the most

recent of which include the following:

• named a Gartner Cool Vendor in Emerging Markets 2013;

• received the 2013 Microsoft Software Asset Management

Partner award, presented to organisations that have

delivered innovative solutions that address client needs;

• awarded Best Windows App at the second annual MTN

Business App of the Year Awards 2013 for the KIDS AID App;

• received the 2013 Microsoft Namibia Country Partner of the

Year Award;

• received the Services Management Exhibition (SMEXA)

Award for itSME SA for the Best GRC (Governance, risk

and compliance) Team for 2013;

• awarded the Managed Service Provider award at the

Candefero Channel Partner of the Year Awards 2012 (2013);

• UCS received the ‘Local System Integrator (2013)’ SAP Africa

Partner award;

• Received the 2012 South African Customer Value

Enhancement Award (Frost & Sullivan) for the significant role

we play in helping our clients to reduce energy-related costs;

• UCS is the first South African company to be ISO/IEC 20000

certified and has been re-certified on the new SANS 20000

1:2011 Information Technology Service Management Part 1

Specification standards (2013).

The group’s solution offerings, which are detailed below, are

provided through its divisional operations which include:

• Services division

• UCS division

• Canoa division

• Technology division

• International division

• Innovation division

Details on the operations of these divisions are included in the

Operational reviews on pages 42 to 51.

GROUP SOLUTION OFFERINGSCloud computing and virtualisation solutions: The group’s next generation cloud services leverage the highest

data centre resiliency, without compromising the robust

security, reliability and scalability attributes of an enterprise

grade cloud solution.

Cloud services include:

• Infrastructure as a Service – computing, storage, data

protection, network and VSAT

• Platform as a Service – rapid application development and

business intelligence

• Software as a Service – messaging, payroll, recruitment, point

of sale, sharepoint, learning solutions, talent management,

web content and xAssess

Data centre services:The Tier IV-design certified data centre is the benchmark for

hosted information systems and information. The group’s

operational expertise combined with management skills and


31/082013

6

CORPORATE

Profile CONTINUED

experience in client service enables it to deliver data and

facilities management ensuring a connected world at all times.

Through the data centre services the group hosts various

systems and applications and provides cloud services to

global clients.

The group is able to virtualise data centre computing and

network environments for optimal efficiency and performance,

creating a private cloud to maximise resource utilisation and

reduce operating costs.

Communication services:The group provides secure, intelligent communications

solutions for voice, data and video, facilitating flexible, high-

performance interactions.

End to end communication solutions and infrastructure build:The group’s highly skilled solution architects, certified to highest

required levels, use the group’s strategic vendor relationships to

develop enterprise-wide, business-critical ICT solutions.

Security solutions and assessments:Through its Information Security Forum membership the group

can draw on a rich library of international good practice to

advise its clients on all aspects of information security from

consulting services, to products and solutions, and managed

security services.

Advanced managed services:Business Connexion provides efficient and high technological

standards and services when supporting existing technology

platforms through key vendor relationships (including

Microsoft, VMware, Citrix, BlackBerry, RightFax and Adobe).

The group also provides software solutions and services

required to install, operate and support in-store point-of-sale

applications.

Collaborative workspace: Through its end-user device support services, the group

provides a virtual workspace enabling employees to work at

any time, from anywhere, with remote and onsite support

from 650 support personnel located country-wide.

Global services management centre: Business Connexion is the single point of contact for managing

service calls consistently and efficiently as part of a contact

centre outsourcing model or through the establishment of a

client defined in-house contact centre.

Service integration management:With an average maturity rating of 3.55 on seventeen ITIL V3

processes the group maintains a constant focus on improving

service quality, increasing user satisfaction and delivering

increased business value.

Application services:Application services focus on increasing workforce mobility

through using latest mobile technology and developing

innovative solutions to access new markets.

Knowledge and information management:Business Connexion’s management solutions can empower

users to find and assimilate the correct information and make

the right business decisions.

Enterprise resource management:Business Connexion has a proven track record as a SAP

implementation and support partner and has adopted the

RunSAP principles, SAP’s best-practice methodology, for

consistently high quality service delivery and the reduction

of operating costs in SAP support environments.

Systems integration:Business Connexion draws together disparate processes,

systems and information, creating a more intelligent, more

responsive enterprise, ensuring total interconnectivity.

Business continuity services:The group provides options that ensure the continuity of

business and other supporting ICT services including a business

continuity programme, ICT service continuity processes,

alternate site recovery hosting, and continuity management

and maintenance.

Industrial solutions:Business Connexion’s in-depth understanding of the

industrial sector enables it to provide stable and reliable

ICT environments that are effective and efficient, improving

production, maintenance, quality, and inventory control.

Energy efficiency services:The group offers energy management solutions ranging from

energy audits to assessments on plant performance which


731/082013

will translate into more efficient use of energy and lower

overhead costs.

Business consulting:By understanding the client’s business, Business Connexion is

able to offer smart ICT solutions that translate strategic intent

into optimal business performance by applying best practices

for ICT service life-cycle management.

Unified communications and managed network services:This service automates and collates all human and device

communication into an integrated experience, linking all

possible devices and communication modes, including

instant messaging, telephony, video, email, short messaging

and white boarding.

Multipurpose, intelligent print devices and related peripherals:With its Canon offering the group provides low cost, high

efficiency document production facilities for corporations

on a “pay-per-page” basis, optimising costs and maintaining

equipment, delivering convenient, low cost, highly reliable

printing and other related services.

Human capital management (time and attendance, payroll, human resources and salary administration):Through its investment in NorthgateArinso Africa the group

has a unique integrated approach that combines world-class

human capital management, time and attendance, access

control and ERP solutions, enabling Business Connexion to

successfully implement integrated ICT solutions.

Learning solutions:The group offers SAP, Microsoft, Cisco, Project Management,

CompTia, Adobe, Adult Basic Education Training, Soft Skills,

Business Professional Certifications, Novell and Linux training.

Custom-developed courses are also accommodated.

Organisational change management consulting:Business Connexion assists clients in achieving better

performance through tailor-made business transformation

solutions for all the stakeholder groups who are impacted by an

IT change, through the delivery of specialised service offerings.

Project management:Successful project delivery is underpinned by effective project

management aligned with the Prince2 Methodology. By

studying business drivers, the group creates value propositions

tailored to meet individual business requirements.

Technology finance ICT rental solutions:Business Connexion’s relationship with ICT vendors allows it

to negotiate rental options on behalf of its clients. In addition,

the group can implement a future migration plan for new

technology equipment and assist clients with managing

third-party rental agreements to maximise benefits and avoid

unnecessary penalties.

GLOBAL ICT PARTNERSBusiness Connexion has established relationships with the

following global ICT partners:

• CISCO: Gold certified and Managed Services Master

Channel partner

• Citrix: Citrix Gold Solution Advisor; first System Integrator

Partner in South Africa

• EMC²: Velocity Signature Solution Partner for EMEA

South Region; Vblock certified partner in Southern Africa;

Authorised Services Partner

• HP: leading Enterprise reseller in South Africa; Gold Service

One Specialist Partner

• IBM: Tier1/Premier Partner

• Infor

• Mendix

• Microsoft: Microsoft-Certified Partner

• NetApp: member of the NetApp FastPath Programme.

• Novell: Novell Platinum Solutions Provider partner for

Identity and Security Management; Gold Solution Provider

for Data Centre Solutions and End-User Computing

• Oracle: Oracle Partner Network certified; UNIX based server

specialists for Oracle and Sun Microsystems

• SAP: National Services Alliance partner of SAP South Africa

and SAP enterprise resource management solution provider

• Symantec: Platinum certified partner; Enterprise Security

Master Specialist

• Synerion

• VMware: VMware Enterprise Solution Provider


31/082013

8

FootPRintGROUP

Kenya

United Kingdom

London

Nairobi

Namibia

Madagascar

Mauritius

Zimbabwe

Malawi

Angola

DRC

Uganda

Windhoek

TanzaniaDar-es-Salaam

Zambia Mozambique

Botswana

Nigeria

Ethiopia

Egypt

Gabon

Benin

Ghana

Lusaka

MaputoGabarone

Lagos

United ArabEmirates

Dubai

Oshakati

Swakopmund

Francistown

Maseru

Mbabane Matola

Temane

Conakry

Morila

LesothoSwaziland

Guinea

Tunisia

Mali

Eritrea

Kenya

United Kingdom

London

Nairobi

Namibia

MadagascarMadagascar

Mauritius

Zimbabwe

Malawi

Angola

DRC

Uganda

Windhoek

TanzaniaDar-es-Salaam

Zambia Mozambique

Botswana

Nigeria

Ethiopia

Egypt

Gabon

Benin

Ghana

Lusaka

MaputoGabarone

Lagos

United ArabEmirates

DubaiDubai

Oshakati

Swakopmund

Francistown

Maseru

Mbabane Matola

Temane

Conakry

Morila

LesothoSwaziland

Guinea

Tunisia

Mali

Eritrea

Guinea – ConakryMali – MorilaMozambique – Matola, TemaneNamibia – SwakopmundNigeria – AbujaSwaziland – Mbabane

Regional offices

South Africa

Gauteng Johannesburg, Midrand, PretoriaWestern Cape Cape TownEastern Cape East London, Port ElizabethKwaZulu-Natal Durban

Africa

Kenya NairobiMozambique MaputoNamibia WindhoekNigeria LagosTanzania Dar-es-SalaamZambia Lusaka

United Kingdom

London

nd, Pretoria

abeth

BethlehemBloemfonteinGeorgeKimberleyKlerksdorpMiddelburgMthathaNelspruitNewcastlePietermaritzburgPolokwane

Service centresSouth Africa – Service centres

South Africa – Points of presence

Africa – Service centres

Port ShepstoneQueenstownRichards Bay RustenburgSasolburgSecundaUpingtonVereenigingVredendalWelkomWorcester

Bethal Johannesburg – City CentreJohannesburg – Crown Mines Johannesburg – OR TamboJohannesburg – Rivonia Johannesburg – RosebankJohannesburg – Sandton LadysmithMmathatho Pretoria – SARSWitbank


31/082013

9

REVENUE OPERATING PROFIT

0

50

100

150

200

250

300

350

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

May 07

Aug 10

May 06

May 08

Aug 09

Aug 11

Aug 12

Aug 13

May 07

Aug 10

May 06

May 08

Aug 09

Aug 11

Aug 12

Aug 13

0

100

200

300

400

500

600

700

800

900

May 07

SHARE PRICE

Aug 10

HEADLINE EPS AND DIVIDEND PER SHARE

Headline EPS Dividend per share

0

10

20

30

40

50

60

70

80

90

May 06

May 08

Aug 09

Aug 11

Aug 12

Aug 13

May 07

Aug 10

May 06

May 08

Aug 09

Aug 11

Aug 12

Aug 13

EBITDA OPERATING EXPENSES

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

0

100

200

300

400

500

600

May 07

Aug 10

May 06

May 08

Aug 09

Aug 11

Aug 12

Aug 13

May 07

Aug 10

May 06

May 08

Aug 09

Aug 11

Aug 12

Aug 13

FinAnciALGROUP

HIGHLIGHTS• REVEnUE incREASEd

BY 5,9% TO R6 173,3 MILLION

• oPERAting PRoFit incREASEd BY 17,3% TO R322,6 MILLION

• oPERAting ExPEnSES CONTAINED WITH NORMALISED INCREASE OF ONLY 0,5%

• EBitdA incREASEd BY 9,5% TO R560,5 MILLION

• noRmALiSEd diLUtEd hEAdLinE EARningS PER SHARE OF 52,6 CENTS

• diVidEnd OF 20,0 CENTS PER SHARE

*15 month period


31/082013

10

StRUctUREGROUP OWNERSHIP

Business Connexion Group Limited

Reg No. 1988/005282/06

Business Connexion International Holdings

Proprietary Limited

Reg No. 1996/007425/07

100%

Business ConnexionProprietary Limited

Reg No. 1993/003683/07

100%

Business ConnexionNamibia Proprietary Limited

Reg No. 89/291

75%

Business ConnexionTanzania Limited

Reg No. 39801

65%

Business ConnexionZambia Limited

Reg No. 46751

85%

Business ConnexionMozambique Limitada

Reg No. 400131406

100%

NorthgateArinso Africa Proprietary Limited‡

Reg No. 2006/030464/07

50%

Business Connexion Limited#

Reg No. 3105853

100%

Business ConnexionICT Services Limited*

Reg No. RC 733524

100%

UCS Solutions Proprietary Limited

Reg No. 1996/014405/07

70%

BCx Kenya Limited

Reg No. CPR 2010/35954

70%

Nanoteq Proprietary Limited

Reg No. 1996/007480/07

75%

UCS Technology Services Proprietary Limited

Reg No. 1998/013893/07

100%

CEB Maintenance Africa Proprietary Limited

Reg No. 2005/014622/07

100%

Canoa Group Holdings Proprietary Limited

Reg No. 2000/018444/07

50% + 1 share

Business Connexion Content Distribution Solutions

Proprietary Limited

Reg No. 1996/007491/07

100%

quad Automation Proprietary Limited

Reg No. 2001/023245/07

100%

Accsys Proprietary Limited

Reg No. 1998/011208/07

100%

Integr8 ITProprietary Limited

Reg No. 2000/016119/07

100%

NetcampusProprietary Limited

Reg No. 2000/021275/07

* Nigeria# UK‡ Formerly Arinso SA Proprietary Limited

50% + 1 share


31/082013

11

oVERViEwOPERATIONAL

Division Objective Performance Highlights

Services • The number one proudly South African ICT Services integrator enabling our clients’ businesses locally and globally

• Full service provider of choice through compliance with the most up to date international design guidelines and best practice for high availability

• Leader in deploying cloud infrastructure services and solutions

• Leader in application and development and management for large corporates

• Largest revenue contributor to group – 34,8%

• African leader in cloud services and state of the art data centre management

• Largest ICT support services footprint with 1 000 skilled engineers

• Frost & Sullivan – Business Connexion holds 27% of the South African data centre market

• Tier IV certified data centre• 22% market share in application

development (BMI-T 2012)• Ongoing achievement of accolades

UCS • Dominant ICT service provider in the retail sector

• Enhance and extend data centre and leveraged managed services offerings

• Provide 29,4% of sub-Saharan African retail IT services

• Cross-selling opportunities identified and acted on

• Synergies achieved

• Acquisition of Integr8 IT• Integr8 IT owns and operate the

only African based nerve centre• Sale of Learning Solutions and

acquisition of 50% +1 share in Netcampus

• Run mission critical retail IT services for all Tier 1 retailers in Southern Africa

Canoa • Simplify workspace by delivering convergence of content, printing, telecommunications and information technology

• Regional, multinational and global consistent delivery

• 29,9% growth in revenue with operating margin increasing to 12,4%

• Diversified distribution channel supports growth in annuity revenue

• Over performance on profit warrantees

• Exclusive distribution rights for Canon

Technology • Full certification with all strategic vendors

• Pan-African partner to strategic vendors

• Multi-platform and device development expertise

• “Top 3” player for strategic vendors

• Regional sales force optimised• Operating model redefined

• R26,5 million operating profit contribution (2012: R3,3 million)

International • Growth strategy of achieving 30% of the group’s earnings from outside South Africa by 2016

• Support existing and future global clients and partners wherever they operate

• Service provider of choice in each of its representative locations

• One of the largest ICT groups in Africa

• Strategically positioned on the African continent

• New acquisitions targeted in Botswana and Nigeria

• Largest employer of ICT skill in Africa

• 13,9% revenue growth• Market penetration in Nigeria

growing revenue by 65,8%• Launch of Nigerian data centre

Innovation • Intellectual property hub of the group

• Ongoing investment in intellectual property through development and enhancement of software solution offerings

• Stable revenue growth• Proprietary solutions leveraged in

public sector throughout Africa• Significant investment in intellectual

property to secure future revenue streams

• Operating profit grew by 38,5%• Sale of QDD and acquisition of 50%

in NGA Africa• Roll-out of SOLAR• Release of a mobile app that

combines payroll and T&A ESS• Improved debt collection from

municipalities


31/082013

12

GROUP

StRAtEgyThe Business Connexion group of companies continue to create

greater value for stakeholders by aligning with changing market

demands and dynamics within the ICT industry.

DyNAMICS AND TRENDSKey ICT developments influencing the group’s strategy

are convergence of technology platforms, increasing

commoditisation and consumerisation of products and services.

The adoption of smartphone and mobile applications and the

shift to cloud computing is changing the way that IT services

are consumed. Business demand for innovative applications,

business intelligence, analytics, advanced security and cost-

effective IT operations is growing. Consolidation of industry

players in the global ICT sector continues, as companies seek

to provide the range of products and services that business

demand. Africa continues to gain attention as a high growth

market for ICT products and services.

SyNERGISTIC SELLINGBusiness Connexion has a long standing reputation for being

able to integrate and adapt a broad set of value offerings

to meet clients’ needs, along with the breadth and depth

of necessary implementation and support capabilities.

The group continuously seeks to simplify the complexity

of integrating IT products by packaging solutions across

the group’s portfolio. In turn, this strategy leverages the

cross selling opportunity of a broad portfolio of offerings

to a large client base.

An example is the strong growth in Canoa as a result of

packaging Managed Print Services, with offerings from other

business units, providing an attractive offering to Business

Connexion’s existing client base.

The group’s strategy is gaining traction, with major new

outsourcing client wins.

The most recent market data from Gartner confirms the group’s

leading position in ICT services within the Retail, Wholesale

Trade, Insurance and Manufacturing and Natural Resources

verticals for sub-Saharan Africa. The group’s vertical strategy

aims to retain and grow these positions through a strong client

solutions focus.

One of the group’s key strategic imperatives remains the

development of our own intellectual property. Focusing on

developing differentiated solutions for specific vertical industries

resulted in a number of highlights during the year.

The UCS division, which focuses on the retail and supply chain

vertical markets, strengthened its specialist SAP capabilities

with its HANA solution, for which strong market demand

is anticipated. SAP HANA enables businesses to operate in

real-time by converging database and application platform

capabilities in-memory.

Innovation for differentiated solutions is also enabled

by the group’s extensive application development and

professional services expertise. Business Connexion remains

the market leader in custom applications development in

South Africa with a market share of 22% per the most recent

BMI-T report. Growth opportunities within the mobile space

are unfolding for the group. Over and above its enterprise

business, the Applications division launched 10 consumer

apps during 2012 – 2013, all available in major application

stores in SA, the UK and USA.

To further leverage its current South African market success

in providing human capital management solutions, Business

Connexion concluded a joint venture with NorthgateArinso,

a leading global player in this domain. The joint venture enables

the group to provide end-to-end human capital management

solutions to local, multinational and public sector organisations

across the African continent. These technologies and services

cover the whole spectrum of HR and Payroll, as well as

Workforce and Security Management, for markets ranging from

SMME to Enterprise sectors.

Nanoteq, the business unit that develops custom cryptographic

products and solutions, recently launched a product suite

positioning it to service niche international markets with specific

and focused solutions.

ACCELERATE PENETRATION OF PUBLIC AND PRIvATE CLOUD SERvICES The Group is recognised as an established data centre services

provider with 27% market share in South Africa.

It is expected that client cost pressures will continue to support

cloud adoption in the major territories. Recent research

indicates that medium to large organisations in South Africa,

Kenya and Nigeria are quickly embracing the cloud for a wide

range of services.


1331/082013

The group’s private cloud offerings for Infrastructure as a Service

has seen uptake by a number of enterprise clients in the past

year, with clients utilising the three Cloud points of presence

in Johannesburg, Cape Town and Nigeria. The group has also

introduced Cloud services to the SMME market and has signed

up a number of resellers as part of a channel strategy to service

this market sector.

A new cloud services brokerage service, which aggregates

and sells public cloud offerings into the market, has been

established and has seen some early wins.

A number of African Telco partners have signed up as

channel partners for Business Connexion’s cloud services.

The outlook for adoption of cloud services across the African

continent is highly positive. Lack of legacy ICT infrastructure

is proving to be a driving factor for adopting cloud services

in some market sectors.

The Accsys business unit enhanced its human capital

management offerings by launching a mobile application

for payroll and time and attendance, linked to employee

self-service.

INTERNATIONAL GROwTHGrowth in select countries on the African continent

continues. Solid progress was made to expand the group’s

go-to-market capabilities and its delivery footprint in

targeted emerging markets.

Nigeria, specifically, has shown strong growth and

performance during the year. Business uptake in Kenya,

however, proved somewhat slower than anticipated, but strong

prospects remain.

The African ICT industry is benefitting from steady growth

in multiple sectors, driven by demand for infrastructure,

natural resources and increased consumer spending.

The group is making inroads through its expanding local

presence, delivering a revenue growth of 13,9% for our

international subsidiaries.

The group’s focus is to deliver ICT services to multi-national

clients who are establishing and growing their business

presence in Africa, as well as serve the specific ICT needs

of clients within each country of operation.

Business Connexion continues to invest in establishing local

expertise and ICT services infrastructure in select African

growth markets. Currently there are full branch operations

in Mozambique, Zambia, Namibia, Tanzania, Kenya and

Nigeria. Business Connexion has also delivered successfully

in markets where we do not have a physical presence via a

broad service delivery network support footprint established

across the continent.

The recent acquisition of Integr8 IT provides mid-tier

managed services that are well priced for Africa. Integr8 IT

was awarded the number one spot on MSPmentor 100 global

rankings for Managed Services Providers in sub-Saharan Africa,

for the third year running and ranked in third position for the

whole of the EMEA region.

PUBLIC SECTOR FOCUSThe group believes it is well positioned to leverage the

significant business opportunities that are presented in the

Public Sector across Africa.

A unified Public Sector team is executing a strategy for deeper

engagement with government to provide ICT solutions

and services to support their delivery in key areas of focus.

Relationships with SMME partners are vital to the group’s

Public Sector strategy.

During the year, Business Connexion successfully transitioned

the outsourcing services for the contract that was awarded

by the Department of Water Affairs of the South African

government. The depth and breadth of ICT skills engaged

in supporting Water Affairs is testimony to the contribution

that Business Connexion is capable of making to government

clients across the continent.

Furthermore, the Persal business unit has been successful

in renewing its contract to support the government payroll

system until 2016.

SOLAR, a newly developed local government solution has

been implemented successfully with further implementations

at other local governments in progress. SOLAR provides an

upgrade to the eVenus solution that is widely implemented

by the LARA business unit. LARA remains the largest player

in the local government sector in South Africa, with a total

market share of 27%.


31/082013

14

GROUP

StRAtEgy CONTINUED

OUTLOOKGlobal business trends, that continually drive clients to

improve overall business performance, naturally impact their

ICT strategies and expectations of ICT service providers.

It is expected that most of the large corporate groups in

South Africa will remain under cost pressures.

In response, Business Connexion’s strategic priority is to

constantly improve client service delivery and to improve

organisational agility.

A group-wide initiative has been launched to establish

a culture of continuous improvement that is focussed

on ensuring that clients experience the organisation as

consistently providing value, through receiving quality

and delivery at a competitive price.

This strategic initiative adopts principles to create a “lean”

culture, where the teams’ way of work constantly identifies

and eliminates non-value adding or sub-optimal processes

and inefficiencies.

The overall sales pipeline is looking healthy and good prospects

in Kenya and Nigeria will continue to support our international

growth strategy.

Ongoing maturity of the cloud computing model will

lead to increased adoption as a new way of consuming

information technology.

The public sector is expected to become an increasingly

important revenue contributor across the African continent.

GROUP STRATEGIC PRIORITIESThe group is concentrating its efforts by focussing on its key

strategic priorities.

Cross selling through unique and integrated client value

propositions holds significant opportunities for the group and

we are starting to see progress.

Through strategic business acquisitions both in South Africa

and the rest of the continent, we will continue to execute in line

with the pillars of our strategy.

Our responsibility to our shareholders remains to deliver

improved return on equity.

Initiatives are underway to drive continuous productivity

improvements across the organisation in pursuit of long term

sustainability, while we remain committed in developing in-

house capabilities to support our strategy and to attract talent in

line with growth ambitions.

Through the successful outcome of our key strategic

priorities we aim to see EBITDA growing faster than revenue,

improvements to our gross margin, reaching our return on

equity targets and improving our cash conversion.

As we look forward, our leadership and staff are committed to

delivering on our mission. “To enrich communities by making

the impossible possible through technology”.


1531/082013

OUR PEOPLE

Attract, retain anddevelop talent

OURORGANISATION

OUROFFERINGS

• Premium Connexion Zone Convergence portfolio• Innovation Zone Own intellectual property

Flexible organisationstructure to achievegrowth strategy

• Largest African presence• Global capabilty• Vertical industry focus: Retail and Supply Chain Mining Financial Services Oil and Gas Public Sector

OURCLIENTS


31/082013

16

BOARD OF

SOUND GOVERNANCE PRACTICES ARE ESSENTIAL TO EARNING THE TRUST OF STAKEHOLDERS

Independent non-executive chairman

BA (UCT), HDE (UCT), Executive Diploma Business Studies (Stanford University, USA)

During his career, Tony has co-founded nine start-ups that became significant companies in South Africa and Africa, including Krew Investments SA Proprietary Limited, Share Legend Proprietary Limited, Sentio Capital Management Proprietary Limited and African Harvest Proprietary Limited. He currently serves as director in all the companies he co-founded. Tony has travelled extensively representing South Africa in trade and investment meetings across the globe. He has also participated in numerous presidential and ministerial-led delegations abroad.

Tony is a member of the Remuneration and nominations committee and the Risk, sustainability, social and ethics committee.

Appointed to the board on 21 September

2007

Chief executive officer

BCom Accounting (University of Pretoria)

In 1996 Benjamin, with his twin brother Isaac, co-founded what was then known as Business Connection. Business Connection subsequently merged with Seattle Solutions in 2001.

Benjamin served as managing director until the company merged with Comparex Africa in 2004 and was renamed Business Connexion. He served as deputy chief executive officer until 2007 when he became chief executive officer. Well-known within the information and communication technology industry, he has received numerous accolades.

Benjamin is a member of the Black Management Forum, the Electronic Industries Federation of South Africa, the Black Information Technology Forum and the Western Cape Investment and Trade Promotion Agency.

Appointed to the board on 2 February

2004

Deputy chief executive officer

BCom (Rhodes), HDip Acc (Rhodes), CA(SA), HDip Tax (Unisa), Life Management Institute Programme (USA), CPA (USA)

Vanessa joined Business Connexion on 1 August 2009.

Vanessa qualified as a chartered accountant by completing her articles at Deloitte. She worked for Deloitte LLP in Chicago, before moving to the UK where she held financial management positions with P&O Nedloyd and Aviva plc. Before joining Business Connexion, she was finance director of Standard Bank Africa.

Vanessa, in her capacity as deputy chief executive officer, is responsible for working with the chief executive officer to drive the overall business strategy. In her capacity as group executive: Services, division she is responsible for ensuring the success of the cloud services offerings, vertical sector solutions and application development.

Vanessa is a member of the South African Institute of Chartered Accountants and the Institute of Directors.

Appointed to the board on 1 August 2009

diREctoRS

VanessaOlvEr

BenjaminMOPhATlAnE

anthony(tony)

ruITErs


1731/082013

Chief financial officer

BCom (Hons) (University of Pretoria), CTA, CA(SA)

Lawrence has vast experience in finance, spanning well over 16 years. He held several group financial management positions in the ICT and financial sectors.

He joined Business Connexion in February 2005 as group financial manager, where he was responsible for key finance aspects of the business.

Lawrence is a member of the South African Institute of Chartered Accountants and the Institute of Directors.

Appointed to the board on 1 September

2011

Executive director

MDP SBL (Unisa), SEP (London Business School)

John has been a leader in the ICT services industry for many years and has gained considerable expertise in deal-making, contract structuring, service management and multi-sourcing arrangements.

He has specialised in ICT outsourcing and managed services, and is one of the founders of the outsourcing industry in South Africa. John is a widely recognised consultant, coach and mentor, drawing on more than three decades of experience in the ICT industry.

In his role as group executive: business development – private sector, John is responsible for developing new business, ensuring collaboration, integration and alignment across the divisions with a specific focus on the private sector. In addition, John is driving the strategic business development for the group in the Africa operations.

Appointed to the board on 31 August 2011

Independent non-executive director

Hons BCompt, CTA, CA(SA), Senior Executive Programme (Wits and Harvard), Diploma in Company Direction

Jenitha is chief audit executive of the FirstRand Group. She held various financial and audit-related roles at, inter alia, Discovery Holdings, Telkom SA, Eskom, Toyota SA and RMBT Property Services (Marriott Group) prior to joining the FirstRand Group. Jenitha has served on many boards and audit committees and is currently a non-executive director of Tongaat Hulett where she is also chairperson of the audit and compliance committee.

Jenitha is a member of the following professional bodies: the South African Institute of Chartered Accountants, the Institute of Internal Auditors and the Institute of Directors.

Jenitha is the group’s Audit and compliance committee chairperson and a member of the Risk, sustainability, social and ethics committee.

Appointed to the board on 1 May 2010

jenithaJOhn

johnJEnkIns

LawrenceWEITzMAn


31/082013

18

Non-executive director

Post-graduate Diploma in Telecommunications and Information Policy (Unisa), Diploma in Computer Programming (Globe)

Nkenke has a wide range of skills and experience in communications and has been involved in formulating telecommunications and broadcasting policies, laws and regulations. He has held various positions during his career, including group executive: regulatory and public policy at Telkom. He was a Member of Parliament and chairman of the Parliamentary Portfolio Committee on Communications. He is currently the chief executive officer of MSIMA Communications Proprietary Limited and an executive director of Mowana Investments Proprietary Limited. He is the chairman of the group’s Risk, sustainability, social and ethics committee.

Appointed to the board on 2 March 2005


BCom (UCT); HDip Accounting (Wits); CA(SA)

Mamoroke founded MyCFO, an outsourced accounting department for small and medium enterprises, after leaving her position as a director at an internal audit practice, where she was a shareholder since 2006. She has led outsourced internal audit functions both in the public and private sectors as well as finance departments in the financial services sector.

She has resigned all other board commitments to invest in building innovative solutions for SMEs around governance, risk management and financial management to enable them to grow and prosper in their chosen industries.

BOARD OF

diREctoRS CONTINUED


CA(SA); BCom (Hons) (UCT); CTA(WITS); CMS(Oxon); AMP(UCT); AMP(Oxford)

John is a qualified chartered accountant with 16 years’ experience in the accounting profession and 32 years’ experience in commerce and industry.

He currently serves as an independent non-executive director of Clicks Group Limited, Sovereign Foods Investments Limited, Tower Property Limited, Ascendis Health Limited, Homechoice Holdings Limited and serves on the Audit and Remuneration committees of these companies. He is a non-executive director of Personal Trust International Proprietary Limited.

He also sits on the Board of Western Province Rugby Proprietary Limited and is a member of the Executive Committee of WPRFU.

Appointed to the board on 8 October 2013

john andrewBEsTEr

mamorokelEhOByE

nkenke (nat) kEkAnA


1931/082013

Non-executive director

BCompt, CTA, CA(SA)

Appointed to the board on 11 May 2011 following the successful acquisition of the UCS subsidiaries

Dean is currently the chief executive officer of Capital Eye Investments Limited (formerly UCS Group Limited), a private equity investment business in the technology sector. He completed his articles at Deloitte & Touche South Africa in 1999 and spent a short time in the Deloitte New York office. He left Deloitte in 2002 to join the listed UCS Group where he performed various roles over a 10 year period from chief financial officer to deputy chief executive officer and then chief executive officer. In recent years his predominate focus has been on investment activity driven through mergers and acquisitions in the technology sector.

Appointed to the board on 11 May 2011


Mike is a chartered accountant with over 20 years’ global experience in executive management, particularly in the technology and business process outsourcing sectors.

Mike is the former CEO of NorthgateArinso (NGA) which he led from February 2009 to April 2013. During his tenure he grew NGA to become the recognised global market leader in the HR Services and BPO industry.

Mike is currently advising various Private Equity Funds on investments in the HCM industry. He is also a non-executive director of Backoffice Associates, a US company focussed on data management, PeopleFluent, a leading Global Talent Management SaaS business, Impellam PLC a London listed Recruitment Process Outsourcing company, and Fairsail.com a HR SaaS software company focussing on the mini-multinational market.

Prior to these roles Mike had senior executive roles in IT and BPO with Unisys, Synstar PLC, and EDS. Mike was awarded the HR Outsourcing Association “Global Thought Leader of the Year” in 2012 recognising his innovative contribution and influence around HR transformation and the HRO industry as a whole.

He holds a Masters in Finance from the London Business School, is a graduate of the University of the Witwatersrand and a member of the South African and English institutes of Chartered Accountants.


deansPArrOW

aLexDArkO


FCCA, MSc (MIS)

Alex has over 30 years’ multi-industry experience in Europe, USA and Africa He is an independent management consultant and executive mentor.

He serves on the boards of Consolidated Infrastructure Group (CIG), Mazor Group and Safintra Investments Proprietary Limited.

Alex was previously the chief information officer at AngloGold Ashanti and director of finance – Dun & Bradstreet Europe Limited


mikeETTlIng


31/082013

20

EXECUTIVE

committEE

DATE OF BIRTH: 22 July 1973

QUALIFICATIONS: BCom (Rhodes), HDip Acc (Rhodes), CA(SA), HDip Tax (Unisa), Life Management Institute Programme (USA), CPA (USA)

DESIGNATION: Deputy chief executive officer and group executive: Services division

EXPERIENCE: Vanessa joined Business Connexion on 1 August 2009.

Vanessa qualified as a chartered accountant by completing her articles at Deloitte. She worked for Deloitte LLP in Chicago, before moving to the UK where she held financial management positions with P&O Nedloyd and Aviva plc. Before joining Business Connexion, she was finance director of Standard Bank Africa.

Overall business strategy. In her capacity as group executive: Services division, she is responsible for ensuring the success of the cloud Services divisions offerings, vertical sector solutions and application development.

Vanessa is a member of the South African Institute of Chartered Accountants and the Institute of Directors.

Appointed to the Executive committee

on 1 August 2009

DATE OF BIRTH: 10 April 1969

QUALIFICATIONS: BCom (Hons) (University of Pretoria), CTA, CA(SA) and Senior Management Programme (University of Pretoria)

DESIGNATION: Chief financial officer

EXPERIENCE: Lawrence has vast experience in finance, spanning well over 16 years. He held several group financial management positions in the ICT and financial sectors.

He joined Business Connexion in February 2005 as group financial manager, where he was responsible for key finance aspects of the business.

Lawrence is a member of the South African Institute of Chartered Accountants and the Institute of Directors.


on 1 September 2011

DATE OF BIRTH: 12 May 1973

QUALIFICATIONS: BCom Accounting (University of Pretoria)

DESIGNATION: Chief executive officer

EXPERIENCE: In 1996 Benjamin, with his twin brother Isaac, co-founded what was then known as Business Connection. Business Connection subsequently merged with Seattle Solutions in 2001.

He served as managing director until the company merged with Comparex Africa in 2004 and was renamed Business Connexion. He served as deputy chief executive officer until 2007 when he became chief executive officer. Well-known within the information and communication technology industry, he has received numerous accolades

Benjamin is a member of the Black Management Forum, the Electronic Industries Federation of South Africa, the Black Information Technology Forum and the Western Cape Investment and Trade Promotion Agency.


on 2 February 2004

SOUND GOVERNANCE PRACTICES ARE ESSENTIAL TO EARNING THE TRUST OF STAKEHOLDERS

VanessaOlvEr

BenjaminMOPhATlAnE

LawrenceWEITzMAn


2131/082013

DATE OF BIRTH: 8 December 1970

QUALIFICATIONS: BCom (Hons) (University of KwaZulu-Natal)

DESIGNATION: Chief operating officer

EXPERIENCE: Matthew formed Seattle Solutions, a focused Microsoft Solution Provider, which merged with Business Connection in 2001. He led the integration process of Business Connection and Comparex Africa in 2004.

From 2006 Matthew consulted to Business Connexion on the formulation and initiation of the revitalisation programme prior to rejoining the group in September 2008 in an executive capacity with specific responsibility and accountability for the group’s revitalisation programme. Matthew, in his current capacity as chief operating officer, is responsible for mergers and acquisitions, marketing as well as special projects.

He is a former recipient of the Information Technology Person of the Year awarded by the Computer Society of South Africa.


on 1 September 2008

DATE OF BIRTH: 22 August 1953

QUALIFICATIONS: MDP SBL (Unisa), SEP (London Business School)

DESIGNATION: Group executive: business development – private sector

EXPERIENCE: John has been a leader in the ICT services industry for many years and has gained considerable expertise in deal-making, contract structuring, service management and multi-sourcing arrangements.

He has specialised in ICT outsourcing and managed services, and is one of the founders of the outsourcing industry in South Africa. John is a widely recognised consultant, coach and mentor, drawing on more than three decades of experience in the ICT industry.

In his role as group executive: business development – private sector, John is responsible for developing new business, ensuring collaboration, integration and alignment across the divisions with a specific focus on the private sector. In addition, John is driving the strategic business development for the group in the Africa operations.


on 8 May 2007

matthewBlEWETT

johnJEnkIns


QUALIFICATIONS: Associate Member for the Institute of Chartered Secretaries and Administrators

DESIGNATION: Group executive: UCS division

EXPERIENCE: Jane has extensive business and ICT management experience. With a career which commenced in financial management, Jane has excelled in various IT management and consulting roles with a specific focus on the retail sector.

Prior to joining Business Connexion Jane held executive positions within the UCS organisation, giving her wide exposure to the organisation’s operations and strategy. Over the years, she successfully delivered many complex internal and client projects while also taking ownership for end-to-end outsource contracts, ensuring common understanding and measurability between service provider and client.

This experience and her abilities are considered key attributes as she takes strategic responsibility for the direction of the UCS businesses as an integral component of Business Connexion.

Appointed to the Executive committee on 1 September 2011

janeCAnny


31/082013

22

DATE OF BIRTH: 30 October 1975

QUALIFICATIONS: B Com Economics (University of Natal), Masters in Business Leadership (Unisa)

DESIGNATION: Group executive: business development – public sector

EXPERIENCE: Themba joined Business Connexion in 2004. He has a wealth of knowledge in ICT strategic sourcing and procurement as well as experience in the public sector which he acquired from SITA and Telkom.

He also has extensive strategic business development and planning experience, especially in sales and general management, which he gained from previous positions in the group, SITA, Telkom SA Limited and Daimler Chrysler SA. He has demonstrated an ability to manage and deliver in complex and demanding environments throughout his career and he has solid strategic relationships with clients, partners and suppliers.

As group executive: business development – public sector, Themba has overall responsibility for positioning Business Connexion as a significant player in the public sector.


DATE OF BIRTH: 19 April 1972

QUALIFICATIONS: BA and BEd concurrent (English and Anthropology, York University, Toronto, Canada), Management Advancement Programme (Wits Business School), HR Management (Unisa), HR Management (Seneca College of Applied Arts, Toronto)

DESIGNATION: Group executive: human resources (HR)

EXPERIENCE: Grace has gained extensive local and international knowledge and hands-on experience across all disciplines of Human Resources (HR) with a career spanning more than 17 years in human resources in the technology and communications industry. Her expertise span across talent management spheres, including performance management, recruitment, HR project management and implementation, business partnering, strategic management, remuneration and compensation.

She has in-depth experience in the ICT arena, having worked for companies that include Sentech, Combining international studies and work experience with local insight, Grace brings to bear theoretical knowledge with practical understanding to achieve the efficient alignment of HR and business.


EXECUTIVE

committEE CONTINUED

GraceDIPAlE

themBaguMBI

DATE OF BIRTH: 19 October 1962

QUALIFICATIONS: Master in Business Administration (MBA) (UNISA)

Management Development Program (MDP) (UNISA)

DESIGNATION: Acting Group Executive: Innovation

EXPERIENCE: With over 27 years’ experience in the IT industry, Henk has worked for various companies, mostly in software development.

He joined Business Connexion in 1996 with a focus on the National Transport Information System (NaTIS) for the South African Department of Transport and was appointed Business Unit Manager for the NaTIS project in 2004. He was promoted to Regional Executive a year later, and was responsible for all sales and services including planning, installation and maintenance.

After the formation of the Innovation Division, Henk was transferred to the Persal Business Unit overseeing the Persal, Vulindlela and Kitso projects. He now serves as the acting Group Executive.

Appointed to the Executive committee on 23 October 2013.

henk DE WEErDT


2331/082013

DATE OF BIRTH: 30 December 1965

QUALIFICATIONS: Currently working on a dissertation for his MBA

DESIGNATION: Group executive: International division

EXPERIENCE: Rodwell joined Business Connexion in 2009 as the managing executive responsible for the West Africa business. He has more than 20 years’ experience in the ICT industry. He spent over 14 years at Microsoft and has extensive cross border experience. He is a member of the British Computer Society.

His portfolio at Business Connexion includes all Business Connexion operations outside of South Africa. He is responsible for driving sales, growth strategy and business development for new markets.


DATE OF BIRTH: 14 November 1968

QUALIFICATIONS: BCom (Honours) (Marketing) (Unisa)

DESIGNATION: Group executive: Technology division

EXPERIENCE: Doug Woolley joined Business Connexion as group executive: Technology division in March 2012. His experience in both vendor management and distribution on a group-wide basis plays an important role in our continuing focus on bringing the full strength and capabilities of Business Connexion to our clients.

Doug’s qualifications are complemented by the wealth of experience that he has accumulated over a decade in various ICT companies. The notable ones are the senior positions that he held during his tenure at WorkGroup that included being managing director and most recently, the chief executive officer at Axiz Workgroup.

Appointed to the Executive committee on 15 March 2012


QUALIFICATIONS: Bachelor Degree (University of Pretoria)

DESIGNATION: Group executive: Canoa division

EXPERIENCE: In 1996 Isaac, with his brother Benjamin, co-founded the former Business Connection, a computer reseller focused on government and parastatals. Business Connection subsequently merged with Seattle Solutions in 2001. In 2004, the company merged with Comparex Africa and Isaac was appointed as group executive: client engagement – public sector.

Isaac provided leadership and direction in the Innovation division which houses the group’s own software and packaged intellectual property prior to taking responsibility for the Canoa division which drives the group’s Managed Print Solution offerings.

Isaac is a member of the Black Management Forum, the Electronic Industries Federation of South Africa and the Black Information Technology Forum. He is the deputy non-executive chairman of the Catholic Education Investment Company.


on 2 February 2004

douGLasWOOllEy

isaacMOPhATlAnE

rodweLLzvArAyI


31/082013

24

REPORTchAiRmAn’S

BUSINESS ENvIRONMENTThe ICT sector experienced an increase in consolidation during

the past year, with a wave of mergers and acquisitions sparked

by tough market conditions as companies felt the effects of

pressures on pricing and activity levels.

High inflation, lower productivity and protracted labour

unrest in South Africa compounded the existing structural

constraints within the economy which slowed further. Increased

competition in the local technology sector was also evident as

international companies made their presence more noticeable.

While conditions remained volatile throughout the course

of 2013, Business Connexion made excellent progress in the

marketplace. Through further group-wide initiatives, we are

now even better positioned to leverage the size and scale of our

operations as well as take advantage of new opportunities in the

sector. Our priority remains to deliver the best possible service

and solutions to existing clients whilst growing our offering into

previously underserviced markets, including through capacity

build up across Africa.

GROwTH STRATEGyThe focus on sustainable, organic growth, the group’s growth

strategy into the rest of Africa, strategic acquisitions focusing

on long-term sustainability, and cost containment has delivered

a solid set of results for 2013, with most indicators showing an

improvement on the prior year.

In my 2012 report, I provided a review of the seven-year

growth strategy which Business Connexion adopted in 2009

after careful consultation between the board, management and

our various stakeholders. The four main areas addressed by the

strategy encompass:

• Establishing Business Connexion as a convergence player

• Focusing on specific vertical sectors and innovation

• Expanding into new markets to develop foreign earnings

• Making strategic acquisitions which are synergistic with the

broader business offering

During the year in review, Business Connexion was both bold and

consistent in driving these strategic areas to support a number of

objectives and to attain our stated performance ratios, including

“UNCERtAINty IN thE wORLD ECONOMy PREVAILED DURINg thE yEAR UNDER REVIEw, DRIVEN By ECONOMIC PRESSURES BOth IN thE EASt AND thE wESt, whICh CONtINUED tO DELAy thE ONSEt OF ANy MEANINgFUL RECOVERy. At thE SAME tIME, thE SOUth AFRICAN ECONOMy BEgAN tO ExPERIENCE thE EFFECt OF ‘StAgFLAtION’ AND thESE COMBINED FACtORS CREAtED A DIFFICULt OPERAtINg ENVIRONMENt ACROSS MOSt OF OUR ChOSEN VERtICALS.

thIS VOLAtILE BACKDROP ACtED AS A CAtALySt tO DELIVER CONSIStENt PROgRESS ON KEy StRAtEgIC INItIAtIVES AS wE DEVELOP OUR POSItION AND ENtRENCh BUSINESS CONNExION’S RELEVANCE IN A FASt-ChANgINg SECtOR BOth At hOME AND ACROSS thE CONtINENt. wE ARE PLEASED tO REPORt gOOD tRACtION ON ALL FRONtS SUPPORtED By A FINANCIAL PERFORMANCE whICh IS StARtINg tO REFLECt CONtINUOUS AND SUStAINABLE IMPROVEMENt.”


2531/082013

a 17% return on equity target over the medium term. Our plan to

attain this target will include a combination of the following:

• drive profitability across all divisions

• maintain the dividend cover

• increase the debt profile

• share buy-back

• merger and acquisition activity

• African expansion

CORPORATE ACTIvITyBusiness Connexion continues to focus on bolstering its

business and product offering through the successful execution

and implementation of acquisitions and joint ventures as a pillar

to progress towards becoming a more efficient, productive and

refined ICT player.

The past year saw a number of deals being concluded including

the finalisation of the Integr8 IT acquisition and the joint venture

with NorthgateArinso’s South African affiliate, NorthgateArinso

Africa which adds another pan-African capability in human

capital management services and technologies to the group.

The disposal of the Q LINK business was also announced and

the board has decided to use the proceeds of the sale to effect

a share buy-back.

Finally, shareholders supported the delisting of the “A” Shares

which were initially created to support Business Connexion’s

BEE initiatives and later to facilitate the acquisition of UCS.

OPERATIONAL REvIEwKey operational highlights included:

• Synergistic selling across the group resulting in significant

new client wins

• The deployment of our cloud offering for the public and

private sectors

• African growth marked by a strong performance and fresh

opportunities in Nigeria

• Public sector focus delivering significant opportunities such

as the contract with the Department of Water Affairs

• Carefully considered corporate activity unlocking value

We are comfortable that the Technology division is now

on the right track and able to deliver good profit growth

whilst the Services division, which is the largest contributor

to the group, performed adequately in an environment

impacted by volatility and the constant squeeze on activity

levels and pricing.

The UCS division continued to show pleasing growth and

entrenched its position in the retail segment despite difficult

trading conditions. In addition, the expansion of the group's

retail offerings into Africa is starting to gain traction as it

entrenches its position as the dominant IT Services player in the

retail industry sector in sub-Saharan Africa.

Business Connexion’s entry into the Managed Print Solutions

segment together with Canon proved successful in spite of

a highly competitive industry. This was evidenced through

the profit contribution of the division, driven by good growth

in the large corporate market.

The Innovation division aims to develop and enable new

products that enhance our ability to provide new technology

to all clients. We now see that platforms are being created for

different elements of the group to partner on IP related ideas.

This manifestation of our strategy will ultimately drive higher

quality and more stable earnings and it is pleasing to see that

Chairman tony Ruiters


31/082013

26

the group is able to unlock significant value as demonstrated

through the sale of Q LINK.

We continued to accelerate the development of our cloud

computing solutions in 2013 to meet growing demand from

our clients for the flexibility and cost-effectiveness which this

technology allows. Business Connexion currently has more data

centre capacity than any other service provider and is the only

provider of SAP Cloud Services in South Africa.

AFRICAN HUBSBusiness Connexion has embarked on a journey to further

entrench itself as a growing multinational able to support and

service global companies wherever they wish to grow on the

continent. We are now well established in Africa, with west

Africa unquestionably our star performer over the past year.

With our expanded capacity, we continue to secure a healthy

pipeline of new business.

Our focus is now on bedding ourselves down across

our Southern, East and West Africa hubs before directing

our attention at new geographies. We are accelerating our

investments in Nigeria and Kenya with the latter becoming

an increasingly competitive market driven by the government’s

emphasis on ICT sector investments. Africa remains a key

growth area for our business and we will continue to seek

acquisitions and partnerships across specific verticals, including

public sector clients, which are essential to grow the African

economy for the benefit of all.

CLIENTSWe are proud of the long-term and close relationships across

our client base. These networks have been built over many

years and attest to our partnership approach. We continue

to differentiate ourselves by acting as strategic intelligence

partners capable of developing and tailoring solutions to

meet their evolving needs. We are extremely mindful of the

pressures faced by our clients in this time of economic volatility,

and are accordingly committed to remaining as cost effective

and flexible as possible in the delivery of our services.

HUMAN CAPITALHuman capital deployment is a key focus for Business

Connexion as we place greater emphasis on understanding

what skills and talent are available in the business. We are

dedicated to attracting and retaining the best of breed both

locally and internationally. We have also benefited from the

addition of new talent to the group through our most recent

acquisitions, diversifying our capabilities even further.

Our goal is to ensure that we have the right capacity to

enable our 7 000 employees to participate and give input

into the business’s strategy, cultivating a culture of open

engagement and excellence. We will continue to drive various

projects across the group to establish a common philosophy

for excellence, quality and sustainability in order to build

long-term sustainability.

In relation to this, the group concluded a transaction between

ATIO’s Netcampus and Business Connexion’s Learning Solutions

business to create a platform to support individual and

organisation learning for the Business Connexion group, ATIO

and its clients. This new business aims to be the leader in the

adult e-learning community in Africa by 2017.

DIRECTORATETo support the successful roll-out of our growth strategy, it is

critically important to ensure that the composition of the board

is reflective of the group’s position and ambitions.

To this end, three new non-executive appointments were

made in October which balances and enhances the depth

of experience available to guide the company. I wish to extend

a warm welcome to Alex Darko, Mike Ettling and John Bester

and look forward to collaborating with them. Information on

each individual is included on pages 16 to 19 of this report.

Our board of directors now comprises 6 independent non-

executive, 2 non-executives and 4 executives.

APPRECIATION Our group has an incredible amount of embedded

intellectual capital available and I would like to express

my thanks to all employees for their input and commitment

during the past year.

I also thank the group’s executive and the senior leadership

team for their energy, enthusiasm and commitment towards

furthering the evolution of Business Connexion. We have

capable, talented leadership at the group and your tireless work

and passion do not go unnoticed.


2731/082013

A word of appreciation also goes to the board members whose

support and guidance over the past year remained key to the

growth strategy.

On behalf of the board, I would like to express our gratitude

to shareholders as well as to all our stakeholders, including

clients and business partners, for their support, advice

and participation.

OUTLOOK2013 presented a fresh set of challenges to our management

team, as continued instability in many markets was set as the

new norm. In spite of this, Benjamin and his executive team met

these trials head on with vigour and optimism.

I am pleased to say that tangible progress was achieved in

making the group more competitive as the fruits of our growth

strategy become increasingly evident.

Thanks to continued hard work, we have entered the new

financial year in a sound position, ready to take advantage of

the many opportunities that await us in a sector that is likely to

continue to grow at a faster rate than the overall economy.

Our strength lies in our ability to build and sustain long-term

relationships with our clients, in line with our passion to enrich

communities by making the impossible possible, through

technology. Accepting that volatility is the new normal and a

constant that can be managed, we are optimistic about the year

ahead and excited about the opportunities available to us as we

leverage our new base and build capacity to entrench ourselves

as a multinational partner of choice across the continent.

Tony Ruiters

Independent non-executive chairman

CONTINUESchAiRmAn’S REPORT


31/082013

28

“2013 wAS A yEAR OF ACCELERAtION FOR thE gROUP AND wE hAVE MADE ExCELLENt PROgRESS IN CONSOLIDAtINg OUR POSItION tO DELIVER thE BESt POSSIBLE SERVICE AND SOLUtIONS tO CLIENtS BOth LOCALLy AND IN AFRICA. IN PARtICULAR, wE ARE PLEASED By thE SIgNIFICANt NEw CLIENt wINS AND thE tRACtION AChIEVED IN AFRICA AND OUR ENtRENChMENt IN thE REtAIL MARKEt SECtOR.”

A general slowdown in South Africa’s GDP growth and very

competitive market conditions created the backdrop for the

past year. In this environment, Business Connexion continued

to deliver on the steady implementation of its seven-year

growth strategy and gained significant momentum on its

journey to being Africa's leading technology company.

The focus on solid organic growth, African expansion, strategic

acquisitions in the context of long-term sustainability and cost

containment delivered a robust performance in 2013, and

further builds the foundation to support the group's future

growth. Key operational highlights for 2013 included:

• Improved footprint in the rapidly expanding African market,

including solid growth from the group's Nigerian operation;

• Canoa division driving market share growth in the Managed

Print Solutions segment;

• Innovation division's performance underlining the quality

and growth of BCX-owned intellectual property businesses

within the group;

• Continued investment in the cloud strategy;

• Significant new client wins; and

• Growth in the retail market sector.

Whilst much more remains to be achieved with regards to the

strategy, the growth in the footprint and capabilities both at

home and abroad is solid evidence of the successes made.

OPERATING RESULTSThe group’s strategy which includes solid organic growth targets,

continuous productivity improvements and costs containment

initiatives to support long-term sustainability is starting to pay

off and will help the group reach its stated target return on

equity of 17% in the medium term.

Revenue grew by 5,9% to R6 173,3 million for the year on

the back of good growth across most divisions. The growth

was mostly organic with only 2,1% attributable to the

acquisition of Integr8 IT. The group’s annuity revenue base

remained intact with annuity revenue accounting for 53,6%

of total revenue.

Business Connexion continued to pursue its objectives

of growing sustainable earnings and generated diluted

earnings per share (EPS) of 44,5 cents (2012: 37,2 cents)

with normalised diluted headline EPS growing 3,0% to

52,6 cents (2012: 50,6 cents). Return on equity increased

to 8,0% (2012: 7,1%) as a result of the improved profitability.

Healthy cash flows were maintained with cash from operations

of R527.7 million.

The divisions delivered strong performances, despite a difficult

start to the year with initial margin pressure being experienced

by the Services and UCS CEB Maintenance divisions in the first

half of the year.

• The Services division grew its revenue by 7,7% to

R2 149,3 million, largely thanks to the division’s application

development business. As mentioned above, profitability

was hampered by contract delays in the first half of the year.

• Business Connexion first invested in UCS in line with its

desire to expand the group’s offering into the Retail industry.

The UCS assets continued to show promising growth in

2013, despite persistently tough trading conditions in the

retail industry. The division increased revenue by 7,1% to

R1 170,9 million. In addition, the expansion of UCS’s Retail

offerings into Africa is starting to gain traction which bodes

well for 2014.

• The Canoa division delivered an encouraging performance

and increased revenue by 29.9% and operating profit by

9,0% respectively for the year. Business Connexion’s venture

into Managed Print Solutions with Canon has proved to be

ExEcUtiVE CHIEF

OFFICER’S REPORT


2931/082013

Tony RuitersIndependent non-executive chairman

CEO Benjamin Mophatlane

extremely successful and significant opportunities for the

group are anticipated.

• The Technology division delivered stellar results for the year,

contributing R26,5 million to total operating profit for the

year – up from R3,3 million in 2012.

• Our International division showed pleasing revenue growth

of 13,9% to R532,2 million. Nigeria continues to be the

star performer, and remains the biggest profit contributor

in the division. Further detail in this regard is included in the

‘Progress in Africa’ commentary below.

• The Innovation division’s various business units delivered

performances which were in line with expectations.

The LARA and Nanoteq performances were particularly

positive and there is good potential to leverage these

units further as evidence of the quality and growth of

BCX owned intellectual property businesses within the

group materialise.

Further details on the group’s financial performance have been

set out in the chief financial officer’s report on pages 32 to 37.

STRATEGIC GROwTH PATH Business Connexion continues to embrace its vision of

‘Connective Intelligence’; a group philosophy which sees

us focusing our energy towards delivering a complete set

of managed services to our clients.

The chief objective of Business Connexion is to be more

competitive as well as to enhance efficiency of delivery

to clients. In a highly competitive marketplace, it is this

commitment to excellence and value-add that distinguishes

Business Connexion from other players. This position also

formed the pillars of the strategic growth path in 2009 which

focuses on the following core areas:

• Expanding existing service offerings in the local market to

foster organic growth and to become a serious convergence

player. Cloud computing is an integral part of this offering,

and the group continued to make significant investments

over the year in review to improve competitiveness in the

marketplace. South African government IT spending also

offers strong growth opportunities for Business Connexion

• Focus on complementary strategic initiatives and innovation

– 2013 saw the group make significant progress in its

Innovation division, which was created three years ago

to help nurture and mature businesses based on the sale,

implementation, integration and support of Business

Connexion’s own software and intellectual property.

This strategy has proved highly successful, as evidenced in

the LARA and Nanoteq performances for the year in review

as well as the value unlocked through the sale of Q LINK

during the period. The group also took the opportunity over

the past year to invest in a group wide Public Sector and

Private Sector Tier 1 engagement strategy which has resulted

in several new Tier 1 client wins, including the Department

of Water Affairs

• Expanding Business Connexion’s footprint into new markets

in order to further grow our foreign earnings. The group

now has subsidiaries in Mozambique, Namibia, Nigeria,

Tanzania, Zambia, Kenya and Botswana (post our recent

acquisition in that country). All of these operations are

geared towards providing cost-effective, uncomplicated

and value-adding knowledge solutions


31/082013

30

CHIEF

• Business Connexion continuously assesses merger and

acquisition opportunities to complement our existing

operations as well as to increase our capacity in strategic

growth areas. 2013 saw the group finalise the R126 million

acquisition of Integr8 IT. We also entered into a joint

venture with NorthgateArinso’s South African affiliate,

NorthgateArinso Africa. Further detail on the acquisitions

is included below.

SUSTAINABILITy AND TRANSFORMATIONBusiness Connexion maintained a level 3 B-bBEE rating during

the 2013 financial year. Meaningful transformation remains

a top priority throughout the group. We take all facets of real

transformation extremely seriously – from ownership and

management to ongoing investment in training, upskilling

and community investment. We have various corporate social

investment initiatives which aim to restore dignity, hope and

transfer skills to underprivileged communities.

Business Connexion has embraced the green revolution and is

extremely conscious of environmental sustainability. Rather than

paying lip-service to sustainability, we have taken an extremely

practical approach to monitoring and reducing our water and

electricity usage, making the most efficient use of our existing

buildings and fostering a culture of awareness across our staff.

More on these initiatives is included in the Sustainability report

on pages 68 to 79.

PROGRESS IN AFRICAThe group’s international operations fared well during

the year driven by Nigeria which exceeded expectations

as the biggest profit contributor. 2013 also saw the group

make large investments in cloud computing services in

Nigeria whilst further acquisition opportunities are expected

to materialise in the year ahead. Kenya is still in its early

development stages for the group and we expect further

traction in the year ahead as opportunities materialise.

Both Nigeria and Kenya’s sales pipelines are looking very

healthy whilst successful service deployments in countries

where the group has no existing physical presence is expected

to drive business flow.

CORPORATE ACTIvITy As mentioned above, Business Connexion concluded the

Integr8 IT acquisition, facilitated through the UCS division to

enable the group to enhance its competitive advantage in the

mid-market corporate space, expand beyond its enterprise

focus, and create a complementary platform of services

markets.

2013 also saw Business Connexion enter into a joint venture

with NorthgateArinso’s South African affiliate, NorthgateArinso

Africa. NorthgateArinso forms part of the NorthgateArinso

Group, which is a leading global human resources software

and services provider offering human resources business

solutions to employers of all sizes, including Global Fortune®

500 companies and public sector organisations. The merged

business will deliver human capital management services

and technologies to support business outcomes for local,

multinational and public sector organisations across Africa.

The decision to dispose of the Q LINK business for

R187,5 million was taken after careful consideration as

the unit no longer formed part of the core business strategy

of the group. Moreover, it was felt that Q LINK would

serve its clients better as part of a financial services group.

The proceeds from the sale will be applied to undertake a

share buy-back programme.

The group also successfully repurchased 25 033 334 BCX "A"

ordinary shares and delisted all the remaining "A" shares.

OUTLOOKThe group wide cross-selling initiative is unlocking value

and has resulted in a number of significant client wins.

Investments in key African countries have also created new

opportunities and the group will continue to explore strategic

deal opportunities to develop its footprint, especially in Nigeria

which is a key growth market.

In spite of 2014 being an election year in South Africa,

the public sector market offers great growth opportunities

for the group which currently only generates 7% of its revenue

from government related work. The five-year outsourcing

contract with the Department of Water Affairs secured during

the year is testament of the group’s abilities and similar

opportunities are actively being pursued. Beyond the country’s


3131/082013

ExEcUtiVE OFFICER’S REPORTCONTINUES

borders, a number of government related solutions and services

are also attracting more interest.

Leveraging off the key achievements of 2013, the group is

confident that it will achieve further revenue and earnings

growth in the next financial year. Whilst much more remains

to be achieved with regards to the strategy, the growth of

footprint and capabilities both in South Africa and abroad

positions the group well to take advantage of key opportunities.

APPRECIATIONI am always mindful of, and grateful for, the exceptional qualities

and personalities who make up our executive committee.

I thank them for their commitment and vision.

I am confident that, with such extraordinary leadership

at the helm of the group, we will achieve our goal in 2014

to accelerate collaboration across our operations, to embrace

our common group philosophy of performance and

excellence and ultimately to focus on what we do best –

providing 21st century Connective Intelligence to our clients.

B Mophatlane

Chief executive officer


31/082013

32

thE PASt yEAR hAS SEEN BUSINESS CONNExION gAIN SIgNIFICANt MOMENtUM ON ItS jOURNEy tO EStABLIShINg ItSELF AS AFRICA’S LEADINg tEChNOLOgy gROUP.

FinAnciAL CHIEF

OFFICER’S REPORT

The focus on sustainable, organic growth, the group’s growth

strategy into the rest of Africa, strategic acquisitions focussing

on long-term sustainability, and cost containment has delivered

a solid set of results for 2013, with most indicators showing

an improvement.

Whilst we had great performances across the group’s divisions,

the Services division experienced reduced margins in the first

six months, following delays in the commencement of work

on a number of new contracts. In UCS, CEB Maintenance also

experienced client project delays.

FINANCIAL PERFORMANCEThe group continues to pursue its objectives of growing

sustainable earnings and in line with this, the group generated

diluted earnings per share (EPS) of 44,5 cents for the financial

year (2012: 37,2 cents) and diluted headline EPS for the year of

34,1 cents (2012: 38,8 cents).

On a normalised basis (excluding the adjustments reflected in

the table on page 34) diluted headline EPS would be 52,6 cents

(2012: 50,6 cents).

On the back of the improved profitability, return on equity

increased to 8,0% (2012: 7,1%) and return on total assets

remained flat at 9,2% (2012: 9,3%). Tangible return on equity

was 17.9% (2012: 13,8%).

Revenue grew by 5,9% to R6 173,3 million for the year. It should

be emphasised that the growth in revenue was mostly organic

as only 2,1% was attributable to the acquisition of Integr8 IT.

The group’s annuity revenue base remains intact with annuity

revenue at 53,6% of total revenue.

31 August 31 AugustR million 2013 2012

Revenue 6 173,3 5 829,6Cost of sales 4 305,1 3 996,1

Gross profit 1 868,2 1 833,5Gross profit margin (%) 30,3% 31,5%

Operating expenses 1 545,6 1 558,5

Operating profit 322,6 275,0Share of profits/(losses) from associates and jointly controlled entities 1,6 (0,5)

Operating profit before investment income 324,2 274,5Investment income 27,6 34,7

Profit before finance costs 351,8 309,2Finance costs 25,5 27,5

Profit before tax 326,3 281,7Taxation 93,3 85,6Non-controlling interests 53,9 46,8

Profit attributable to equity holders 179,1 149,3

Headline earnings 137,2 155,4

The Services division’s revenue grew by 7,7% for the year to

R2 149,3 million, compared to R1 996,2 million for the previous

year. The Services division remains the largest contributor to

group revenue at 34,8% of group revenue.

Content Distribution Solutions has been integrated into the

Communications business unit within the Services division,

thereby combining the metro and local Ethernet networks

with the group’s MPLS network. The segmental results for the

Services division have been restated to include the results of

Contact Distribution Solutions.


3331/082013

SEGMENTAL REvENUE ANALySIS31 August

2013

31 August

2012R’000 % R’000 %

Services division 2 149,3 34,8 1 996,2 34,2UCS division 1 170,9 19,0 1 093,2 18,8Canoa division 1 117,5 18,1 860,5 14,8Technology division 694,7 11,3 916,0 15,7International division 532,2 8,6 467,2 8,5Innovation division 508,7 8,2 496,5 8,0

6 173,3 100,0 5 829,6 100,00

copy to come

CFO Lawrence weitzman

The UCS division contributed R1 170,9 million to group

revenue with an operating profit of R100,4 million. Operating

margins in the UCS division were impacted by a restructure

in CEB Maintenance following client project delays and

the integration of a new cabling business at lower than

expected margins.

The Canoa division continued to perform with revenue growth

of 29,9%. The division contributed R1 117,5 million in revenue

and R116,1 million in operating profit.

This was driven by an increase in the volume of machines sold

and traction in Managed Print Solutions.

The refocus within the Technology division has generated

positive results with the division contributing R26,5 million

to operating profit for the year.

The International division has seen revenue growth of 13,9%

to R532,2 million for the year, whilst operating profit of

R11,1 million was achieved.

The Nigeria operations grew operating profit by 59,0% year-

on-year and exceeded budget expectations. Both Nigeria and

Kenya’s sales pipelines are looking very healthy.

The Innovation division increased revenue by 2,4% to

R508,5 million The division restored its operating margins

to acceptable levels with all business units performing well.

The performance of LARA and Nanoteq has been especially

pleasing.

The sale of the Q LINK business, for a significant premium, is

further evidence of the success of the strategy supporting the

creation of Innovation division three years ago.

As a result of the recent sale of the Q LINK business for

R187,5 million, the results for Q LINK are reflected as

discontinued operation.


31/082013

34

CHIEF

2013 2012R’000 % R’000 %

Operating profit as reported 322,6 5,2 275,0 4,7Amortisation of intangible assets relating to

the UCS assets, Canoa Group and Integr8 IT 52,6 49,2Fair value adjustment on Canoa Group

earn-out payment 26,2 26,2Fair value adjustment on “A” share buy-back 4,3Profit on sale of businesses (84,0) (4,6)Impairment of goodwill 40,1 4,9Impairment of investments 4,5

Normalised operating profit 361,8 5,9 355,2 6,1

Gross profit margins, at 30,3%, were down from the 31,5%

achieved for the year to August 2012, mainly as a result of

the reduced margins in the Services division.

Operating expenses continue to be well managed and

increased on a like-for-like basis (excluding the items listed

in the table below and the operating expenses brought in

with the acquisition Integr8 IT) by 0,5%.

The group recorded a normalised operating profit margin

of 5,9% (2012: 6,1%) following adjustments for a number of

items including:

• Amortisation charge of R52,6 million (2012: R49,2 million)

as a result of intangible assets created by the acquisition of

the UCS assets, Canoa Group and Integr8 IT and which are

amortised over their useful lives;

• A final earn-out payment of R26,2 million as a result of

Canoa Group exceeding profit targets. In terms of IFRS 3,

this payment is deemed to be a fair value adjustment of

a liability and was recorded through the Statement of

Comprehensive Income;

• A profit on sale of R84,0 million relating to the sale of the

Q Data Dynamique business to NorthgateArinso Africa

Proprietary Limited (formerly Arinso SA Proprietary Limited)

in exchange for 50% in the share capital of NorthgateArinso

Africa;

• An impairment of goodwill of R35,2 million from the sale

of the Learning Solutions division to ATIO’s Netcampus

Proprietary Limited (Netcampus), in exchange for 50%

plus 1 share of the share capital of Netcampus; and

• A fair value adjustment of R4,3 million recorded through

the Statement of Comprehensive Income as a result

of the repurchase of 25 033 334 BCX "A" shares and

the consequent delisting of all the remaining "A" Shares

post year-end. The “A” Shares are treated as a liability

for accounting purposes.


3531/082013

CONTINUESFinAnciAL OFFICER’S REPORT

SHARE OF PROFITS FROM jOINTLy CONTROLLED ENTITIESThe recently completed merger with NorthgateArinso

has strengthened BCX’s HR Business Process Outsourcing

capability and provides a niche entry into African markets. As

Business Connexion owns 50% of the issued share capital in

NorthgateArinso Africa the results are equity accounted.

TAxATIONThe effective tax rate for the group was 28,6% for the year.

The big movements in the group’s tax line are primarily as

a result of the reversal of the overprovision for capital gains

tax of R30,3 million on the sale of Destiny e-Commerce to

VeriFone in the previous financial year, partially offset by STC

of R21,9 million.

STATEMENT OF FINANCIAL POSITION31 August 31 August

2013

R’000

2012

R’000

Property, plant and equipment 480,6 442,0Goodwill and intangibles 1 043,8 930,2Other non-current assets 394,4 306,0Current assets (excluding cash) 1 823,7 1 493,4Cash and cash equivalents 196,8 443,9

Total assets 3 939,3 3 615,5

Shareholders’ equity 2 232,2 2 105,7Non-controlling interests 168,6 95,8Non-current liabilities 306,1 237,7Current liabilities 1 232,4 1 176,3

Total equity and liabilities 3 939,3 3 615,5

Key elements of the statement of financial position include the

following:

PROPERTy, PLANT AND EqUIPMENT AND INTANGIBLE ASSETSAdditions to property plant and equipment for the period

amounted to R264,9 million. R207,0 million was spent on

income generating assets. Capital expenditure in the current

year emanated predominantly from the group’s data centre

requirements, the roll out of our public cloud offering, both

in South Africa and Nigeria, the new platform for our private

cloud offering and the conversion of the LARA e-Venus product

set to Java.

GOODwILLGoodwill increased by R72,2 million following the acquisition

of Integr8 IT Proprietary Limited effective 1 February 2013 and

by R32,9 million from the transaction with Netcampus effective

1 April 2013.

The increase in goodwill was partially offset by the impairment

of goodwill relating to SiloFX Enterprise Integrators (“SiloFX”)

of R4,9 million as well as R35,2 million on Netcampus.

BCX is impairing the goodwill created on SiloFX over 3 years

as its contracts come to an end after this period.

Amortisation of the intangible assets created through the

acquisition of the UCS assets, Canoa Group, Netcampus and

Integr8 IT amounted to R52,6 million for the year.

wORKING CAPITAL MANAGEMENTWorking capital management remains a key focus area within

the group.

The key moves in working capital include:

Trade receivablesThe group has made good progress in collecting debts from

local municipalities. Average debtor days on the whole book

increased to 57,1 days from 54,6 days in 2012.

The profile of trade receivables was as follows:

Other working capital balances remained at similar levels

to 2012.

Unfortunately 31 August fell on a Saturday this year and a

number of the group’s clients only paid their outstanding

amounts on the following Monday. R66,2 million was collected

in the first week of the new financial year.

TRADE RECEIVABLES

0

400

600

800

1 000

1 200

1 400

Feb2011

Aug2011

Feb 2012

Aug2012

Feb2013

Aug2013

200

>60 days 31 – 60 days 1 – 30 days Current


31/082013

36

Cash movementThe group continues to generate healthy cash flows with cash

generated from operations of R527,7 million, before working

capital changes.

Capital expenditure, dividends, payments in respect of

Canoa profit warrantees, the Integr8 IT acquisition, and the

deterioration in working capital all contributed to the reduction

in cash reserves.

31 August 31 August2013

R’000

2012

R’000

Operating cash flows 527,7 520,8Working capital changes (220,0) (30,5)Capital expenditure (264,9) (205,6)Acquisition of subsidiaries (83,1) (10,8)Other (37,1) (31,7)

(77,4) 242,2Taxation paid (89,6) (101,4)Dividend paid – ordinary (80,1) (55,8)

Decrease/increase in cash

before special dividend (247,1) 85,0Dividend paid – special (159,4)

Decrease in cash (247,1) (74,4)

CORPORATE ACTIvITy Effective 1 April 2013, the group concluded a transaction to

sell, as a going concern, its Learning Solutions division to ATIO’s

Netcampus Proprietary Limited (Netcampus), in exchange for

50% plus 1 share of the ordinary shares of Netcampus.

Effective 11 July 2013, the group concluded a transaction to

sell, as a going concern, its QDD business to NorthgateArinso

Africa Proprietary Limited in exchange for 50% of the ordinary

shares in NorthgateArinso Africa. NorthgateArinso Africa forms

part of the NorthgateArinso group, which is a leading global

human resources software and services provider offering

human resources business solutions to employers of all sizes,

including Global Fortune® 500 companies and public sector

organisations.

Effective 1 September 2013, the Group entered into an

agreement to dispose of its entire interest in the Q LINK

business unit to Summit Garnishee Solutions Proprietary

Limited (SGS) as a going concern for a cash consideration

of R187.5 million. SGS is a privately-owned company that

is not a related party to the Group. The consideration was

settled in full on the date that the last suspensive condition

was fulfilled.

Effective 8 October 2013, the transaction to repurchase, by

way of a scheme of arrangement, 25 033 334 BCX "A" ordinary

shares, and the consequent delisting of all the remaining

"A" Shares, was successfully implemented.

DIvIDENDSThe group continues to pay a normal dividend based on a

dividend cover of between 2,5 and 3 times normalised earnings.

In line with this dividend policy, the group has kept its dividend

at 20 cents per share.

FinAnciAL CHIEF

OFFICER’S REPORT CONTINUED


3731/082013

OUTLOOK FOR 2014The focus on sustainable, organic growth, the group’s growth

strategy into the rest of Africa, strategic acquisitions focusing

on long-term sustainability, and the continuous focus on

cost containment has provided a solid base for driving higher

returns. We remain committed in achieving our medium-term

return on equity target of 17%.

Internal group-wide optimization and cross-selling projects will

continue to enhance cost efficiencies and leverage synergies

emanating from the acquisitions made by the group over the

past few years.

In conclusion a big thank you to my shared services team for

your never ending efforts and support.

Lawrence weitzman

Chief financial officer


31/082013

38

HISTORYEight-yEARGROUP

31 August 31 August 31 August 31 August 31 August 31 August 31 May 31 May 31 May2013 2013 2012 2011 2010 2009 2008 2007 2006

8 yr CAGR 12 months 12 months 12 months 12 months 15 months 12 months 12 months 12 monthsR’000 % Actual Actual Actual Actual Actual Actual Actual Actual

Statement of comprehensive incomeRevenue 8,5 6 173 339 5 829 644 4 314 181 4 059 979 5 496 127 4 118 534 3 551 125 3 207 679 Cost of sales 8,6 4 305 127 3 996 112 2 979 118 2 899 924 4 036 713 3 030 566 2 536 463 2 229 381

Gross profit 1 868 212 1 833 532 1 335 063 1 160 055 1 459 414 1 087 968 1 014 662 978 298 Operating costs 8,3 1 545 587 1 558 507 1 177 391 962 767 1 326 811 923 972 846 486 816 228

Operating profit 9,0 322 625 275 025 157 672 197 288 132 603 163 996 168 176 162 070 Share of profits/(losses) from jointly controlled entities and associates 1 553 (495) (217) (2 231) Net investment income 2 080 7 211 9 253 27 098 52 369 48 889 33 343 21 942

Profit before tax 7,4 326 258 281 741 166 708 222 155 184 972 212 885 201 519 184 012 Tax 93 263 85 618 64 400 76 087 80 256 84 811 34 232 46 040 Non-controlling interest 53 846 46 806 9 721 22 821 2 216 13 373 30 397 21 649

Attributable profit 5,5 119 384 149 317 92 587 123 247 106 932 114 701 136 890 116 323

Depreciation 185 221 152 297 119 384 87 473 121 731 81 907 75 997 48 707 Amortisation 52 627 84 627 43 569 25 394 28 191 22 665 35 975 21 854

EBITDA 560 473 511 949 320 625 310 155 282 525 268 568 280 148 232 631 EBITDA % 9,1 8,8 7,4 7,6 5,1 6,5 7,9 7,3OP % 5,2 4,7 3,7 4,9 2,4 4,0 4,7 5,1

Statement of financial positionNon-current assets: other 10,5 1 123 074 949 076 895 130 696 429 717 627 733 296 564 527 500 367 Non-current assets: intangible 27,8 795 688 729 108 766 666 145 575 145 575 154 093 112 505 113 505 Current assets excluding cash 7,4 1 823 757 1 493 459 1 502 748 1 256 265 1 141 320 1 165 034 1 046 786 1 032 514 Cash (15,3) 196 771 443 930 518 308 358 823 333 431 524 272 585 843 743 307

Total assets 6,4 3 939 290 3 615 573 3 682 852 2 457 092 2 337 953 2 576 695 2 309 661 2 389 693

Equity 7,8 2 400 844 2 201 585 2 193 043 1 550 643 1 418 393 1 526 813 1 460 006 1 317 159 Long term liabilities 8,8 306 066 237 685 319 526 40 760 41 321 117 970 157 021 155 365 Total current liabilities 3,8 1 232 380 1 176 303 1 170 283 865 689 878 239 931 912 692 634 917 169

Total equity and liabilities 6,4 3 939 290 3 615 573 3 682 852 2 457 092 2 337 953 1 576 695 2 309 661 2 389 693

working CapitalInventories 191 998 197 901 178 939 138 172 189 579 110 162 95 144 49 596 Trade receivables 1 189 785 971 334 970 084 771 394 686 274 840 243 746 851 544 573 Trade payables (554 208) (425 323) (457 128) (318 250) (231 249) (349 627) (311 035) (217 584) Other receivables 297 858 239 034 250 604 242 282 166 676 118 865 110 745 106 307 Other payables (580 011) (647 565) (622 384) (478 965) (564 775) (491 861) (337 982) (468 852)

545 422 335 381 320 115 354 633 246 505 227 782 303 723 14 040

Financial ratiosReturn on total equity (%) 8,0 7,1 4,3 8,0 6,8 7,5 6,7 8,6Return on total assets (%) 9,2 9,3 5,3 10,4 7,4 8,9 10,5 10,7Equity to total liabilities (%) 156,1 155,7 147,2 171,1 154,2 145,4 171,8 122,8Gross profit margin (%) 30,3 31,5 30,9 28,6 26,6 26,4 28,6 30,5Operating profit margin (%) 5,2 4,7 3,7 4,9 2,4 4,0 4,7 5,1Average debtor’s days (%) 57,5 54,6 65,5 58,6 57,3 63,5 59,7 55,4 Net asset value per share (cents) 551,2 520,0 529,6 508,4 540,1 581,3 555,9 501,5 Tangible net asset value per share (cents) 354,7 339,9 336,4 460,1 483,6 520,8 511,4 452,7

Share PerformanceWeighted average number of shares (000) 400 570 398 550 331 689 260 854 257 300 254 806 251 601 247 867 Diluted weighted average number of shares (000) 402 602 401 097 335 172 307 636 261 082 259 577 260 327 260 758 Basic earnings per share (cents) 44,7 37,5 27,9 47,2 41,6 45,0 54,4 46,9 Diluted earnings per share (cents) 44,5 37,2 27,6 40,1 41,0 44,2 52,6 44,6Headline earnings per share (cents) 34,2 39,0 17,3 47,6 37,5 45,1 38,8 45,6Diluted headline earnings per share (cents) 34,1 38,8 17,2 40,3 36,9 44,3 37,5 43,3Shares in issue at period end (000) 404 972 404 972 404 972 303 729 262 637 262 637 262 637 262 637 “A” shares in issue 100 133 100 133 100 133 75 100 Share price – ordinary (cents) 516 485 520 552 450 535 760 830Share price – “A” shares (cents) 95 71 70Normal dividend per share (cents) 20 14 23 18 18 15 15 20Special dividend per share (cents) 40 60 17


3931/082013

31 August 31 August 31 August 31 August 31 August 31 August 31 May 31 May 31 May2013 2013 2012 2011 2010 2009 2008 2007 2006

8 yr CAGR 12 months 12 months 12 months 12 months 15 months 12 months 12 months 12 monthsR’000 % Actual Actual Actual Actual Actual Actual Actual Actual

Statement of comprehensive incomeRevenue 8,5 6 173 339 5 829 644 4 314 181 4 059 979 5 496 127 4 118 534 3 551 125 3 207 679 Cost of sales 8,6 4 305 127 3 996 112 2 979 118 2 899 924 4 036 713 3 030 566 2 536 463 2 229 381

Gross profit 1 868 212 1 833 532 1 335 063 1 160 055 1 459 414 1 087 968 1 014 662 978 298 Operating costs 8,3 1 545 587 1 558 507 1 177 391 962 767 1 326 811 923 972 846 486 816 228

Operating profit 9,0 322 625 275 025 157 672 197 288 132 603 163 996 168 176 162 070 Share of profits/(losses) from jointly controlled entities and associates 1 553 (495) (217) (2 231) Net investment income 2 080 7 211 9 253 27 098 52 369 48 889 33 343 21 942

Profit before tax 7,4 326 258 281 741 166 708 222 155 184 972 212 885 201 519 184 012 Tax 93 263 85 618 64 400 76 087 80 256 84 811 34 232 46 040 Non-controlling interest 53 846 46 806 9 721 22 821 2 216 13 373 30 397 21 649

Attributable profit 5,5 119 384 149 317 92 587 123 247 106 932 114 701 136 890 116 323

Depreciation 185 221 152 297 119 384 87 473 121 731 81 907 75 997 48 707 Amortisation 52 627 84 627 43 569 25 394 28 191 22 665 35 975 21 854

EBITDA 560 473 511 949 320 625 310 155 282 525 268 568 280 148 232 631 EBITDA % 9,1 8,8 7,4 7,6 5,1 6,5 7,9 7,3OP % 5,2 4,7 3,7 4,9 2,4 4,0 4,7 5,1

Statement of financial positionNon-current assets: other 10,5 1 123 074 949 076 895 130 696 429 717 627 733 296 564 527 500 367 Non-current assets: intangible 27,8 795 688 729 108 766 666 145 575 145 575 154 093 112 505 113 505 Current assets excluding cash 7,4 1 823 757 1 493 459 1 502 748 1 256 265 1 141 320 1 165 034 1 046 786 1 032 514 Cash (15,3) 196 771 443 930 518 308 358 823 333 431 524 272 585 843 743 307

Total assets 6,4 3 939 290 3 615 573 3 682 852 2 457 092 2 337 953 2 576 695 2 309 661 2 389 693

Equity 7,8 2 400 844 2 201 585 2 193 043 1 550 643 1 418 393 1 526 813 1 460 006 1 317 159 Long term liabilities 8,8 306 066 237 685 319 526 40 760 41 321 117 970 157 021 155 365 Total current liabilities 3,8 1 232 380 1 176 303 1 170 283 865 689 878 239 931 912 692 634 917 169

Total equity and liabilities 6,4 3 939 290 3 615 573 3 682 852 2 457 092 2 337 953 1 576 695 2 309 661 2 389 693

working CapitalInventories 191 998 197 901 178 939 138 172 189 579 110 162 95 144 49 596 Trade receivables 1 189 785 971 334 970 084 771 394 686 274 840 243 746 851 544 573 Trade payables (554 208) (425 323) (457 128) (318 250) (231 249) (349 627) (311 035) (217 584) Other receivables 297 858 239 034 250 604 242 282 166 676 118 865 110 745 106 307 Other payables (580 011) (647 565) (622 384) (478 965) (564 775) (491 861) (337 982) (468 852)

545 422 335 381 320 115 354 633 246 505 227 782 303 723 14 040

Financial ratiosReturn on total equity (%) 8,0 7,1 4,3 8,0 6,8 7,5 6,7 8,6Return on total assets (%) 9,2 9,3 5,3 10,4 7,4 8,9 10,5 10,7Equity to total liabilities (%) 156,1 155,7 147,2 171,1 154,2 145,4 171,8 122,8Gross profit margin (%) 30,3 31,5 30,9 28,6 26,6 26,4 28,6 30,5Operating profit margin (%) 5,2 4,7 3,7 4,9 2,4 4,0 4,7 5,1Average debtor’s days (%) 57,5 54,6 65,5 58,6 57,3 63,5 59,7 55,4 Net asset value per share (cents) 551,2 520,0 529,6 508,4 540,1 581,3 555,9 501,5 Tangible net asset value per share (cents) 354,7 339,9 336,4 460,1 483,6 520,8 511,4 452,7

Share PerformanceWeighted average number of shares (000) 400 570 398 550 331 689 260 854 257 300 254 806 251 601 247 867 Diluted weighted average number of shares (000) 402 602 401 097 335 172 307 636 261 082 259 577 260 327 260 758 Basic earnings per share (cents) 44,7 37,5 27,9 47,2 41,6 45,0 54,4 46,9 Diluted earnings per share (cents) 44,5 37,2 27,6 40,1 41,0 44,2 52,6 44,6Headline earnings per share (cents) 34,2 39,0 17,3 47,6 37,5 45,1 38,8 45,6Diluted headline earnings per share (cents) 34,1 38,8 17,2 40,3 36,9 44,3 37,5 43,3Shares in issue at period end (000) 404 972 404 972 404 972 303 729 262 637 262 637 262 637 262 637 “A” shares in issue 100 133 100 133 100 133 75 100 Share price – ordinary (cents) 516 485 520 552 450 535 760 830Share price – “A” shares (cents) 95 71 70Normal dividend per share (cents) 20 14 23 18 18 15 15 20Special dividend per share (cents) 40 60 17

for periods ended 31 August and 31 May


31/082013

40

STATEMENTVALUE-AddEd

31 August 31 August2013 2012

Notes R’000 % R’000 %

Revenue 6 173 399 5 829 644 Cost of services and products 3 117 214 3 184 859

Value added 3 056 185 97,3 2 644 790 99,7Investment income 27 565 0,9 34 695 1,3Fair value adjustment and profit on sale of business 57 814 1,8 (26 185) (1,0)

Total wealth created 3 141 564 100 2 653 300 100

Distributed as follows:Employees– Employees costs 1 2 645 042 83,8 2 257 668 85,1Providers of capital– Financial costs 25 485 0,8 27 484 1,0Governments 2 138 363 4,9 170 768 6,4Retained in the group for future growth 332 674 10,5 197 380 7,4

– Depreciation and amortisation 238 364 7,6 236 924 8,9– Profit attributable to equity holders 179 149 5,7 149 317 5,6– Dividend paid (80 115) (2,5) (215 215) (8,1)– Foreign currency translation reserve 13 100 0,4 5 894 0,2– Deferred tax movement (17 824) (0,6) 20 460 0,8

Total wealth distributed 3 141 564 100,0 2 653 300 100,0

value-added ratiosAverage number of employees 6 788 6 548 Revenue per employee (R’000) 909 890 Wealth created per employee (R’000) 463 405


4131/082013

31 August 31 August2013 2012

Notes R’000 R’000

1. Employee costsPaid to employees 2 509 667 2 124 067Contributions paid on behalf of employees 135 375 133 601

2 645 042 2 257 668

2. GovernmentsTax 93 754 105 505 Skills development levies 16 448 15 123Rates and taxes paid to local authorities 3 154 4 603 Customs duties, import surcharges and excise taxes 25 007 45 537

138 363 170 768

South African government 128 596 161 655 Other governments 9 767 9 114

138 363 170 768

3. Additional amounts collected on behalf of governmentsValue added tax 438 937 372 446 Employee tax deducted from remuneration paid 555 484 498 490

994 421 870 936

South African government 944 126 832 558Other governments 50 296 38 378

994 421 870 936

Donations and community investments 4 446 4 858

COMMENTARyTotal revenue for the 12 months ended 31 August 2013 amounted to R6 173,3 million. The cost of sold services and products

amounted to R3 117,2 million. After interest income and the fair value adjustment relating to the acquisition of Canoa Group Holdings

and the profit on sale of Q Data Dynamique, wealth created amounted to R3 141,6 million. This created wealth was distributed to

employees in the form of salaries amounting to R2 645,0 million, interest on borrowed funds of R25,5 million and taxes paid to

governments of R138,4 million.

The balance of R332,7 million has been reinvested in the business for future growth.


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42

SERVicESOPERATIONAL REVIEW

DIVISION

Revenue

R2 149,3 miLLion34,8% oF gRoUP REVEnUE

34,8%

The Business Connexion Services division offers a full range of ICT infrastructure and professional services. The majority of the infrastructure service offerings are delivered through state of the art data centres in Africa.

Divisional revenue grew by 7,7% to R2149,3 million (2012: R1 996,2 million). The growth in revenue was achieved predominantly through the division’s application development business unit. Profitability was negatively impacted by delays in transitioning a number of new contracts in the first half of the year.

Although a challenging year for the Services division, the division continues to successfully retain key outsourcing contracts as well as secure strategic new clients based on our unique service offering. The division’s regional footprint has expanded as a direct result of growth in the Public Sector and in both the Industrial and Commercial sectors.

The division is built on an innovative, knowledgeable, driven, agile and diverse team of people. These attributes are key to enable delivery of standardised service offerings as well as allowing for the flexibility to design client specific requirements from traditional ICT services to complete enterprise services. Our clients benefit from an enhanced level of business performance, enriched information application, and flexible information technology.

The division has maintained the Tier IV status for the Midrand data centres validating that it is fully compliant with the best practise international design guidelines for high availability. The most recent Frost and Sullivan Market Share report reflects the group retaining 27% of the South African data centre market with the nearest competitors at 16%.

Business Connexion is a leader in Cloud Computing, both nationally and across the African continent, offering next generation cloud services, incorporating a highly secure and agile environment, capable of delivering solutions to a wide range of business requirements. The cloud portfolio has expanded, with the division now offering private cloud solutions and cloud service brokering offerings.

The Services division continues to focus on providing its clients with exceptional service delivery and was awarded the best Governance, risk and compliance team at the itSME SA Service Management Exhibition (SMEXA) awards.

Microsoft remains an essential part of the Services division and the Microsoft Lifecycle Management team was awarded the Microsoft Software Asset Management Partner award for 2013, which recognises the innovative solutions delivered to meet client needs.

The application development team has extensive capability to develop applications and mobile solutions for the various platforms and devices that are deployed in the cloud. The solutions that have been developed have added considerable value to our client’s business and have

31 August

2013

R’million

31 August

2012

R’million

Growth

%

% of

total

Revenue R2 149,3 R1 996,2 7,7 34,8Operating profit R157,6 R191,0 (17,5) 48,9Operating margin 7,3% 9,6%


4331/082013

modernised their application portfolios to take advantage of new technologies. These unique integrated solutions assist clients to build systems that enable them to enhance and grow, their business. BMI-TechKnowledge has confirmed that Business Connexion has 22% market share in application development, which has increased by 2% from the prior year. The business units’ expertise in this space was further recognised when the unit was awarded the best Microsoft mobile App at the 2013 MTN Awards which follows on the prior year best android application.

The Industrial Solutions business unit continues to provide scalable and reliable Industrial IT environments. Our quality automation and Manufacturing Execution Systems (MES) solutions focus on optimisation of plant processes which are essential in the business areas such as production, maintenance, quality and inventory. The business unit was awarded the Best Scada/HMI implementation for 2012 and was a runner up in the Top System integrator of the year.

The Security division offers a comprehensive information security services portfolio including cloud services with a highly skilled local capability aligned to international best practice and certifications.

For further details on the services offered by the Services division refer to the Corporate profile on pages 4 to 7.


31/082013

44

Revenue

R1 170,9 miLLion18,9% oF gRoUP REVEnUE

18,9%

31 August

2013

R’million

31 August

2012

R’million

Growth

%

% of

total

Revenue R1 170,9 R1 093,2 7,1 18,9Operating profit R100,4 R116,9 (14,1) 31,1Operating margin 8,6% 10,7%

Business Connexion, through its UCS and Services divisions is the dominant IT Services player in the retail industry sector in sub-Saharan Africa.

A significant highlight during the year was the successful conclusion of the acquisition by the group of 100% of Integr8 IT Proprietary Limited effective 1 February 2013, through its subsidiary UCS Solutions.

A further milestone was the acquisition of 50% plus 1 share in the ordinary shares of Netcampus Proprietary Limited. The transaction, effective 1 April 2013, comprised the sale of Business Connexion’s Learning Solutions business to ATIO’s Netcampus in exchange for the controlling stake in Netcampus Proprietary Limited.

The UCS assets comprising UCS Solutions Proprietary Limited, UCS Technology Services Proprietary Limited and CEB Maintenance Africa Proprietary Limited, have been integrated into the Business Connexion group and continue to maximise synergies that existed between the divisions and companies.

The UCS division has established itself as a provider of:• in-store IT maintenance services, specialising in point of sale

(POS) systems for the retail industry;• end user device support services;• ERP, Switching and In-Store application support;• infrastructure managed services to retailers and mid-tier

services to multiple industry verticals;• retail business consulting; and• training.

The UCS division offers a full range of ICT infrastructure services targeted to meet Tier-1 Retail and Tier-2 IT services requirements through its leveraged Infrastructure hosting and services platform.

The division has extensive services and product offerings and an experienced leadership team. Its established track record is supported by a strong annuity revenue base.

The affiliation of the UCS division with other Business Connexion divisions has allowed significant cross selling opportunities and optimisation of costs to enhance the competitiveness of the division’s service and product offerings to its clients.

UCS Solutions specialises in the provision of outsourced application hosting services, integrated service management services, SAP and JDA application software services as well as strategic and optimisation consulting services for Tier 1 and Tier 2 retailers.

CEB Maintenance is South Africa’s largest specialist point-of-sale (POS) maintenance and support service provider providing POS installations, support, on-site maintenance, repair, logistics, procurement and depot servicing of all major POS brands both on proprietary and open systems. In addition to these retail services, CEB provides cabling services.

UcSOPERATIONAL REVIEW

DIVISION


4531/082013

UCS Technology Services provides in-store solutions and POS application support for the fuel, clothing, pharmacy, building supplies, cellular, FMCG and furniture verticals.

Integr8 IT has a highly leveraged infrastructure which includes remote management of distributed infrastructure, providing Tier-2 Managed Services for any industry vertical. Intergr8’s key IP has been built into its Nerve Centre®, which underpins all service management. This includes “self healing” routines, intelligent management and real time remediation of distributed infrastructure (servers, network devices, desktops).

Aligning the UCS division’s businesses creates a complimentary platform of services which can provide mature, cost effective services to markets not historically serviced by Business Connexion and at the same time broadens the UCS divisions’ historic focus on the retail vertical.

It is expected that Integr8 IT will enhance the group’s ability to win ICT managed services market share in the public sector and in Africa and will complement the services provided by CEB Maintenance and UCS Technology Services.

Netcampus provides holistic learning solutions to multiple industry verticals. Netcampus’ Blended Learning Solution comprises four key methodologies; e-Learning, Collaborative Learning, Live Learning and Classroom Learning. Utilising these methodologies and its e-learning platform, Netcampus is well positioned to provide organisations with tailor-made training that caters for their specific needs.

Netcampus provides learning consulting services, SAP training material development and end-user training. It has a Learning Centre for Microsoft, Cisco, Project Management (PMBok), CompTia, Adobe, Adult Basic Education Training, SoftSkills, Business Professional Certifications, Novell, Linux and custom developed courses. It is SETA accredited, a Microsoft training partner and a SAP education partner.

The UCS division will continue to track the maturity of South African retailers focussing on the retail value chain, client analytics, supply chain management, mobile solution offerings and disaster recovery, while diversifying, through Integr8 IT, into mid-tier managed services for all industry verticals. The division aims to partner with its multinational clients to enable client expansion using its world class solutions at mid-tier prices perfectly suited to Africa.

In line with the group’s overall strategy of expansion into Africa the division is focusing research into the African market to enable growth opportunities. In addition, ongoing research will focus on identifying new POS solution offerings so as to remain “best-of-breed” and retain market dominance.


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46

OPERATIONAL REVIEW

18,1%

DIVIS IONcAnoA

Revenue

R117,5 miLLion18,1% oF gRoUP REVEnUE

31 August

2013

R’million

31 August

2012

R’million

Growth

%

% of

total

Revenue R1 117,5 R860,5 29,9 18,1Operating profit R116.1 R106,5 9,0 36,0Operating margin 10,4% 12,4%

Business Connexion’s investment in the Canoa Group has fulfilled its strategic intent to simplify the information and communications technology workspace for its clients by converging the previously distinct areas of content, printing, telecommunications and information technology.

Key strategic success factors highlighted for the division include:• Regional, multinational and global consistent delivery,

refers to uniformity of products, services, and pricing; standardised training of sales and support personnel; seamless infrastructure for ongoing client management; and globally integrated sales force and billing at regional and global levels.

• Professional services capabilities around both horizontal and industry specific document processes means having the business process and vertical expertise to understand a client’s pain points and then design the best combination of technology and services to meet real client requirements.

• Support for an indirect channel includes training, business development, and marketing support in addition to the products and services portfolio.

• Offerings beyond fleet management and the office include management of production print facilities and the commercial purchase of print.

• Technology solutions to address a range of clients’ security requirements extend to mobile and remote workers.

• IT management capabilities and partnerships provide access to a broader client base.

The company operates in a highly competitive price sensitive environment. Traditionally the company’s strength has been in the SME market but with the advent of the Business Connexion transaction and the IT channel, more corporate business is being done.

The market is changing considerably with the big manufacturers placing more emphasis on growth in the colour and higher volume copy, print and imaging units and the smaller manufacturers competing for the high volume low margin business. World trends are showing that the dominant players are finding it increasingly difficult to maintain profitability in the print market. With this mind the Canoa division is focusing on African expansion and public sector penetration.

The Canoa Group, for the past 27 years, has exclusive distribution rights for Canon copy, print and imaging solutions in Southern Africa. Its diversified distribution channel supports growth in annuity revenue through spares and consumables across its large installed client base.

The group also has multibrand “break and fix” service companies offering cost effective print solutions with a presence in all major cities of the country. These services are predominately performed on 3 to 5 year contracts on a cost per copy basis.

Managed Print Solutions (MPS) is considered an important and growing area within the ICT workspace. These services are an integral component of Business Connexion’s managed solutions portfolio. The service comprises a cost per page commercial model, proactive maintenance of the equipment fleet and on-going optimisation of the environment throughout the contract life. The corporate MPS space continues to be a highly competitive market, but the group has managed to secure a healthy pipeline with solid learning experiences contributing to refined solution offerings to enhance profitability.

While the Canoa division is a Canon importer, Business Connexion will remain vendor-agnostic, providing solutions from a range of manufacturers to meet the needs of its many clients across Southern Africa and beyond. This acquisition established the largest, brand-independent managed print solutions organisation in Africa with over 600 certified support engineers. Together with CEB Maintenance and Business Connexion Onsite Connect, it uniquely positions Business Connexion to deliver holistic, cost-effective managed print solutions.


31/082013

47

OPERATIONAL REVIEW

11,3%

Revenue


31 August

2013

R’million

31 August

2012

R’million

Growth

%

% of

total

Revenue R694,7 R916,0 (24,2) 11,3Operating profit R26,5 R3,3 >100 8,2Operating margin 3,8% 0,4%

D IV IS IONtEchnoLogy

The Technology division specialises in designing innovative infrastructure solutions to assist business to drive increased productivity and maximise efficiency, in both private enterprise and the public sector.

The successful refocus within the Technology division which was initiated in the prior financial year has generated positive results with the division increasing profitability and contributing R26,5 million (2012: R3,3 million) to operating profit.

The refocus of the division was directed at the following core responsibilities:• Sourcing• Solutioning• Financing• Support

Sourcing is the ability to establish relationships with the principals of leading technologies at the best price, highest possible accreditation and most efficient time-to-delivery models.

Solutioning is the ability to architect and design core infrastructure solutions with the best and most experienced skills around selected technologies. The group’s accreditation with leading global technology partners and suppliers such as Cisco Systems, EMC2, HP, IBM, VMware and Oracle is testament to the group’s skills level.

Financing is the capability to offer selected technologies to the client in the most attractive form that fits their commercial and operating models.

Support is the ability within the division to support the client base with the installation and maintenance of the solutions that have been procured from Business Connexion over the useful life of the products. This support is provided with the highest skills and certifications, required by the technology vendors, to be accredited as a support and maintenance partner.

The division is aligning with the changing IT market and positioning itself to best serve the interests of the group. It is mandatory that all technology be procured through the Technology division. Further, in an effort to avoid the impact of competing brands and products between divisions the division is also the only entry point for all technology into the group.

Within the IT market, outsourcing activity is expected to continue to account for the largest portion of the total IT spend and also reflects the fastest growth rate over a five-year forecast period. IT expenditure will transition towards a services-based model as software and hardware products become increasingly commoditised, resulting in services providing the only means of differentiation for many vendors. Further, as the cost of hardware declines, software expenditure, which is more stable in terms of pricing, will account for a greater portion of total spend in the IT market.

By focusing on Sourcing, Solutioning, Financing and Support the Technology division can be viewed as the design, build, optimise and maintain segment of the group. It is through technology infrastructure provided by this division that the group is able to drive comprehensive, value-adding, client-specific, affordable solution offerings.


31/082013

48

Revenue


8,6%

With a population of one billion people in 54 countries, the African continent presents a key growth opportunity for the group. The International division is responsible for capturing that growth on the continent and beyond. Business Connexion’s international business comprises the group’s seven subsidiaries namely:

• BCX Kenya Limited

• Business Connexion Mozambique Limitada

• Business Connexion Namibia Proprietary Limited

• Business Connexion ICT Services Limited

• Business Connexion Tanzania Limited

• Business Connexion Zambia Limited

• Business Connexion Limited (United Kingdom)

In addition to the group’s legal entities listed above the group has points of presence in Botswana and the United Arab Emirates and it has established a partner network to cover most of the African countries where it currently does not have a presence. The group has also entered negotiations to acquire an operation in Botswana and a further business in Nigeria.

By taking the group’s Technology, Services, Innovation, UCS and Canoa divisions’ offerings to the global market the International division will drive the group’s key growth strategy of achieving 30% of the group’s earnings from outside South Africa by 2016.

Revenue in Business Connexion ICT Services Limited (Nigeria) has grown 65,8% with corresponding operating profit growth of 59,8%. The management team has a keen focus on existing client engagements, building opportunity pipelines and discipline within the company’s operations enabling the company to capitalise on opportunities the Nigerian market offers as well as extending their solution offerings to neighbouring countries where their key clients, and other group clients, have operations.

Business Connexion Namibia and Business Connexion Limited (UK) are both stable entities. The Namibian business maintained its revenue but improved profitability significantly with an increase in operating profit.

Despite the tough economic conditions in Europe the UK business has managed to retain and renew key client contracts. Significant steps have been taken to continually identify cost saving opportunities for the UK market.

Business Connexion Zambia remains a strong participant in the market with good contracts in the public, mining and private sector. Following the national elections in 2012 the political risk profile has reduced. Despite the above the company produced marginal results with a small profit. However, a strong pipeline of opportunities has been carried through to the 2014 financial year with significant wins registered in first quarter.

intERnAtionALOPERATIONAL REVIEW

DIVISION31 August

2013

R’million

31 August

2012

R’million

Growth

%

% of

total

Revenue R532,2 R467,2 13,9 8,6Operating profit R11,1 R11,7 (5,0) 3,4Operating margin 2,1% 2,5%


4931/082013

Business Connexion Tanzania has positioned itself as the only Payment System Infrastructure Service Provider in Tanzania with a secure annuity revenue base. Its data centre services are gaining significant momentum. The International division, with its presence in both Kenya and Tanzania, is well positioned to take advantage of business opportunities in the growing East Africa Community where local governments are encouraging foreign investment through government incentive policies.

BCx Kenya has invested heavily in building client relationships and conducting feasibility studies in support of the group’s data centre investment in the region. Despite this business uptake has been slow. That said, the opportunity pipeline and Business Connexion’s’ reputation in the Kenyan market have seen major client wins in both the private and public sector in the first quarter of 2014.

A key focus for Business Connexion Mozamibique Limitada has been to stabilize the business. The rapid growth and expansion of the Mozambican economy in the north of the country has shown significant growth opportunities but also highlighted the shortage of technical skills and the strain on the company’s operating infrastructure. The focus on stabilising the business in Mozambique resulted in an improvement in operating profit of 150%.

Although the African penetration has been considered slow, the past three years have shown a significant turnaround in the International division from returning operating losses to making a significant profit in the current year. The division’s focus on positioning its operating structures and its resources to operate in the divergent and challenging African market are now showing positive financial returns.


31/082013

50

Revenue


8,2%

DIVIS IONinnoVAtionOPERATIONAL REVIEW

31 August

2013

R’million

31 August

2012

R’million

Growth

%

% of

total

Revenue R508,7 R496,5 2,4 8,2Operating profit R93,6 R67,6 38,5 29,0Operating margin 18,4% 13,6%

With business and ICT together developing at lightning pace, the Innovation division focuses on taking the group and its solutions into the future. The primary activities of the Innovation division are centred on software or packaged intellectual property.

The Innovation division comprises six business units:• Accsys • Persal• LARA • Q Data Dynamique (QDD)• Nanoteq • Q LINK

The division increased revenue by 2,4% to R508,7 million following good growth in its Q LINK, LARA, Persal and Nanoteq business units.

Effective 11 July 2013, the group concluded a transaction to sell, as a going concern, its QDD business to Arinso SA Proprietary Limited (Arinso SA), in exchange for 50% of the ordinary shares in Arinso SA. Arinso SA forms part of the UK based NorthgateArinso group. Arinso SA has been renamed

NorthgateArinso Africa (NGA). NGA Africa delivers Human Capital Management services and technologies that support business outcomes for local, multinational and public sector organisations across the African continent. These services and technologies cover the whole spectrum of HR and Payroll as well as Workforce and Security Management. The transaction supports Business Connexion’s international growth objectives and allows further diversification of its revenue streams.

By expanding their service offering to the market the Q LINK business unit achieved decent growth in tough financial conditions. Effective 1 September 2013, the group entered into an agreement to dispose of its entire interest in the Q LINK to Summit Garnishee Solutions (Pty) Limited (SGS) following a group discussion that Q LINK is no longer core to the group strategy.

LARA had an extremely successful year posting both a healthy growth in revenue and operating margin. Growth in the consultancy space and resilience in the two outsource centres generated positive performance.

The roll out of SOLAR, our new local government solution, has been successfully implemented with further implementations at other local governments in progress.

Accsys has strengthened its people management offering by releasing a mobile app, that combines Payroll and Time and Attendance with Employee Self Service functionality. On the education side, the Da Vinci Institute is partnering with Accsys to launch a formal BCom degree in Payroll Administration.

Accsys has been awarded the TT100 Award for Sustainable Innovation for the third time. In addition Accsys was awarded “Excellence in management of people” and “Excellence in management of systems” at the TT100 November 2013 awards.


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Nanoteq, our security and encryption business, has enjoyed significant international expansion with related improved financial performance. Nanoteq, has recently launched an enhanced product suite, which is culminating in significant international and local opportunities.

Persal remains entrenched in the public sector with its stable payroll and personnel systems offering and its data warehousing solution. Although a new solution offering has been developed the uptake within the public sector has been slower than expected.

As the intellectual property hub of the group the division is committed to managing on-going investments in intellectual property through the development and enhancement of software and hardware solution offerings. This strategic focus has proved successful as is evident from the NorthgateArinso Africa and Q LINK transactions referred to above.


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GOVERNANCE CORPORATE

REPORTINTRODUCTIONIn Business Connexion governance extends beyond legislative

and regulatory compliance. The creation of value is at the

heart of integrated thinking. Management strives to engender

an enterprise-wide culture of good governance linked to

the group’s business philosophy, which incorporates our

vision and values. Business Connexion’s values require that

directors and employees behave with integrity, displaying

consistent and uncompromising moral strength and conduct

in order to promote and maintain trust. BCX is driven by a

desire to operate as a responsible corporate citizen and the

group recognises that an ethical culture underpins corporate

governance. BCX and its board of directors are committed

to ensuring ethical and sustainable business practices,

guided by its values. The board and management subscribe

to the philosophy that corporate governance built on an

ethical and values-based foundation permeates through all

business activities and enables the group to achieve its short-

and medium-term strategic objectives, while contributing

to reaching the BCX vision of enriching communities,

through technology.

Business Connexion is committed to the application of, and

compliance with, corporate governance principles as reflected

in the King Report on Governance for South Africa 2009

(King III or the code), the Companies Act of 2008, the Listings

Requirements of the JSE and any legislative requirements

in countries where Business Connexion has representation.

It regards corporate governance as an integral part of its

operations and therefore the board and every employee is

responsible for acting in accordance with sound corporate

governance practices and in the best interests of the group.

The board has the responsibility of leading the enterprise

with integrity and to ensure a sustainable business. In an

environment of increasing regulatory pressure, the group

acknowledges the need to maintain a balance between the

expectations of investors, regulators and other stakeholders

and the need to deliver competitive financial returns.

The board takes overall responsibility for the application

of the code and it is a focal point of the group’s corporate

governance system. However, the directors of specific

companies in the group are responsible for ensuring

compliance in respect of the companies of which they

are directors.

The board believes that while compliance with the formal

standards of governance practice is important, greater emphasis

must be placed on ensuring the effectiveness of the application

of governance practices on a daily basis. The board operates

on the understanding that sound governance practices are

fundamental to earning the trust of stakeholders, which is

critical to sustaining performance and preserving stakeholder

value. The group’s governance framework enables the board to

balance its role of providing risk oversight and strategic counsel

as well as ensuring adherence to regulatory requirements

and risk tolerance. The board is committed to upholding the

fundamental tenets of governance, which include discipline,

independence, responsibility, fairness, social responsibility,

transparency and accountability of directors to all stakeholders.

The board’s approach to governance is to embrace relevant local

and international best practice. In all jurisdictions, governance

developments are monitored on an ongoing basis to ensure that

local requirements are met.

KING III AND COMPANIES ACT COMPLIANCE The directors believe that Business Connexion has materially

complied with the requirements of King III and is mindful of the

limitations of achieving the goal of a fully integrated basis of

reporting. All entities in the group are required to subscribe to

the spirit and principles of King III.

The board is committed to full compliance with the Companies

Act, Act 71 of 2008, as amended (Companies Act) and

significant effort was devoted to addressing the requirements:

• Directors are continuously briefed on new requirements

when specific decisions need to be made.

• It is confirmed that all current directors are eligible to

act as directors of the company and are not ineligible or

disqualified from appointment as directors or prescribed

officers for any reason.

• The group memorandum of incorporation was approved

by shareholders at the annual general meeting (AGM) held

on 14 January 2013 and all the South African subsidiary

companies’ memorandums of incorporation have been

amended.

GOvERNANCE DEvELOPMENTS FOR THE PERIOD UNDER REvIEwThe governance process is reviewed continually and enhanced

to align with internal developments and to ensure continual


5331/082013

adherence to legislation and best practise. During the period

the key governance developments were as follows:

• John Poluta resigned from the board on 21 June 2013.

• John Bester, Alex Darko and Mike Ettling were appointed

to the board on 8 October 2013.

• Business Connexion complies with the additional

requirements for good corporate governance stipulated in

the JSE Socially Responsible Investment (SRI) Index and has

again qualified for inclusion in the 2013 JSE’s SRI Index.

• Business Connexion won second place in the Sake24

financial advertisement competition 2013 in the Content

Category of the first quarter (October to December 2012)

with the financial results published on 6 November 2012.

Business Connexion also won second place in the Visual

Category of the third quarter published on 19 April 2013.

• Shareholders approved the delisting of the Business

Connexion “A” shares (code BCA).

BOARD OF DIRECTORS Board composition Business Connexion has a unitary board with a majority of

non-executive directors being independent. The chairman of

the Business Connexion board is an independent non-executive

director. The roles of chairman and chief executive officer are

separate, with Tony Ruiters and Benjamin Mophatlane holding

these positions respectively. This division of responsibility

ensures a balance of authority with no individual director

having unrestricted decision-making authority. The roles of

chairpersons and managing directors also do not vest in the

same persons in the groups’ subsidiary companies.

The board consists of eight non-executive directors and four

executive directors. Six of the non-executive directors are

considered independent in terms of the King definition whilst

Nkenke Kekana is not classified as independent as he is part of

Gadlex Holdings (Proprietary) Limited, Business Connexion’s

empowerment partner. Dean Sparrow is also not classified

as independent as he is the chief executive officer of Capital

Eye Investments (formerly UCS Group Limited) and holds a

significant investment in Business Connexion following the

group’s transaction with UCS Group Limited.

Board independence is determined by the board members’

independence in character and judgement and whether there

are any relationships or circumstances which are likely to affect,

or could appear to affect, their judgement.

None of the non-executive directors has a director’s service

contract. Executive directors are full-time employees and as

such are subject to BCX’s conditions of service.

Skills, knowledge and experience of directors Any new appointment of a director is considered by the

board on the recommendation of the Remuneration and

Nominations Committee (ReNco). The selection process

involves consideration of the existing balance of skills,

knowledge and experience and a continual process of

assessing the needs to act in the best interest of the company.

None of the directors, with the exception of the chief executive

officer (CEO), have served for longer than nine years and

therefore, the board believes that none of the current directors’

independence, judgement and contribution is compromised

or may appear to be compromised.

Board appointments and succession planning Directors are appointed by the board in a formal and

transparent manner. Non-executive directors do not have a

fixed term of appointment and one-third of the non-executive

directors retire by rotation annually in terms of the company’s

Memorandum of Incorporation (MOI) based on the longest

service. If eligible, available and recommended for re-election

by the ReNco, their names are submitted for re-election

at the AGM. In addition, non-executive directors appointed

during the course of any financial year are required to be

re-elected at the next AGM. Executive directors retire at

age 60 while non-executive directors are required to retire

at the AGM following their 70th birthday.

The ReNco considers non-executive director succession

planning and makes appropriate recommendations to

the board. The board collectively identifies and appoints

directors, including the CEO and other executive directors,

on recommendation from the ReNco. This committee

fulfils the role of a Nominations Committee and is

responsible for identifying and nominating candidates

for approval of the board as additional directors or to

fill any board vacancies when they arise, taking skills,

experience, demographics, gender and racial diversity,

as well as diversity in business, geographical and academic

backgrounds into account. In addition, the committee

recommends directors, who retire in terms of the company’s

MOI, for re-election.


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54

goVERnAncE CORPORATE

REPORT CONTINUED

Ongoing education and new director inductionOngoing board education remains a focus. Directors are kept

abreast of all applicable legislation and regulations, changes

to rules, standards and codes, as well as relevant sector

developments that could affect the group and its operations.

On appointment, each new director receives an induction

pack that includes all relevant governance information such

as mandates, management structures, significant reports,

important legislation and policies. One-on-one meetings

are scheduled with management to introduce new directors

to the company and its operations.

Board charter A formal documented charter regulates how business of the

board is to be conducted and sets out specific powers and

responsibilities to be discharged by board members collectively

and the individual roles expected of them.

Key features covered in the charter are as follows:The charter expresses the board’s philosophy in regard to

excellence in client satisfaction, quality of service, respect for

human dignity, being an exemplary corporate citizen and fostering

sound relationships with stakeholders and regulators.

Board responsibilitiesThe directors are responsible for the preparation, integrity and

reliability of Business Connexion’s annual financial statements

and all other information contained in the integrated report.

Certain responsibilities have been delegated to sub-committees,

but the board accepts that it remains accountable for the

performance and affairs of the group.

The board identifies and monitors key risk areas, key performance

areas and non-financial aspects relevant to Business Connexion.

The directors are entitled to obtain independent professional

advice on matters related to the exercise of their duties and

responsibilities at the group’s expense, should they deem this

necessary. In addition, the board has unrestricted access to all

company information, records, documents and property to

enable it to discharge its responsibilities.

The board is responsible for the group’s internal financial and

operational control systems. The internal control systems are

designed to provide reasonable assurance against material

misstatement and loss.

The board has reviewed and approved the integrated report,

with assurances on the information having been provided to

the group Audit and compliance committee.

Key features covered in the charter are as follows:

the mission and credo of the board

acknowledgement of fiduciary

responsibility

selection and composition of

the board

conduct regarding conflicts of interest

determining of non-executive

director fees and process

orientation of new directors

formal evaluation of directors

board meetings and procedures

risk management and internal controls


5531/082013

Strategic planningAs a key performance area of the board, group strategy

is mapped by the board. The board ensures that the

strategy is aligned with the group’s values, performance

and sustainability objectives and that it addresses the

associated risks. The board appreciates the fact that strategy,

risk, performance and sustainability are inseparable, and

annually reviews the strategy and finalises the group’s

business plan for the next year. The executive committee

attends a two-day strategy session annually to determine

strategic direction with the board, to assess progress as well

as to consider long-term issues facing Business Connexion.

Financial performance is monitored through quarterly

management reports.

Board meetingsThe board meets at least four times per annum, retains full

and effective control over all the companies in the group

and monitors executive management in implementing

board strategies and plans. Additional board meetings, apart

from those planned, are convened as circumstances dictate.

The number of meetings held during the year under review

(including meetings of board appointed committees) and the

attendance of each director are set out in the table below.

Where directors are unable to attend a meeting personally,

video- and tele-conferencing facilities are made available to

include them in the proceedings and allow them to participate

in the decision-making process.

Directors are afforded the opportunity to propose additional

matters for discussion at board meetings. Board meetings are

scheduled well in advance. The board agenda and meeting

structure is focused on strategy and performance monitoring,

governance, financial results and budgets, and monitoring

of the implementation of delegated responsibilities and

related matters. This ensures that the board’s time and energy

is appropriately applied. At each meeting feedback from its

committees is provided.

Meeting attendance including board sub-committees for the financial year

Director

Board meetings

(including

2 special

meetings)

Audit and

compliance

(including

2 special

meetings)

Remuneration

and

nominations

(including

1 special

meeting)

Risk,

sustainability,

social and ethics

J John 4/4 4/4 – 3/4NN Kekana 4/4 – – 4/4M Lehobye 3/4 3/4 4/4 –LB Mophatlane 4/4 – – -V Olver 4/4 – – -JM Poluta* 2/3 3/3 – -AC Ruiters 4/4 – 4/4 4/4D Sparrow 4/4 - 4/4 -J Jenkins 4/4 – – -LN Weitzman 4/4 – – -

*Resigned 21 June 2013

Board performance assessment and effectiveness evaluationBoard evaluations are conducted annually during November

through a board effectiveness evaluation process as well as an

individual director self-evaluation questionnaire. The board

collectively considers the outcomes of this process during

the first board meeting after the evaluation process has been

concluded. The outcomes are minuted as part of the formal

meeting and these minutes are available for inspection by

the external auditors. The chairman of the board also has a

one-on-one discussion with each board member thereafter.

The performance of the group chairman is evaluated by fellow

directors. No major areas of concern were highlighted during

the reporting period.


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7 - relationship with stakeholders; and 8 - group structure, succession planning, management and remuneration.

5 - performance of the company secretary;6 - strategy and financial matters (performance against strategic objectives set);

3 - board committees;4 - performance of the chairman of the board;

(performance against strategic objectives set);

1 - board structure and composition;2 - board processes and accountabilities;

The board evaluation process covers, inter alia, the following key areas:

1. The quantitative and qualitative aspects of the group’s performance through reviews of the management reporting, which includes financial and non-financial information and strategic and operational updates from management;

The board/individual director performance evaluation assesses the following:

2. Review of key risk areas and key performance indicators;

3. Monitoring of the group’s compliance with all relevant legislation and codes of business practice;

4. Monitoring of the procedures to ensure the group maintains an effective system of internal control and risk management; and

5. Reviews the group’s communications with its key stakeholders.

The evaluation process is also used to determine whether the board will endorse a retiring director’s re-election. Names and

information of the directors standing for re-election at the AGM are contained in the notice of AGM on pages 156 to 165.

REPORT CONTINUED


5731/082013

1. Time and availability;

Individual director performance is assessed against the following criteria:

2. Competence and commitment to performing the function of a director;

3. Strategic thought and specific skills, knowledge and experience brought to the board;

4. The individual's views on key issues and challenges facing the group;

5. The individual’s views on his/her own performance as a board member;

6. Attendance over the past year; and

7. Other areas or roles where the director’s specific skills could be used.

Board remunerationThe non-executive directors receive fees for their services as

directors and for serving on board committees. The chairman

of the board and chairmen of the respective board committees

receive an additional fee. These fees are recommended by the

executive directors and shareholders who consider and approve

the proposed remuneration payable to directors at each AGM.

The fees proposed to be approved by shareholders at the AGM

for the 2014/2015 financial year, as well as the new category

of international director for the 2014/2015 financial year are

reflected in the notice of the AGM on pages 156 to 165.

None of the current non-executive board members participate

in any share incentive or option scheme.

Directors’ and officers’ insuranceDirectors and officers have the benefit of liability insurance

funded by the group. The cover excludes liability resulting from

criminal, reckless or fraudulent behaviour. The level of cover is

reviewed annually to ensure that it is appropriate and in line

with legislative parameters and any other statutory provisions.

Board committees The board is authorised to establish board committees to

facilitate decision-making by the board in the execution of

its duties. Business Connexion currently has three standing

committees, namely the Audit and compliance committee,

Remuneration and nominations committee and Risk,

sustainability, social and ethics committee. The members and


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58


the chairmen of the committees are appointed by the board.

The names of the members of the Audit and compliance

committee are submitted to shareholders for approval annually

at the AGM. The proposed fee structure for these committees

is submitted to shareholders for approval and forms part of the

notice of the AGM as contained on page 160 of this report.

The board recognises that it is ultimately accountable and

responsible for the performance and affairs of the group

and that the use of delegated authorities to board committees

and management in no way mitigates or dissipates the

discharge by the board and its directors of their duties and

responsibilities. Specific responsibilities have been delegated

to these committees, which operate under written terms of

reference confirmed by the board. There is transparency

and full disclosure from board committees to the board. In

this regard, the minutes of committees are submitted to the

board for noting and committee chairpersons also provide

the board with a verbal report on recent committee activities.

Board committees are free to take independent professional

advice as and when deemed necessary.

Notwithstanding the establishment of the various board

committees and delegated authorities, the Business Connexion

board reserves to itself a range of key decisions to ensure that it

retains proper direction and control of the group (supported by

any recommendation that may be made by the relevant board

committee and/or management).

Although the Business Connexion board still retains overall

responsibility for the affairs of the group, subsidiary boards

play an important role in the group’s overall governance

approach. Business Connexion directors have full access to

subsidiary board documentation. The level of detail dealt with

at subsidiary boards is generally greater than that dealt with by

the Business Connexion board (as well as being specific to the

relevant subsidiary).

The board is of the opinion that the board committees set

out below have effectively discharged their responsibilities as

contained in their respective terms of reference for the year

under review.

In terms of the recommendation in the King III Report the

chairman of the board should not be a member of the Audit

committee. Tony Ruiters, the group’s chairman, attends meetings

on occasion.

The chairman and the members of the ACC are all independent

directors. The appointment of the members of the ACC is

submitted to shareholders for approval and forms part of

the notice and proxy for AGM purposes as contained on

page 158 of this report. All members of the committee are

financially literate.

The internal and external auditors, as well as the group chief

audit executive, have unrestricted access to the ACC, which

ensures that their independence is in no way impaired. Internal

and external audit have met in committee with the ACC without

management being present during the financial year.

The ACC is a sub-committee of the board that is appointed

to assist in the review of the group’s financial position, internal

financial controls, fraud and IT risks relevant to financial

reporting and to make recommendations to the board on

all financial matters. This includes assessing the integrity and

effectiveness of accounting, financial, compliance and other

control systems.

REPORT CONTINUED

Audit and compliance committee (ACC)

MEMBERS Jenitha John (Chairperson)

John Bester

Alex Darko

ATTENDEES / INVITEESTony Ruiters CEO,

Deputy CEO, CFO and

CAE - Internal and External Audit

FREQUENCY- At least four meetings

per annum

AUDIT AND COMPLIANCE COMMITTEE (ACC)


5931/082013

The competence, suitability and skills of the external auditors

were considered and the committee is satisfied that KPMG

meets all the requirements to fulfil the role of external auditors

of Business Connexion. Business Connexion has an audit

partner rotation process in accordance with the relevant legal

and regulatory requirements which requires the lead partner to

rotate every five years.

The committee is responsible for the oversight of the internal

control framework, which is the group’s three lines of control

defence overlaid by the group’s corporate governance

framework. The three lines of defence model seeks to separate

the relevant duties and ensure independent reporting lines

to underpin effective internal control and risk management.

The group chief financial officer is ultimately responsible for

implementing and maintaining internal financial controls.

Assurance of the effectiveness of internal financial controls is

achieved through:

• management confirmation that the financial governance

controls and internal financial controls supporting the

assertions in the financial statements operated effectively

during the year; and

• the co-ordination of audit work by the internal and external

auditors as part of their annual risk-based audit plans.

On an annual basis, all non-audit fees are submitted to the

committee for review and approval. This is done to ensure

that the independence and objectivity of the auditors is not

impaired. The committee chairman approves, on a case-by-

case basis, all significant services outside the scope of the pre-

approved audit plan.

The ACC reviews financial information to be published by the

group. In addition, the content of the integrated report was

reviewed by the committee and the content recommended

to the board. The committee receives assurance on material

issues from the external auditors. The committee has also

been mandated with the responsibility for overseeing the

implementation of integrated reporting and verification

procedures. This will also involve the further development of

the combined assurance model.

INTERNAL AUDITThe group acknowledges the importance of an independent

strategically aligned internal audit function to assist the ACC

in discharging its responsibilities. The internal audit function

is independent of all other organisational functions, reports

directly to the ACC and has free and unrestricted access to all

areas within the group, including management, personnel,

activities, locations and information.

Systematic and thorough annual internal audit coverage plans

are prepared together with management and approved by the

ACC. All businesses within the group receive adequate coverage

by following a methodical risk-based audit approach.

The strategic focus of internal audit is to:

• Improve risk-based alignment in order to provide assurance

on key risks that may prevent or affect the realisation of

strategic goals; and

• Assist management in further developing the internal

financial control framework to identify financial reporting

risks and ensure controls are adequate to address the risk of

material misstatements of financial results.

PwC are the internal auditors to Business Connexion to provide

independent and objective assurance and reporting to an

internally appointed group chief audit executive. Internal audit

has provided a systematic and disciplined approach to evaluate

and improve the effectiveness of risk management, control and

governance processes within Business Connexion.

The internal audit process provides oversight to obtain

reasonable assurance regarding management assertions

that control objectives are met to achieve effectiveness and

efficiency of operations, reliability of financial information and

compliance with laws and regulations.

The purpose, authority and responsibility of the internal audit

function is formally defined in the function’s terms of reference

as approved by the ACC.


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The ReNco comprises of non-executive directors of Business

Connexion and is chaired by an independent director. The CEO,

CFO and the executive responsible for human resources attend

the meetings by invitation, but recuse themselves from discussions

and decisions regarding their remuneration and benefits.

The ReNco also assists the board in governance matters

related to executive remuneration, succession planning and

identification of suitable candidates to serve on the board.

The committee has formal terms of reference approved by

the board and is responsible for the assessment and approval

of a broad remuneration strategy for the group. In particular,

it reviews and agrees on key performance indicators and

determines the remuneration packages and incentive bonuses

of the members of the executive committee, the fees for the

non-executive directors and recommends the granting of

share options to executive directors and senior employees.

These details, together with an overview of remuneration and

incentive philosophies, are set out in the remuneration report

on pages 89 to 97.

The board is ultimately responsible for risk and capital

management. The main purpose of the RSSEC is to provide

independent and objective oversight of risk in the group. The

committee reviews and assesses the integrity of risk control

systems and ensures that risk policies and strategies are

managed effectively and contribute to a culture of discipline

and control that reduces the opportunity for fraud. Assurance

on the effectiveness of the risk management processes is

provided to the committee through management reporting.

More information on risk management is contained in the Risk

report on pages 64 to 67.

The RSSEC is constituted as a sub-committee of the board of

directors of Business Connexion. The committee comprises at

least three non-executive directors. Members of this committee,

and its chairman, are nominated by the board. At least one

member of the ACC will be an ex officio member of this

committee.

The role of the committee is to assist the board on the following

matters:

• Risk - To ensure that the group has implemented an effective

policy and plan for risk management that will enhance the

group’s ability to achieve its strategic objectives; and to

ensure that the disclosure regarding risk management is

comprehensive, accurate and relevant. For more information

refer to the Risk report on pages 64 to 67.

REPORT CONTINUED

Risk, sustainability, social and ethics committee (RSSEC)

MEMBERS Nkenke Keana (Chairperson)

Tony Ruiters – Alex Darko

Mamoroke Lehobye

ATTENDEES / INVITEESCEO, CFO, Executive for business

development private sector,

CAE and Risk Manager

FREQUENCYAt least four meetings

per annum

Remuneration and nominations committee (ReNco)

MEMBERS Mamoroke Lehobye (Chairperson)

Tony Ruiters - Dean Sparrow

John Bester

ATTENDEES / INVITEESCEO - CFO and the executive

responsible for human

resources

FREQUENCY- At least four meetings

per annum

REMUNERATION AND NOMINATIONS COMMITTEE (ReNco)

RISK, SUSTAINABILITy, SOCIAL AND ETHICS COMMITTEE (RSSEC)


6131/082013

• Sustainability reporting – To assess key sustainability

performance measures taking into consideration economic,

social and environmental factors relevant to the group; to

assess management’s plans and strategies to ensure the

sustainability of the group and to ensure that sustainability

issues that are disclosed in the group’s integrated report

are accurate, comprehensive, relevant and reliable and

that no conflicts or differences arise when compared

with the financial results. The committee will review and

recommend to the board the approval of the annual

sustainability report and make recommendations on

specific actions or decisions that the board should consider

in order to maintain the integrity of the annual sustainability

report for the integration into Business Connexion’s integrated

report. More information is contained in the Sustainability

report on pages 68 to 79.

• Health, safety, environmental and community matters

– To ensure the effectiveness of the Business Connexion

policies and systems for identifying and managing

material health, safety, environmental and community

matters. The committee will review the effectiveness of

the Business Connexion’s policies and systems for identifying

and managing the health, safety, environment and

community matters that are material to the achievement

of the corporate objective.

• Transformation and/or other similar in country

requirements – To ensure the group’s has a target level of

compliance to the B-bBEE Codes of Good Practice and to

ensure progress in achieving the targets are monitored by

means of scorecards for each division within the group as it

relates to South African legislative requirements and to ensure

that the group complies with any legislative requirements in

the countries it operates in terms of indigenisation targets.

• IT Governance – To ensure that the group’s IT strategy and

plans are aligned with the business strategy, the performance

and the sustainability objectives of the group. To assist

directors in fulfilling their responsibility of ensuring that there

is an IT Governance framework in place throughout the

group.

• Fraud risk assessment – To review the results of the annual

fraud risk assessment, determine root cause and monitor

implementation of corrective actions to minimise fraud risks

identified and refer any internal control related fraud risks to

the ACC.

• Fraud prevention – To review and recommend to the

board the group’s fraud prevention policy, the effectiveness

of the fraud prevention strategies adopted by the group and

monitor overall compliance with the fraud prevention policy.

• Business continuity – To ensure that the group has

comprehensive business continuity plans in place that are

documented and communicated to all relevant officials.

• Social and ethics – To monitor the group’s activities, having

regard to any relevant legislation, other legal requirements

or prevailing codes of best practice, with regard to matters

relating to –

(i) social and economic development;

(ii) good corporate citizenship, including the group’s –

(a) promotion of equality, prevention of unfair

discrimination and reduction of corruption;

(b) contribution to development of the communities

in which its activities are predominately conducted

or within which its products or services are

predominately marketed; and

(c) recording of sponsorships, donations and charitable

giving:

(iii) the environment including the impact of the group’s

activities and of its products and services;

(iv) consumer relationships, including the advertising, public

relations and compliance with consumer protection

laws; and

(v) labour and employment including

(a) the group’s standing in terms of the International

Labour Organisation Protocol on decent work and

working conditions;

(b) the group’s employment relationships, and its

contribution towards the educational development

of its employees;

(c) drawing matters within its mandate to the attention

of the board as occasion requires; and

(d) reporting through one of its members, to the

shareholders at the group’s AGM on the matters

within its mandate.


31/082013

62

GOVERNANCE CORPORATE

ExECUTIvE DIRECTORS AND THE GROUP ExECUTIvE COMMITTEE (Exco)There are four executive directors on the board of Business

Connexion and a number of executive directors on the boards

of the group’s main subsidiaries. There is full disclosure in the

group remuneration report of various remuneration matters

in respect of the executive directors of Business Connexion.

The ReNco determines the remuneration and benefits of

executive management.

Exco, chaired by the CEO, comprises the group’s four

executive directors and eight members of the executive

management team. It meets once a month and deals with all

material matters relating to the implementation of the agreed

board strategies and plans, the monitoring of performance

and the consideration of group policies. Exco held eight

meetings during the year as well as a two-day Exco strategic

planning session.

As a general rule, members of Exco are not permitted to hold

external directorships. In exceptional cases, such directorships

are allowed only to the extent that these do not interfere with

the members’ immediate management responsibilities and are

approved by the CEO on an individual basis.

GROUP COMPANy SECRETARyAll directors have access to the advice and services of the

group company secretary, who provides guidance to the

board as a whole and to individual directors with regard to

discharging their responsibilities in the best interests of the

group. The group company secretary also ensures the induction

of new directors and assists the chairman and the CEO in

determining the board and board sub-committee agendas, as

well as formulating governance and board-related issues.

At a board meeting held on 15 August 2013 the board

considered, in terms of section 3.84(i) of the JSE Listings

Requirements, the competence, qualifications and experience

of the company secretary. In terms of the appropriateness of

the group company secretary the board has considered his

experience and expertise and is satisfied that Mr J de Koker

has the appropriate expertise, experience, competence and

skills to fulfil the role of group company secretary of Business

Connexion Group Limited and that the role is performed on an

arm’s-length basis.

ETHICS AND ORGANISATIONAL INTEGRITyThe group is committed to entrenching an ethical culture,

providing excellent services to clients and considers a high

standard of ethical behaviour to be paramount in achieving this

objective. An important element of the induction process is to

communicate to new employees the group’s values, standards

and compliance procedures. The group’s core values include

respect for company assets and the environment, operating

with integrity, acting with professionalism in our service

delivery to clients, being fair in the way we treat people and

accountability, which requires employees to take full ownership

of actions taken.

Employees or others can report unethical or risky behaviour

to the custodian of the tip-off anonymous line. A summary

of incidents reported is submitted to the Risk, sustainability,

social and ethics committee. More detail on ethics in Business

Connexion as well as tip-offs experienced during the year is set

out in the Sustainability report on pages 68 to 79.

SHARE DEALINGSIn terms of the group’s closed period policy, directors,

associates, officers, participants in the share incentive scheme

and employees who may have access to price sensitive

information are precluded from dealing in Business Connexion

shares prior to the end of the interim and year-end financial

periods until release of the group’s interim and final results.

Where appropriate, additional closed periods, as well as the

persons to whom such periods apply, may be invoked by the

board. Details of directors’ dealings in Business Connexion

shares are disclosed to the board and the JSE Limited through

the Securities Exchange News Service (SENS). All directors are

required to obtain approval from the chairman prior to trading.

Directors and all group employees are not permitted to deal

directly or indirectly in the shares of the company during:

• any period when they are aware of any negotiations or

details which may affect the share price; and

• the time declared as a prohibited period in terms of the

JSE Listings Requirements.

Directors are required to notify the company secretary in writing

immediately following any transaction involving the company’s

shares. The trades are timeously disclosed to the JSE.

REPORT CONTINUED


6331/082013

STAKEHOLDER COMMUNICATION AND RELATIONSHIPSThe board recognises that effective communication is integral

in building stakeholder value and is committed to providing

meaningful, transparent, timely and accurate financial and

non-financial information to primary stakeholders. The purpose

is to assist these stakeholders to make meaningful assessments

and informed investment decisions about the group. The board

acknowledges that the integrated report should disclose the

nature and outcome of dealings with stakeholders and more

detail on the stakeholder management programme will be

provided in future.

Business Connexion’s stakeholders include shareholders,

employees, clients, communities, government, regulatory

bodies, the media and various resource/service providers.

The board recognises the importance of ensuring an

appropriate balance in meeting the diverse needs and

expectations of the group’s stakeholders, building lasting

relationships with them and reporting to them in a transparent,

balanced and comprehensive manner that favours substance

over form. Business Connexion reports annually on the nature

and extent of its social transformation, ethical, safety, health

(including HIV/Aids) and environmental policies and practices.

The group recognises the importance of its shareholders’

attendance at its AGM. All shareholders are encouraged

to attend the AGM and to raise issues and participate in

discussions on items included in the notice of the meeting.

Such attendance offers an opportunity for shareholders to

raise issues and participate in discussions relating to items

included in the notice of the meeting. Explanatory notes setting

out the effects of all proposed resolutions accompany the

notice of the meeting. Shareholders’ meetings are conducted

on the basis of a poll. The results of shareholders’ meetings are

posted on SENS.

INvESTOR RELATIONSManagement actively engages with local and international

shareholders and analysts to enable informed decisions

to be made on investing in Business Connexion. The investor

relations approach embraces the principle of transparency,

timely disclosure and equal access to information.

The approach is also aimed at ensuring compliance with

governance and disclosure regulations whilst limiting

reputational risk for the group.

The CEO, Deputy CEO and CFO are designated investor

spokespersons and meet regularly with shareholders

and analysts.

Business Connexion’s relevance to the markets and societies

in which it operates depends on continued and meaningful

engagement with all stakeholders. This helps the group to

manage the expectations of society, minimise reputational

risk and form strong partnerships, which all underpin business

sustainability.

Copies of SENS announcements, investor briefings,

presentations, interim and integrated reports and other

relevant information are posted on the group’s website

at www.bcx.co.za.


31/082013

64

mAnAgEmEntRISK

INTRODUCTIONBusiness Connexion is committed to conducting business with

sound business practices which are beyond reproach with its

suppliers, business partners and clients. Business Connexion

continues to build and enhance risk management policies

and procedures that assist in delivering the group’s objectives.

The group adopts an integrated risk management framework

which includes the following areas:

• Corporate governance and business ethics

• Business process management

• Environmental risk management

1. Defining the risksRisks are defined within each business unit and at astrategic level. These are done through risk assessmentsand as a result of internal audits.

2. Assessing the impact of the risks on the company should they occur

Risks are based on their potential impact on the business(strategic, financial, market, political, country, environmental,operational, client relations, human resources, supplierrelations and corporate governance). A classification of 1is seen as insignificant and 5 as very significant.

3. Assessing the likelihood of the risks occurring

Risks are assessed based on their potential likelihood ofoccurring. A classification of 1 is seen as insignificant and5 as very significant.

4. Classifying the risksThe classification of risks is completed by logging the riskand the impact and likelihood values into Barnowl(the group’s risk management tool).

5. Monitoring and reporting on risks

Once the risks have been logged and the required risk owners identified the monitoring process commences withthe inclusion of the mitigation plan and the required actionsassociated to the plan. Reporting of risks is done quarterly to the board through the Risk, sustainability, social and ethics committee.

The risk management process is based on a 5 step approach:

• Sustainability

• Internal audit

• Occupational health and safety

• Security management

• Business continuity management

• Enterprise Risk Management

The integrated report addresses the above areas in the

Corporate governance report on pages 52 to 63, the Audit

and compliance report on pages 82 to 83, this Risk report

and the Sustainability report on pages 68 to 79.


6531/082013

Risk management within Business Connexion is a structured

approach to managing uncertainty through risk assessments,

developing strategies to manage these risks and mitigation of

risk using managerial resources.

The risk management practices are based on the following best

practice guides and standards:

• the King report on Corporate Governance for South Africa

(King III).

• the JSE Limited’s Social Responsibility Investment Index.

• the Department of Trade and Industry codes of good

practice.

• Committee of the Sponsoring Organisations of the Treadway

Commission and the Commission (COSO) Enterprise Risk

Management Framework.

• AS/NZS 4360 Risk Management Standard.

• ISO 31000:2009 Risk Management – Principles and

guidelines.

Risks

Process / ManagementAction

Objectives Controls

Inherent risk - before theassessment of controls

Residual risk - after theassessment of controls

Inherent Residual

Risk managment evaluation process


31/082013

66

mAnAgEmEnt CONTINUED

R ISK

RESPONSIBILITy FOR RISK MANAGEMENT The board of directors has overall responsibility for the

establishment and oversight of the group’s risk management

framework. The board has established the Risk, sustainability,

social and ethics committee, which is responsible for

developing and monitoring the group’s risk management

standards, policies and procedures. The committee reports

regularly to the board of directors on its activities. For

completeness, part of this report relating to financial risks is also

presented to the Audit and compliance committee for noting

as risk management forms part of the combined assurance

framework.

RISK STRATEGy Business Connexion uses a two-way approach in identifying

risk. Firstly, risks that impact on the group as a whole are

identified and secondly, risks that impact on individual group

companies, operating divisions or projects are identified. These

risks are then consolidated and categorized into four main risk

categories with their respective subcategories:

• Strategic:

• market

• political

• country

• supplier relations

• client relations

• corporate governance

• Financial

• reporting

• Operational:

• human resources

• technology

• Compliance:

• environmental

Each category and subcategory has been assigned a risk owner

(group executive committee member) who is responsible for

reviewing the risks and putting action plans in place. The risks

are then recorded in the group risk register.

RISK APPETITE The group takes on a level of risk in line with its risk appetite

and risk tolerance levels. All risks that fall outside the risk

appetite or risk tolerance levels are avoided or alternatively

escalated by the Risk, sustainability, social and ethics committee

to the group executive committee and, if necessary to the group

board, for noting and prioritisation.

RISK ASSESSMENT wORKSHOPS A qualitative technique of conducting half-yearly risk

assessment workshops across divisions is used to identify,

analyze and evaluate strategic, financial, operational, and

compliance risks. The risk assessment workshops involve the

identification of risks associated with the key strategic and

related business objectives followed by the ranking of the

risks in terms of likelihood and impact, an evaluation of the

current mitigating activities, and formulation of additional risk

mitigation strategies and action plans.

RISK REPORTING Risk reports for the various stakeholders are prepared and

distributed as follows:

• Monthly reporting on the key divisional risks to each

divisional executive committee.

• Quarterly reporting on the key group risks to the Risk,

sustainability, social and ethics committee;

• Quarterly reporting on the key divisional risks to the Audit

and compliance committee.

BUSINESS CONTINUITy MANAGEMENTThe business continuity management practices deployed within

Business Connexion are based on the following guides and

standards:

• BS 25999-1:2006 BCM Code of Practice of the British

Standards Institution (BSI).

• BCI Good Practice Guidelines 2008.

• BCI 10 Standards of Professional Competence.

• ISO 22301: 2012.

Business continuity management is managed through a four

point plan:

• to proactively identify potential disruptions and disasters,

• to proactively improve Business Connexion’s resilience

against any disruptions and disasters;

• to provide a rehearsed method for restoring Business

Connexion’s ability to supply its key products and services to

an agreed level within an agreed timeframe in reaction to a

disruption or disaster; and


6731/082013

• to provide a proven capability to manage a disruption

or disaster in order to maximise the defense of Business

Connexion’s reputation and brand image and to minimise/

prevent the impact within and beyond the group.

Business continuity management is enabled as follows:

• Each business area within Business Connexion has a

business disaster recovery plan in place covering all the

mission critical activities.

• Suppliers and outsource service providers of Business

Connexion are measured against the policy and standards

used by the group. Verifiable evidence of business continuity

management programmes and the testing of these

programmes are required from every business partner.

• Contracts are revised or rewritten to impose penalties over

failure to meet obligations. Over-reliance on a limited

number of suppliers is eliminated as far as possible.

BUSINESS PROCESS MANAGEMENTThe purpose of business process management in support of the

enterprise objectives is to be the enablers of excellence. This is

achieved through:

• Policy and process design.

• Policy and process implementation.

• Policy and process sustainability.

• Policy and process improvement.

• Change management.

Through the implementation, monitoring and improvements of

Business Connexion’s business process management the highest

level of skill and competency is identified.

Business process management within Business Connexion is an

ever changing controlled environment which ensures that best

practices and evolution of technology is constantly defined and

utilised to ensure a continual improvement which allows for a

competitive edge.

Deployment of these processes takes place within the

framework of a number of international standards and

frameworks as listed below:

• ISO 9001: Business Connexion is certified to ISO 9001:2008,

an international standard for establishing and maintaining

a quality management system. ISO 9001:2008 standards

contribute to making the development, design and supply

of products and services more efficient, safer and cleaner

and safeguarding clients and users of products and services.

This standard forms the basis of Business Connexion’s

business process management system to which all internal

standards adopted have been aligned.

• Information technology infrastructure library (ITIL) best

practice: The group’s decision to align itself with the ITIL

methodology aims to familiarise management with the

underlying components and architecture design of the

information and communications technology infrastructure

standards and best practice. By aligning with ITIL the group

experiences improved quality of services rendered and

enhanced internal processes to maximise efficiencies and

cost containment.


31/082013

68

INTRODUCTIONThe group remains committed to conducting its business in a

manner that ensures the long-term sustainability of the business

for the benefit of its employees, suppliers, clients and all other

stakeholders. Sustainability for the group is a continuous

journey and requires a multi-disciplinary approach. Longer-

term business sustainability is not only about minimising the

group’s environmental impact and generating good returns

to shareholders. Good governance, sound risk management,

stakeholder engagement, the group’s corporate social

investment – all form part of Business Connexion’s vision to be

Africa’s leading ICT player.

The group’s sustainability objectives remain unchanged and

BCX is on track to meet these objectives. BCX focuses on eight

key sustainability objectives which seek to:

• encourage an ethical trading environment;

• deliver sustainable earnings growth and appropriate returns

to the group’s shareholders and stakeholders;

• ensure the creation of equal opportunities through

recruitment, training, promotions, development and

advancement of all employees and ensuring employees are

motivated to perform;

• develop and sustain fair, equitable and sustainable business

relationships with suppliers;

• assist in the empowerment and social upliftment of

communities surrounding the group operations;

• assist in minimising the group’s environmental footprint

through “greening” initiatives;

• comply with legislation and regulatory frameworks in a

proactive and positive manner; and

• ensure that risk management issues are addressed

throughout the organisation.

ORGANISATIONAL INTEGRITy AND ETHICS Business Connexion is committed to the application of high

ethical standards, a prerequisite when dealing with staff, clients,

suppliers and contractors. Business ethics are well defined

within the corporate regulations and policies of the group.

These include, but are not limited to, the following:

• delegation of signing authority and clearly defined

accountability;

• gift, gratification and invitation declaration policy;

• conflict of interest policy;

• tip-offs anonymous; and

• ethical business practises with the guidelines of the group’s

Code of Conduct.

The board is ultimately responsible for ethics through the Risk,

sustainability, social and ethics committee. The committee

members are appointed by the board and comprise 3 non-

executive directors, 2 of whom are independent non-executive

directors. Communication regarding ethics is on-going and

is accessible by staff on the group’s intranet site. All non-

compliance issues are logged, investigated, progress tracked

and reported quarterly to the group’s Executive committee and

the Risk, sustainability, social and ethics committee which, in

turn, provided feedback to the board.

The group utilises the services of Deloitte to operate an

independent “Tip Offs Anonymous” process. During the period

under review a total of 56 calls (2012 – 35) were made to the

tip-off line. 8 reports were generated requiring investigation

(2012 -1). The increase in calls to the tip offs line can be

attributed to an Ethics awareness campaign during the year

which focussed on the new Code of Conduct, tip offs, fraud,

gift declarations and conflict declarations. Ethics is also part

of the induction programme for new recruits and interns and

attendance statistics is tracked.

Anyone can contact Tip-offs Anonymous. It doesn’t matter

whether you’re an employee, client, supplier, manager

or shareholder - You can report dishonesty, fraud and

inappropriate activities in Business Connexion in a safe,

confidential and secure way.

The board ensures that the company’s ethics are managed

effectively by building and sustaining an ethical corporate

culture. It determines the ethical standards which are clearly

articulated and ensures that the group takes measures to

achieve adherence to them in all aspects of the business.

Adherence to these ethical standards is measured by

incorporating ethical risks and opportunities in the risk

management process.

SUSTAINABLE EARNINGS GROwTH In order to grow business profitability and sustainability, the

group has to focus not only on maintaining margins, but

improving on these margins at the operating profit level.

Margin growth will be achieved through ongoing initiatives to

improve efficiencies in all operating divisions and the corporate

office, leveraging off its intellectual property, the group’s

footprint on the African continent and capitalising on the

synergies from its acquisitions

REPORTSUStAinABiLity


31/082013

69

The group continues to focus on its statement of financial

position to optimise return on equity. To this end the group

has embarked on a share buy back in an effort to improve its

return on equity. Refer to the chief financial officer’s report

on pages 32 to 37 for further details on the group’s financial

performance and focus on achieving improved profit margins

in the medium term.

Business Connexion embraced a process of incorporating

aspects of the Global Reporting Initiative (GRI) G3 guidelines

into its sustainability reporting. While this predominantly

focuses on issues that the group and its stakeholders regard as

being important and material, it talks to 10 GRI’s which comply

with level C reporting. The GRI items specifically relating to level

C in the report are:

✓ EC1 – Direct economic value generated and distributed,

including revenues, operating costs, employee

compensation, donations and other community

investments, retained earnings, and payments to capital

providers and governments.

✓ EC6 – Policy, practices, and proportion of spending on

locally-based suppliers at significant locations of operation.

✓ EC7 – Procedures for local hiring and proportion of senior

management hired from the local community at locations of

significant operation.

✓ EN3 – Direct energy consumption by primary energy source.

✓ EN5 – Energy saved due to conservation and efficiency

improvements.

✓ EN22 – Total weight of waste by type and disposal method.

✓ EN28 – Monetary value of significant fines and total number

of non-monetary sanctions for non – compliance with

environmental laws and regulations.

✓ LA1 – Total workforce by employment type, employment

contract, and region.

✓ LA4 – Percentage of employees covered by collective

bargaining agreements.

✓ LA7 – Rates of injury, occupational diseases, lost days, and

absenteeism, and number of work – related fatalities by region.

The Energy Efficiency Journey

Active energyefficiencyaudits

Monitor• Maintain• Improve

Passive energyefficiencyaudits

Business Connexion

• Electrical bill monitoring• Fix the basics • Use energy efficient lights• Add Insulation

Measure• MetersUse energy moreintelligently

BUSINESS CONNEXIONINDUSTRIALSOLUTIONS


31/082013

70

REPORT CONTINUED

SUStAinABiLityvALUE ADDED STATEMENTEC 1 – The group’s value added statement is reflected on

pages 40 to 41.

PROCUREMENTEC 6 – The group is committed to transformation and

supporting local suppliers. Details of preferential procurement

are reflected on page 77.

ENvIRONMENTAL IMPACT EN 3 – Direct energy consumption by primary energy source

kW/h CONSUMPTION

Total Elect kWh

Total CO2e in kg

21 500 000

22 000 000

22 500 000

23 000 000

23 500 000

24 000000

24 500 000

kWh Sep 2011 - Aug 2012

kWh Sep 2012 - Aug 2013

24 287 921

24 045 042

22 823 275

22 595 042

kWh

The total national kW/h for the current financial year was

22 823 275 kWh (2012:24 24 287 921) which, according

to the Heritage Eco Calculator represents, an equivalent

CO2 footprint or greenhouse gas impact of 22 595 042 kg

(2012:24 045 042kg). National kW/h has therefore been

reduced by 1 450 000 kg of CO2.

EN5 – Energy saved due to conservation and efficiency improvementsThe group is making use of Video Conferencing to reduce the

number of flights during the year.

The following diagram reflects Business Connexion’s journey to

improved efficiency and saved energy.

EN 22 – Total weight of waste by type and disposal method

More waste is being recycled compared to the prior period with

less waste going into the landfill.

The heritage Eco Calculator represents an equivalent negative

CO2 footprint or greenhouse gas emission of 26 321kg

(2012: 26 600kg). This negative footprint is offset by the waste

disposed through composting, recycling and reuse which

amounts to a positive 279kg (2012: 165kg).

In support of Green IT, Business Connexion has joined the

e-Waste Association of South Africa (eWASA). The group can

now assist its staff and clients with the disposal of electronic

waste in a responsible manner in compliance with the eWASA

code of conduct.

VIDEO CONFERENCE USAGE

Total and average number of hours per year

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

Sep 2011 - Aug 2012 Sep 2012 - Aug 2013

4 842 7 753H

ours

TONS OF CO2e EMITTED FROM LANDFILL WASTE

CO2e in kg for land�ll waste

Sep 2010 - Aug 2011

Sep 2011 - Aug 2012

0

5 000

10 000

15 000

20 000

25 000

30 000

Sep 2012 - Aug 2013



Linear (CO2e in kg for land�ll waste)

21 441

5 324

26 765.26

20 580

26 600.17

6 020

21 361.78

4 959

26 320.78


7131/082013

Business Connexion remains an Eskom-approved Energy

Services Company (ESCO) with strong operational principals,

methodologies and processes via the BCX Industrial Solutions

business unit.

LA1, LA4 AND LA7 – HUMAN CAPITAL Business Connexion has a total of 6 788 (2012: 6 548)

employees of which 6 445 (95%) are employed within the

borders of South Africa and the balance in the United Kingdom

and across the African continent

The group’s human resources strategy remains focused on the

sourcing of key skills, promoting long-term talent and career

development through career-related training and development

with the primary focus being on technical skills development,

ensuring competitive rewards, and fostering sound employee

relations and cultural transformation. This enables the group’s

on-going growth and sustainability agenda.

Performance excellence As a values driven and high performance organisation the

group’s ability to attract, retain and develop talent is a key

differentiator in maintaining a competitive advantage. The

group strives for a performance orientated culture where

performance is formally recognised through properly

constituted incentive and recognition schemes. Each employee’s

performance is measured via an electronic My Performance

Contract (MPC). The MPC is utilised during the annual

salary review to further embed a performance culture on a

sustainable basis.

Recruitment The recruitment and on-going attraction of ICT expertise and

skills remains a key focus area for Business Connexion to ensure

that the group remains a leader within the technology arena.

Recruitment activity within our International division has

increased during the period.

E-recruitment was implemented during 2013 to enhance

efficiencies in the BCX recruitment effort and to ensure

consistency and proper governance with an automated process.

Training and development2013 was another significant year with regards to the

investment in our people with an enhanced focus on bringing

talent into the group through our internship programme as well

as launching two new leadership development programmes to

enhance our leadership capabilities.

In excess of R50 million was spent on training for the reporting

period. Training interventions include end-user computing

training, soft skills training, management and sales training,

specific skills development programmes, certification

programmes and internal training programmes related to the

group’s operations.

The group’s internship programme, now in its sixth year,

underpins its commitment to youth skills development. During

this period the group trained in excess of 800 information

technology interns. For the period under review the group

trained 159 interns and, to date, placed 67% in permanent

positions. Of these interns 95% are black and 52% are female.

The internship programme continues to provide a future

talent pipeline for the group, whilst also contributing towards

alleviating unemployment and addressing the skills shortage in

the sector.

The internship programme not only provides technical

industry-specific training and certification, but also soft skills

training to assist candidates in adapting to the workplace.

Specifically trained line managers are also appointed as mentors

and coaches to assist graduates with on-the-job training and

development.

Employee relations An employee communication forum, 1Voice, serves to address

collective concerns and provides input towards the enhanced

wellbeing of the group’s employees.

The 1Voice representatives are democratically elected and

meet regularly with senior management representatives in each

operating division to:

• promote the interests of all employees in the workplace;

• maximise efficiencies in the workplace through

recommendations to management with respect to the

perceptions, feelings and sentiments of employees;

• exchange information and discuss business-related issues

thereby contributing to the enhancement of the quality of

management decisions;


31/082013

72

REPORT CONTINUED

SUStAinABiLity• participate in joint decision-making on certain workplace

matters aligned with the group’s business practices; and

• provide input on the workplace skills plan and the skills

development plan to support the group employment equity

initiatives and endeavours.

The sustainability of open and transparent communication

channels between employees and management constitutes a

non-negotiable imperative. Normal communication channels

cater for both individual and collective communication.

However, 1Voice caters specifically for structured collective

communication outside the established organisational

communication processes.

The group supports the constitutional right of employees to

elect whether they wish to participate in organised labour, and

to join a union of their choice. Management therefore neither

obstructs nor favours any particular union, but has created a

climate in which employees have the freedom to decide for

themselves regarding any desired representation.

There has been no strike action or negative financial impact

due to formal or informal collective industrial action during

the period under review.

The group has well established and communicated, disciplinary

and grievance policies and procedures to facilitate interaction

between employees and management.

wellness, health and safety All employees have access to Wellness Connect – a multi-

faceted employee wellness programme, provided by ICAS

South Africa – an international leader in the Employee

Wellness field.

Employees and their immediate families gain access to

a 24/7 dedicated toll free support line, as well as face to

face counselling when required. Additional benefits of this

programme include access to an online, self-help wellness

website and access to life management services, such as

financial and legal advice. All ICAS services are provided by

trained professionals and psychologists, and are provided to

employees at no cost.

Wellness Connect also provides a managerial consulting service

for line managers, and provides support and advice on any

management issues being experienced.

Various Wellness initiatives and events have taken place at

the Business Connexion during the period under review, with

highlights being the CANSA Shavathon and the Discovery

Health Wellness Days. Employees enjoyed these events and the

awareness and value of Employee Wellness has most certainly

increased across the organisation.

Financial wellness sessions, educating staff about sound financial

principles, were held across the country and were well attended.

Business Connexion continually reviews effectiveness of health

and safety systems aimed at reducing workplace incidents

and injuries and to ensure that the group complies with all

requirements. Annual safety audits are conducted on group

sites as well as client sites where the group operates. Audit

findings are discussed with management and agreed action

steps put in place to mitigate risks. No major findings were

reported during the period under review.

21 injuries were reported for the period September 2012 to

August 2013. No diseases were reported during the period.

Of these reported incidents the majority related to minor

injuries such as twisted ankles, minor cuts and bruising from

slipping on stairs and handling of equipment. The incidents per

category are listed in the table below.

The reported incidents amount to 55 lost man-days due to

injury with a remuneration cost of R96 346.33.

The Average Recordable Case Rate (RCR) for the period is 0,4624.


7331/082013

Health and Safety Incident Statistics for the year ended 31 August 2013

Incident Types 2009 2010 2011 2012 2013

Damage 1 – 1 – –Disability Injury – – – – –Environ Injury 5 4 5 4 –Minor Injury 14 19 11 16 13Major Injury – 1 – 1 –MVA 1 – 1 – –Near Miss 1 7 1 2 8Off the Job – – – – –Product Loss – – – – –Lost Time (Total Number of Days) 12 – 12 50 34

Total number of incidents 22 31 19 23 21

Region

2009 2010 2011 2012 2013

KZN 4 5 3 2 2WC 3 2 2 2 2Midrand 13 23 13 9 14EC 2 1 1 3 1Bloemfontein 2 – 1 1 –Client Site – – – 3 –Pretoria – – – 3 2

Total 22 31 19 23 21

RECORDABLE CASE RATE PER MONTH FOR THE PERIOD

2009 2010

0

5

10

15

20

25

2011

KZN WC Bloemfontein Client sideMidrand EC Pretoria

20132012

4 53 2 222 23 2

13

23

13

9

14

2 2 1 1 1 13 3 3

1 2


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74

REPORT CONTINUED

SUStAinABiLityRECORDABLE CASE RATEA Health and Safety Management System, in compliance

with the requirements of the Occupational Health and

Safety Assessment Series (OHSAS) 18001 standard, has been

documented. This standard refers to the requirements of

a behavioural based safety management system to ensure

that employee behaviour drives improvement in the risk

identification of hazards.

The group has successfully maintained its International

Register of Certified Auditors (IRCA) rating for health and safety

management at two of its client sites and is implementing this

management system throughout the group.

LOST DAy RATE (LDR)It is always a drive to obtain the lowest value based on LDR,

however, due to human factor it is virtually impossible. It is

imperative that BCX maintains its LDR below 1,000 and in this

endeavour it has been successful. For the past 5 years BCX has

been able to maintain a level well below 1,000.

The LDR has been impacted by a single incident where an

employee was involved in a motor vehicle accident and was off

work for an extended period.

A lost day rate is defined as an occupational injury or illness that

results in one or more days away from work.

Lost Day Rate =Total number of lost days

X 200 000Total hours worked

LOST DAY RATE

0

0.50

1.00

1.50

2.00

2.50

3.00

3.50

Sep 2012

Oct 2012

Nov2012

Dec2012

Jan2013

Feb2013

Mar2013

Apr2013

May2013

Jun2013

Jul2013

Aug2013

INjURy RATE (IR)The Injury Rate is a standard international measure for reporting

work-related injuries and illnesses and other safety incidents

resulting in injury. The IR is the number of fatalities, lost workday

cases, restricted work cases, medical treatments beyond first-aid

cases and accepted illnesses, for every 200 000 employee hours

worked, reported on a 12-month moving average basis.

IR =Total number of injuries

X 200 000Total Hours Worked

INJURY RATE

0

0.20

0.40

0.50

0.60

0.70

0.80

0.90

Sep 2012

Oct 2012

Nov2012

Dec2012

Jan2013

Feb2013

Mar2013

Apr2013

May2013

Jun2013

Jul2013

Aug2013

0.30

0.10

HUMAN RIGHTS The human rights of employees are entrenched in the

Constitution of the Republic of South Africa and employee

rights relating to the work environment are protected by the

Basic Conditions of Employment Act, the Labour Relations

Act and the Occupational Health and Safety Act (OHASA). The

group’s human resources policies comply with all South African

legislative frameworks. In foreign countries prevailing legislation

may not afford employees the necessary degree of human

rights protection. The group is aware that it has a special duty

of care to ensure that its own employees and those of suppliers

in foreign countries are afforded the right level of human rights

protection. This is particularly relevant as the group expands its

footprint into Africa. There were no incidents of discrimination

at any of the group’s operations during the year.

HIv/AIDS IN THE wORKPLACE The group has a Dread Disease Policy (inclusive of HIV/Aids).

The purpose of the policy is to:

• provide guidelines on managing dread diseases in the

workplace;


7531/082013

• protect the legal rights of employees at work who are living with

a dread disease, and all other employees;

• ensure that employees who are living with a dread disease are

provided with the appropriate support through the group’s

employee wellness programme;

• encourage and facilitate counselling support services to those

employees who are affected by a dread disease, so as to

improve the overall health and wellbeing of these employees;

• minimise, as far as possible, the spread of any communicable

dread diseases and the impacts thereof, within the organisation

and its stakeholders; and

• ensure that all affected employees are managed with

compassion, respect and without discrimination.

Employees have access to the Wellness Connect (ICAS) HIV/

Aids management programme and the Discovery Health HIV/

Aids benefit. ICAS provides affected employees and their families

with the necessary pre and post testing support, counselling and

information needed, when faced with HIV/Aids infection.

TRANSFORMATIONBusiness Connexion is committed to promoting socio-economic

sustainability on the African continent where it operates. Embracing

sustainability in Africa is a business imperative. The group is

committed to supporting sustainability policies of the African states

aimed at addressing the social imbalances created in the past.

The group embarked on a programme of transformation nearly

fifteen years ago - long before the B-bBEE legislation was passed

in 2003. Management recognised that the group’s competitiveness

and on-going success depend upon its ability to carve a niche

in the market. Sustainability, tackled with passion and creativity,

will create a platform for business growth, which will further

enhance stakeholder value. Management also recognised that

empowerment will help the group attract and retain quality

employees from all cultural backgrounds.

The group believes that successful transformation begins with its

commitment to investing in the development of South African

society in a socially and economically sustainable manner, while

honouring the interests of all the organisation’s stakeholders. To

this end, the board has established sustainability programs and

structures, including the National transformation committee.

NATIONAL TRANSFORMATION COMMITTEEThe National transformation committee is a sub-committee

of the group Exco and is appointed to oversee transformation

within the group. This committee has overall responsibility and

accountability for the transformation process. Its responsibilities are

as follows:

• Formulating a strategy for transformation within the group

aligned with the board mandate and to implement a structure

and process to support the mandate.

• Ensuring the establishment of transformation committees at

business unit level.

• Recommend transformation targets for each pillar on an annual

basis to the group Executive committee.

• Recommend the key performance indicators and define

reporting requirements.

• Ensuring a culture of change is introduced and maintained

within the group.

• Communicate to employees on transformation processes and

progress.

The National transformation committee comprises of members

appointed by the CEO from time to time. The CEO chairs, or

appoints the chairman, of the National transformation committee.

Pillar owners are members of the National transformation

committee responsible for driving pillar programmes and strategies.

Any other member may be co-opted from time to time.

B-bBEE SCORECARDAs reflected in the scorecard below, Business Connexion

retained a level 3 B-bBEE rating following an external rating and

verification process conducted in December 2012. The Business

Connexion scorecard improved in 2013, scoring 77.72 points. This

improvement is attributable to Business Connexion’s commitment

to diversity and transformation.

Available

Externally

verified

Externally

verifiedpoints BCG BCG

DTI

Targets

Score –

2013

Score –

2012

Equity ownership 23 18,40 19,08Management control 11 8,59 9,50Employment equity 13 0,88 4,18Skills development 17 4,63 4,92Preferential procurement 26 22,22 18,36Enterprise development 11 11 15Socio-economic

development 12 12 5

Total score 113 77,72 76,03


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76

REPORT CONTINUED

SUStAinABiLitySEvEN-POINT FRAMEwORKIn line with the generic B-bBEE scorecard and the ICT charter, the transformation programme of the group is based on a seven-point

framework structured as follows:

1. Equity ownershipBusiness Connexion recognizes the importance of all the

elements of B-bBEE, especially equity ownership. In line with

legislation the board considers equity ownership as a priority

element.

2. Management controlThe group is led by a board and an executive leadership team

that is reflective of the broader South African population. Black

people constitute 50% of the board and 36% of the executive

committee.

3. Employment equityBusiness Connexion embraces diversity as reflected by the

diverse representation at all levels within the group in terms

of race, colour, gender, religious affiliation, class or creed.

Embracing and managing diversity is critical to the future

success of the group and will drive business growth. The

group will continue to focus on creating equal opportunity

in recruitment, training, promotion, development and

advancement of all employees with the intention of bolstering

its current group-wide black ratio.

The objectives of the group’s employment equity plan include

the following:

• Increase the number of designated groups in order

to improve the group’s employment equity score on

the generic B-bBEE scorecard and strive to bridge the

representation gap.

• Alignment of human resource policies, processes, practices

and systems with employment equity goals and objectives.

• Ensuring senior and executive management take

accountability for employment equity goals, plans and

targets.

• Promote a culture that embraces diversity, employment

equity and inclusion in the group.

• Review internal transformation education, communication,

monitoring and evaluation plans and strategies.

• Introduces measures to attract and retain talent, in particular

black talent.

Management Control

Skills Development

Preferential Procurement

Enterprise Development

Corporate Social Investment

Employment Equity

Equity Ownership


7731/082013

Employment equity statistical profile

ACI w F

Occupational Levels

2013

%

2012

%

2013

%

2012

%

2013

%

2012

%

Executive management 36,36 40,00 66,67 60,00 25,00 10,00Senior management 21,92 16,80 78,08 83,20 21,92 20,00Middle management/ professionals 19,27 17,87 80,72 82,13 25,27 24,71Junior management/associate professionals 42,54 42,55 57,46 57,45 34,23 35,51Semi-skilled 80,72 77,44 19,28 22,56 44,48 29,52

A = African; C = Coloured; I = Indian; W = White; F = Foreign National

Business Connexion believes that addressing the imbalances

of the past is not a once-off occurrence. The group views its

transformation as an ongoing process and uses several tools to

monitor progress.

4. Skills developmentAs Africa’s leading ICT company, Business Connexion is acutely

aware that its expertise needs to be reflected in all its diverse

personnel. Systematic and organised training efforts are

implemented to ensure that the development of employees

from previously disadvantaged backgrounds is not left to chance.

The development of skills in the ICT industry has been identified

as one of the priority areas to transform the sector. Sustainable

socio-economic growth in South Africa and the developing

world at large lies in building a knowledge-based economy

through the development of a strong ICT sector and associated

ICT skills. This will help drive an economy that offers society,

previously disadvantaged communities in particular, greater

access to opportunities for improving their quality of life in

terms of knowledge and skills acquisition.

Business Connexion is proud of its sound business track record

spanning over three decades in the ICT sector. This track

record has been underpinned by huge investments in the field

of education and training. The focus areas of our learning and

developing strategy include diversity training, management

development, ICT technical skills development, and internship

and learnership programmes.

5. Preferential procurementBusiness Connexion recognises that if transformation and

black economic empowerment in South Africa are to be

successful, big business must actively support the development

of smaller enterprises. If successfully implemented, preferential

procurement will drive entrepreneurship, skills development

and job creation.

6. Enterprise and supplier developmentIt is the policy of the group and it’s wholly owned South African

subsidiaries to give small to medium size businesses (including

Black owned and Black women owned concerns) practical

opportunities to participate in sub-contracting, enterprise

development and procurement at Business Connexion.

We acknowledge that Enterprise Development plays a vital role

in the transformation of the South African economy and can

contribute to market share for Black Economic Empowerment

companies. SMMEs are considered significant contributors

towards economic growth and job creation.

Our enterprise development strategy as summarised below,

seeks to enhance the support we give to existing black owned,

black empowered and black engendered SMMEs and in

so doing contribute to the South African government’s job

creation agenda.


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78

REPORT CONTINUED

SUStAinABiLityPILLAR 1 PILLAR 2 PILLAR 3

SMME

Connect Programme

Supplier

Connect Programme

Entrepreneur

Connect Programme

vision Bolster strategic and business

relationships with SMMEs

that provide related or

complimentary service offerings.

Increase market accessibility

for designated suppliers

previously excluded from the

economic mainstream through

procurement and business

linkages.

Unlocking the potential of

emerging entrepreneurs.

Strategic Objectives Strengthen partnerships with

SMMEs that provide related

service and/or product offerings.

Strengthen SMME access to

markets through procurement

and business linkages.

Enhance awareness of the

value of entrepreneurship to

SMME suppliers, partners and

subcontractors.

Leverage SMME partnerships to

access markets, public sector in

particular.

Increase the volume of

purchases from black owned

enterprises.

Implement a franchise model

where applicable.

Establish enterprise

development partnerships with

private and public sector clients.

Enhance the group’s Preferential

procurement score through

increased spend on suppliers

identified as enterprise

development projects.

Enable SMMEs to access

funding through business

associations, partnerships and

networks.


7931/082013

7. Corporate Social Responsibility (CSR)Philosophy and Mission:Business Connexion’s CSR mission is to empower young

people to be able to change their lives as well as those of their

communities through technology. We see our responsibility

towards the communities where we operate as business

imperative and this forms part of the overall sustainability

requirements for the organisation.

CSR activities need to be aligned to:• achieve social and economic imperatives,

• support the national government’s objectives in addressing

socio-economic imperatives, and ensure that organisational

objectives and strategies for sustainability are met;

• As part of its overall CSR strategy, Business Connexion makes

a clear distinction between charity/philanthropic giving,

corporate social investment (CSI) and socio-economic

development (SED).

Charity/philanthropic giving incorporates once-off donations

of money and/or time to a charitable organisation or NGO

to aid in the immediate relief of basic needs and once-off

donation of money towards an event or group of people for the

benefit of a group of people in need and/or an NGO. Charity/

philanthropic giving resides with the office of the CEO.

Corporate Social Investment (CSI)CSI is defined as monetary and non-monetary contributions

towards long term sustainable social projects through

resources that address social development needs in which the

organisation has a long-term commitment and involvement.

Socio-economic development (SED)SED is defined as social investment initiatives that aim to create

sustainable access to the economy for beneficiaries whereby

the focus is on the economic upliftment and sustainability of

previously disadvantaged individuals (PDIs).

Business Connexion’s CSI and SED focus is on:• Education and skills programmes; as well as

• School development programmes.

Business Connexion has an initiative called, letmelearn™ which

hosts its CSI and SED programmes. letmelearn™ is an initiative

to drive positive social connectivity through technology and its

mission is to empower young people to change their lives and

communities through technology.

Today, learning is not an option for millions of young people

around the continent. The absence of learning is a signal of

a greater absence: a lack of investment in their potential to

contribute, to lead, to be a part of a community.

Together, we can reclaim high quality education by touching

one school, one class and one young person at a time. We

believe that technology can empower young people to not only

change their lives for the better, but those of their communities

as well. Technology is one of the key vehicles that can assist in

unleashing human potential.

Our letmelearn™ manifesto says:• letmelearn™ and you will forget my colour, my ethnicity, my

gender, my ability, my disability, my religion, my income level

and my background.

• letmelearn™ and I will dream-Big.

• letmelearn™ and I will be empowered.

• letmelearn™ and I will lead.

• letmelearn™ and I will succeed.

In and outside of the class-room, letmelearn™ and you will see

a powerful generation raised on technology


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80

for the year ended 31 august 2013


8131/082013

TABLE OF

INTEGRATED REPORT31/082013

CONtENtspage

Audit and compliance report 82

Directors’ responsibility statement 84

Certificate by company secretary 85

Responsibility for financial statement preparation 85

Directors’ report 86

Independent auditor’s report 88

Remuneration report 89

Statements of financial position 98

Statements of comprehensive income 99

Statements of changes in equity 100

Statements of cash flows 102

Accounting policies 103

Notes to the financial statements 118

Annexure A – Investment in subsidiaries 149

level of assuranceThese financial statements have been audited in compliance with Section 30 of the Companies Act

published19 November 2013


31/082013

82

REPORTCOMPLIANCE

AUDIT AND

The Audit and compliance committee has the pleasure of presenting its report for the group for the year ended 31 August 2013

The Audit and compliance committee has adopted formal terms of reference, delegated to it by the board of directors. The terms of reference are

aligned with the Companies Act, the King Report on Governance for South Africa 2009 (King III) and the JSE Listings Requirements.

Composition of the CommitteeThe Audit and compliance committee consists of only non-executive directors, all of whom are financially literate. The committee meets at least four

times per annum in accordance its terms of reference. The members act independently and are listed below:

• Jenitha John (chairperson)

• John Bester (appointed 8 October 2013)

• Alex Darko (appointed 8 October 2013)

Business Connexion’s chief executive officer, deputy chief executive officer, chief financial officer, chief audit executive, external auditors and other

assurance providers attend committee meetings in an ex officio capacity.

The Audit and compliance committee has discharged the functions in terms of its charter approved by the board and ascribed to it in terms of the

Companies Act as follows:

• reviewed the interim, provisional and year-end financial statements and integrated report, culminating in a recommendation to the board to adopt

them. In the course of its review the committee:

• took the appropriate steps to ensure the financial statements were prepared in accordance with International Financial Reporting Standards

(IFRS) and in a manner required by the Companies Act;

• considered and, when appropriate, made recommendations on internal financial controls;

• dealt with concerns or complaints on accounting policies, internal audit, the auditing or content of annual financial statements, and internal

financial controls;

• reviewed legal matters that could have a significant impact on the organisation’s financial statements; and

• reviewed all adjustments resulting from the external audit and accepted and adjusted audit differences as not material to the fair presentation of

the financial statements;

• reviewed external audit reports on the annual financial statements;

• reviewed and approved the internal audit plan;

• reviewed internal audit and risk management reports and, where relevant, made recommendations to the board;

• evaluated the effectiveness of risk management, controls and governance processes;

• verified the independence of the external auditor, nominated KPMG Inc. as auditor for 2013 and noted the appointment of Mr Pierre Fourie as the

designated auditor;

• approved audit fees and engagement terms of the external auditor;

• reviewed capital expenditure throughout the group for adequate control, monitoring and reporting;

• reviewed the management and reporting of tax related matters;

• reviewed the management and reporting of treasury related matters;

• sought assurance from the chief information officer on management of IT risks as it related to financial reporting;

• considered, and deferred, the establishment of a combined assurance committee at group level; and

• reviewed a documented assessment, including key assumptions, prepared by management of the going concern status of the company and has

accordingly confirmed to the board that the company will be a going concern for the foreseeable future.

internal audit The Audit and compliance committee has oversight of the group’s financial statements and reporting process, including the system of internal financial

control. It is responsible for ensuring that the group’s internal audit function is independent and has the necessary resources, standing and authority in

the organisation to discharge its duties. The committee oversees cooperation between internal and external auditors, and serves as a link between the

board of directors and these functions. The committee accordingly recommends the internal audit charter for approval by the board and approves the

annual internal audit plan. The chief audit executive is responsible for reporting on the findings of the internal audit work against the agreed internal

audit plan to the Audit and compliance committee on a regular basis. The chief audit executive reports functionally to the chair of the audit committee

and administratively the chief financial officer.


8331/082013

During the year internal audit performed a review of the adequacy and effectiveness of the group’s internal control environment, including its

internal financial controls. Based on the results of these reviews, internal audit confirmed to the Audit and compliance committee that nothing has

emerged to indicate material weakness in the internal control processes including internal financial controls. The written assessment by internal

audit formed the basis for the Audit and compliance committee’s recommendation to the board in this regard.

risk managementThe Risk management report on pages 64 to 67 provides information on the review and assessment of the risks identified through the risk

management process and an evaluation of management’s mitigating plans and actions to reduce the residual risk.

external auditThe competency, skills and experience of the external auditors were considered and the committee is satisfied that KPMG Inc. meets all the

requirements to fulfil the role of external auditors of Business Connexion. Business Connexion has an audit partner rotation process (maximum five

years) in accordance with the relevant legal and regulatory requirements. The auditors, as well as the individual designated auditor, are reappointed

annually for the forthcoming year at the annual general meeting.

Fees paid to the auditors are disclosed in note 24 on page 131.

appropriateness and expertise of the Chief finanCial offiCer and finanCe funCtionThe Audit and compliance committee, at a meeting held on 6 August 2013, considered the competence, skill and experience of the chief financial

officer in terms of section 3.84(h) of the JSE Listings Requirements and was satisfied that Lawrence Weitzman met all the requirements to fulfil the

role of chief financial officer for Business Connexion.

Following a review and meeting of the requirements of each of the terms of reference, the Audit and compliance committee, individually and

combined, is satisfied that the finance function of the group and its subsidiaries is adequately skilled, resourced and experienced.

The Audit and compliance committee recommended the approval of the unqualified audited annual financial statements to the board. The board

has subsequently approved the financial statements which will be open for discussion at the forthcoming annual general meeting.

The Audit and compliance committee will continue to apply rigour in overseeing the group’s integrated reporting process and the effectiveness of

the internal control environment, governance and risk management processes.

J John

Audit and compliance committee chairperson


31/082013

84

STATEMENTrEsPONsIbILItyDIRECTORS ’

The directors are responsible for the preparation and fair presentation of the consolidated and separate annual financial statements of Business

Connexion Group Limited, comprising the statement of financial position at 31 August 2013, and the statements of comprehensive income, changes

in equity and cash flows for the year then ended, and the notes to the financial statements, which include a summary of significant accounting policies

and other explanatory notes, in accordance with International Financial Reporting Standards, and the requirements of the Companies Act of South

Africa. In addition, the directors are responsible for preparing the directors’ report.

The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements that

are free from material misstatement, whether due to fraud or error, and for maintaining adequate accounting records and an effective system of risk

management.

The directors have made an assessment of the ability of the company and its subsidiaries to continue as going concerns and have no reason

to believe the businesses will not be going concerns in the year ahead.

The auditor is responsible for reporting on whether the consolidated and separate financial statements are fairly presented in accordance with the

applicable financial reporting framework.

approval of Consolidated and separate finanCial statements The consolidated and separate annual financial statements of Business Connexion Group Limited, as identified in the first paragraph, were approved by

the board of directors on 15 November 2013 and signed by:

aC ruiters lB mophatlane ln Weitzman

Chairman Chief executive officer Chief financial officer


8531/082013

SECRETARy

CERTIF ICATE By

COMPANy

STATEMENT PREPARATION

RESPONSIB IL ITy FOR

fINANCIAL

In terms of section 88(2) of the Companies Act of South Africa, I certify that, to the best of my knowledge and belief, Business Connexion Group

Limited has, in respect of the financial year reported upon, lodged with the Registrar of Companies all returns required of a public company in terms of

the abovementioned Act and that such returns are true, correct and up to date.

J de koker

Company secretary

15 November 2013

Mr Lawrence Weitzman CA(SA), the chief financial officer, is responsible for the financial statements and has supervised the preparation thereof in

conjunction with Ms Prudence Mbebe CA(SA), the group financial manager.


31/082013

86

REPORTdIrECtOrs’

nature of BusinessBusiness Connexion Group Limited (Business Connexion or the group or the company) is an information communications technology (ICT) investment holding company incorporated in South Africa and listed on the JSE Limited. The group has a track record of 34 years as a leading ICT company.

Business Connexion is a black empowered integrator of innovative business solutions based on information and communications technology, runs mission-critical ICT systems and manages products, services and solutions for JSE-listed and key public sector organisations, parastatal enterprises and medium-sized companies.

Corporate governanCeBusiness Connexion is committed to the principles of the Code of Corporate Practices and Conduct set out in the King Report on Corporate Governance (King III). Further details are included in the Corporate governance report on pages 52 to 63.

operating resultsA review of operations of the group is provided in the Chief executive officer’s report and the Chief financial officer’s report on pages 28 to 31 and 32 to 37 respectively.

Capital expenditureCapital expenditure is closely monitored by the board. A total of R264,9 million (2012: R205,6 million) was spent on capital expenditure with R207,0 million (2012: R129,0 million) relating to income generating acquisitions.

share Capitalauthorised share capitalThe company commenced the year with authorised share capital of 847 457 627 ordinary shares of R0,0059 each and 150 000 000 “A” shares of R0,0059 each. This remained unchanged for the year under review.

issued share capitalThe company commenced the year with issued share capital of 404 972 468 ordinary shares of R0,0059 each and 100 133 334 “A” shares of R0,0059 each. This remained unchanged for the year under review.

The company’s share premium account has remained unchanged at R5,4 billion for the year under review.

interests of direCtors in sharesOn 31 August 2013, the directors beneficially held in aggregate 1 576 381 (2012: 1 655 381) ordinary shares and 388 305 (2012: 388 305) “A” shares in the company. The directors have no interests in options (2012: 149 334 options) relating to Business Connexion shares.

The executive directors have 13 644 000 (2012: 13 644 000) “A” shares in the BCG Management “A” Share Trust.

No director of the group, other than Messrs LB Mophatlane and NN Kekana, hold, directly or indirectly, more than 1% of the issued share capital of the company. For further details refer to the Remuneration report on pages 89 to 97.

share inCentive sChemesThe group operates a share trust and an executive share option scheme. The objectives are to incentivise the employees of the group by enabling them to acquire shares in the company.

The trustees of the trust are Messrs LC Marran and RS Hislop. Mr JM Poluta resigned on 21 June 2013.

The trust is entitled to acquire shares from time to time, which it requires to meet its commitments, either by purchasing those shares on the open market or by subscribing for new shares. At 31 August 2013, the trust held 1 053 294 shares (2012: 1 701 630 shares).

Share options granted in terms of the executive share option scheme are allocated to key individuals based on the following criteria:• impact on the group’s employees;• impact on key clients;• impact on technology partners;• impact on the community; and• impact on the financial results.

These options can only be exercised provided that a minimum growth rate in total shareholder return is achieved over the vesting period.

The aggregate number of unissued shares that may be reserved for all option schemes is limited to 26 263 691 shares. Details of the options granted in terms of the schemes are set out on pages 95 to 97 of the Remuneration report.


8731/082013

BCg management “a” share trustThe ICT industry is faced with significant skills shortages and it is with this in mind that the BCG Management “A” Share Trust (the trust) was established as part of the approved B-bBEE deal concluded in August 2010. The objective of the trust is to grant “A” shares to participating employees to promote economic empowerment within the group as well as to encourage employees to drive growth and profitability within the group.

The voting rights attached to the “A” shares held by the trust shall remain vested in the beneficiaries and will be exercised on their behalf by the trust trustees. Therefore the trustees will not have any discretion over the “A” share votes.

The allocation of “A” shares to the participating employees is based on parameters defined in the Remuneration report on page 93.

dividendsThe board declared normal dividend number 9 of 20 cents per share on 15 November 2013. Dividend number 8 of 20 cents per share was paid on 21 January 2013.

speCial resolutionsBusiness Connexion passed the following special resolutions during the year for the purposes indicated below:• a special resolution was passed at the annual general meeting to approve non-executive directors’ remuneration for 2013/2014;• a special resolution was passed at the annual general meeting to approve the general authority to repurchase shares;• a special resolution was passed at the annual general meeting of the company for the approval of the MOI;• a special resolution was passed at a general meeting to approve a scheme of arrangement in terms of section 114 of the Companies Act;• a special resolution was passed at a general meeting to approve the specific repurchase in terms of paragraph 5.69 of the Listing Requirements

(excluding Eligible Shareholders vote); and• a special resolution was passed at a general meeting to approve the repurchase of greater than 5% of the Eligible “A” Shares in terms of section 48(8)(b)

of the Companies Act and the repurchase of Eligible “A” Shares from a Director in terms of section 48(8)(a) of the Companies Act

suBsidiariesAnnexure A to this report sets out the principal subsidiaries that the directors consider appropriate for shareholders to gain a proper appreciation of the group’s affairs. A full list of the companies forming the group will be made available to shareholders on written request to the company secretary.

Corporate aCtivityEffective 1 February 2013, the group acquired 100% of the issued share capital of Integr8 IT Proprietary Limited (Integr8 IT) for a total consideration of R126,0 million which was settled through an initial payment of R56,0 million and three potential earn-out payments of up to a maximum amount of R70,0 million, payable on 15 October 2013, 15 October 2014 and 15 October 2015, respectively, and which will be determined and calculated on the achievement of certain profit warrantees. Integr8 IT is one of the largest privately owned ICT managed services companies to mid-market corporates throughout South Africa. All rights and obligations as purchaser, have been ceded, under the Sale Agreement to the group’s 70% held subsidiary, UCS Solutions Proprietary Limited.

Effective 1 April 2013, the group concluded a transaction to sell, as a going concern, its Learning Solutions business to ATIO’s Netcampus Proprietary Limited, in exchange for 50% plus 1 share of the ordinary shares of Netcampus Proprietary Limited.

Effective 11 July 2013, the group concluded a transaction to sell, as a going concern, its QDD business to NorthgateArinso Africa Proprietary Limited (NGA Africa), in exchange for 50% of the ordinary shares in NGA Africa. NGA Africa forms part of the NorthgateArinso group, which is a leading global human resources software and services provider offering human resources business solutions to employers of all sizes, including Global Fortune® 500 companies and public sector organisations.

direCtorate and seCretaryThe board of directors in office at the date of this report is set out on pages 16 to 19. The company secretary is responsible for the duties stipulated in Section 88 G (d) of the Companies Act of South Africa and has signed the appropriate declaration as contained on page 85.

The company secretary is J de Koker.

The address of the company secretary is that of the registered office, Business Connexion Park North, 789 16th Road, Randjespark, Midrand, 1685.

suBsequent eventsEffective 1 September 2013, the group entered into an agreement to dispose of its entire interest in the Q LINK business (Q LINK) to Summit Garnishee Solutions Proprietary Limited (SGS) as a going concern for a cash consideration of R187,5 million. SGS is a privately-owned company that is not a related party to the group. The consideration was settled in full on the date that the last suspensive condition was fulfilled.

Effective 8 October 2013, the transaction to repurchase, by way of a scheme of arrangement, 25 033 334 BCX “A” ordinary shares and the consequent delisting of all the remaining “A” shares was successfully implemented.


31/082013

88

REPORT

INDEPENDENT

AudItOr’sto the shareholders of Business Connexion group limitedWe have audited the consolidated and separate financial statements of Business Connexion Group Limited, which comprise the statements of financial

position at 31 August 2013, and the statements of comprehensive income, changes in equity and cash flows for the year then ended, and the notes to

the financial statements which include a summary of significant accounting policies and other explanatory notes set out on pages 89 to 150.

direCtors’ responsiBility for the finanCial statements The company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with International

Financial Reporting Standards and the requirements of the Companies Act of South Africa, and for such internal control as the directors determine is

necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

auditor’s responsiBility Our responsibility is to express an opinion on these financial statements 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 about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures

selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, 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 financial statements 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, as well as evaluating the overall presentation of the financial statements.

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

opinion In our opinion, these financial statements present fairly, in all material respects, the consolidated and separate financial position of Business Connexion

Group Limited at 31 August 2013, and its consolidated and separate financial performance and consolidated and separate cash flows for the year then

ended in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa.

other reports required By the Companies aCt As part of our audit of the financial statements for the year ended 31 August 2013, we have read the Directors’ report, the Audit committee’s report and

the Company secretary’s certificate for the purpose of identifying whether there are material inconsistencies between these reports and the audited

financial statements. These reports are the responsibility of the respective preparers. Based on reading these reports we have not identified material

inconsistencies between these reports and the audited financial statements. However, we have not audited these reports and accordingly do not

express an opinion on these reports.

kpmg inc.

per lp fourie

Chartered Accountant (SA)

Registered Auditor Director

KPMG Crescent

85 Empire Road

Parktown

Johannesburg

15 November 2013


8931/082013

REPORTrEMuNErAtION

In preparing this report, Business Connexion has conducted an analysis of the extent to which the group’s remuneration policy complies with King III

and due regard has been given to these requirements.

Cognisant of the fact that the group has a presence in South Africa and seven other countries on the African continent and offices in the United

Kingdom and Dubai, the Business Connexion remuneration and reward strategy strives to:

• align, enhance and reinforce individual and team performance;

• balance the application of financial and non-financial rewards; and

• ensure fairness and consistency commensurate with individual performance, the labour market and individual roles and responsibilities.

In realising the above, Business Connexion maintains a reward strategy that supports the group’s business strategies.

The remuneration policy is aimed at driving a high-performance culture based on Business Connexion’s values and attracting, retaining and developing

key talent.

The design and implementation of executive reward policies are guided by the principle to include a strong link between pay and performance, thereby

placing a significant portion of the remuneration ‘at risk’, measured at group, divisional and individual performance level. The policy supports the group

in striving to be an employer of choice in all markets within which it operates.

The objective with these remuneration principles is to position the group to be:

• competitive in its respective labour markets;

• aligned to the market in terms of remuneration relating to guaranteed and non-guaranteed remuneration, incentives and recognition; and

• driving the right performance-driven behaviour in the group.

These remuneration principles support the group’s strategic human resources imperatives:

• the attraction, retention and engagement of the right calibre of talent;

• positioning the group as an investor in people and an employer of choice;

• developing and growing our people;

• equitably rewarding individual and team performance;

• driving transformation initiatives;

• supporting the realisation of the group vision; and

• focusing on both short-term and long-term incentives.

the remuneration and nominations Committee (renco) The ICT sector in which Business Connexion operates is characterised by rapid change and demands a high level of technical skills. The ideal

employees and executives are hard to find, extremely mobile and highly sought-after, both locally and internationally. Keeping them motivated

and appropriately rewarded while balancing the financial concerns of shareholders is a continual challenge.

The ReNco operates as a sub-committee of the board. The focus of its activities is on the group’s remuneration policy, the determination of

remuneration levels, short-term and long-term incentives and retention plans.

The committee is committed to applying independent and objective oversight. Its overriding mission is to ensure that the remuneration policies

and practices enable the achievement of the business objectives.

In the application of agreed remuneration principles, the ReNco ensures that reward practices support a performance-oriented culture and are aligned

with the group’s fundamental belief in total accountability and transparency.

It has been an unprecedented year in that remuneration has been widely discussed by regulators, politicians and the public across the jurisdictions

in which Business Connexion operates. It is incumbent upon a listed company to reflect on these changes. The committee, in addition to its regular

business, has reviewed a comprehensive survey of the new remuneration trends and changing attitudes in all its core geographies.


31/082013

90

REPORT CONTINUED

rEMuNErAtION

role, purpose and prinCipal funCtions The role, purpose and principal functions of the ReNco include:

• approving the group’s remuneration strategy, principles and policy;

• annual review of executive and senior management remuneration ensuring that an appropriate balance exists between guaranteed and

performance-based remuneration;

• fulfilling the role of a nominations committee, to ensure that suitably qualified persons are nominated to the board for appointment as executive or

non-executive directors;

• reviewing different methods of remunerating the executive directors, executive management and senior management and ensuring that it is

reasonable;

• reviewing publications of professional executive recruitment organisations and current industry practices to understand trends;

• reviewing existing or proposed incentive schemes across the group;

• reviewing benefit schemes across the group;

• reviewing related party transaction disclosure, if any;

• succession planning for executive directors and executive management and other strategic positions/roles;

• evaluating the performance of the chief executive officer and reviewing the evaluation of the performance of other executive directors; and

• reviewing principal matters relating to employment practices.

In executing its responsibilities, the ReNco has access to independent external consultants to ensure it receives independent advice. In addition, the

committee regularly reviews external reports on developments in local and international remuneration trends and practices.

Talent management, retention and succession of senior management and executives remained key items on the committee’s agenda during the year.

The group is conscious of the need to constantly refresh the means of incentivising its employees in order to meet the pressures of competition in

labour markets within the context of a much changed global landscape.

remuneration and effeCtive risk management The group applies a variable performance reward model which is closely linked to profit before tax performance against pre-determined targets.

The committee is confident that the remuneration policy aligns top management’s interests with those of shareholders by promoting and measuring

performance that drives long-term growth thereby creating sustainable shareholder value.

The rewards of the various group executives are linked to the specific divisional performance and also on the overall performance of the group taking

into consideration financial performance and compliance with the desired culture and values.

The ReNco ensures that corporate governance and legal compliance requirements are considered when reviewing existing remuneration practices or

implementing new remuneration plans or policies. The committee furthermore ensures that, through the continuous assessment of risk factors within

the approved group risk framework, shareholder interests are protected, inappropriate behaviour is mitigated in the construct of the reward systems,

and remuneration practices are balanced and appropriately aligned to the group’s risk profile. The following risk-mitigating controls are part of the

design of the remuneration practices:

• mix of remuneration elements

The committee determines each component of remuneration (as it forms part of the total remuneration mix) both separately and in totality and

ensures that in total the guaranteed package, the short-term incentive and long-term incentive components provide for a balanced mix driven by

sustainable business performance. The long-term incentive scheme is designed such that a balance is struck between retention and performance

over the long-term time horizons of the business development cycle.

• mix of performance measures

Financial and non-financial measures are used in the annual short-term incentive and long-term incentive schemes to ensure that performance-related

rewards are conditional upon achievement of a diverse mix of targets, thereby protecting shareholder interests over the medium and long term.


9131/082013

• other controls

The committee has an overriding discretion to approve short-term incentive payments in the event that there are unintended consequences as a

result of external factors influencing the organisation’s performance, or for other reasons as deemed appropriate by the committee.

looking forWard The ReNco will continue to ensure that reward packages remain appropriately competitive, provide an incentive for performance, and take due

regard of the group’s culture, values, philosophies, business strategy, risk management and capital framework. The committee will continue to review

the existing remuneration arrangements, as discussed in this report, taking particular cognisance of any additional regulatory and market driven

remuneration reform proposals.

Further details on the mandate and the composition of the committee appear in the corporate governance report on pages 52 to 63.

remuneration The components of the remuneration mix are designed to support and enable Business Connexion’s strategy. These take account of market realities

and talent requirements in different geographic locations. The remuneration mix consists of:

• base salary and benefits (referred to as total guaranteed package);

• sales incentives;

• key talent retention schemes;

• short-term incentives; and

• long-term incentives.

In order to remain competitive all elements of total remuneration, as well as the remuneration mix, are subject to regular benchmarking exercises.

The remuneration mix may differ depending on seniority within the organisation and geographic location.

There is strong alignment between the types of benefits that are offered to all permanent employees. Defendable differentiation in remuneration

and benefits is applied in terms of market practice, the size and complexity of the position, the need to attract and retain certain scarce and critical

skills and individual performance.

guaranteed remuneration and BenChmarking The group’s remuneration practices have been structured to be competitive in a globally complex and rapidly evolving industry whilst recognising the

importance of cost containment. This ensures that the group can attract, motivate and retain the correct calibre of individuals to achieve the group’s

strategic business objectives. Remuneration is benchmarked to data provided in national executive remuneration surveys.

Guaranteed remuneration, for competent performing individuals on average, is aligned with the median of the market as a general principle. Where

there is a retention risk for scarce skills, management can differentiate and has discretion to pay around the 75th percentile and above of the market.

There is a focused endeavour to manage guaranteed remuneration cost between specified market ranges. These market ranges are obtained from both

national and international salary survey houses on an annual basis and applied as per current best reward practice. These surveys provide relevant

information about pay levels in both South Africa and our international operations.

Annual increases in the total guaranteed package are determined with reference to the scope and nature of an employee’s role, market benchmarks,

personal performance and competence, affordability, company performance, projected consumer price index figures and projected movements in

remuneration in the external market.

In the case of executive directors and the chief executive officer, annual increases are approved on an individual basis by ReNco and the board.

Contributions towards retirement, life cover, disability and medical benefits are included in the total guaranteed package.

All legal entities within the Business Connexion Group have established relationships with retirement funds. All employees, including the executive

directors, are required, as a condition of service, to join the retirement fund affiliated to the legal entity for which they work. The retirement funds are

defined contribution schemes. Contributions to the retirement funds form part of the guaranteed package. Normal retirement age is 60 years.


31/082013

92

All members of the Business Connexion Pension and Provident Fund section of the Alexander Forbes Retirement Fund have the option to change their

pensionable income and monthly contributions made to the fund and the risk benefit funds, subject to the rules of the funds on an annual basis.

Business Connexion offers participation in a nominated medical aid scheme. Membership of the scheme is a condition of service for all permanent

employees unless they are covered by the healthcare fund of the partner.

Business Connexion does not offer post-retirement medical benefits. A small group of employees employed through acquisitions have a post-

retirement medical aid benefit.

International employees are remunerated on a structure of basic salary plus benefits.

short-term inCentivesThe group annual short-term incentive scheme intends to recognise the achievement of a combination of group, divisional and individual performance

objectives against agreed targets. Short-term incentives are delivery specific and are considered to drive competitiveness and performance. bonus

pools are approved centrally, with custodianship by the ReNco, with due consideration of profit before tax and other metrics maintaining a balance in

delivery to both shareholders and employees.

Bonus payments are discretionary and payments made under the plan are dependent upon performance.

The committee has the final discretion in determining the individual amounts that are paid out under the group short-term incentive scheme

considering overall performance in relation to predetermined targets.

long-term inCentives The long-term incentives are intended to reward improved sustainable group performance and create alignment with shareholder interests over the

longer term. The long-term incentive scheme provides management and other senior employees with a stronger link to the continuing performance

of the group, thereby encouraging an equity culture. Long-term incentives are offered through participation in an executive option scheme whose

objectives are to incentivise the employees of the group by enabling them to acquire group shares.

The maximum amount of unissued shares to be utilised for all schemes (excluding the BCG Management “A” Share Trust) amounts to 26 263 691 shares.

The group is authorised to buy any additional shares required on the open market.

Business Connexion group share trust In terms of a general meeting of shareholders held on 28 April 2004, the meeting voted to create a trust called Business Connexion Group Share Trust.

At 31 August 2013, 383 772 (2012: 1 067 774) options were still in issue in this trust and all these will expire in November 2013.

Business Connexion (2009) executive share option scheme The Business Connexion (2009) Executive Share Option Scheme was approved by shareholders on 12 May 2009. The objective and purpose of

this scheme is to grant options to senior employees, to enable them to acquire fully paid shares in Business Connexion so as to promote employee

satisfaction and increase the continuous profitability by enhancing the performance of these employees and retaining their skills.

Share options related to this scheme are allocated to key individuals based on the following criteria:

• impact that the person has on the group’s staff;

• impact that the person has on key clients;

• impact that the person has on technology partners;

• impact that the person has in his/her community; and

• impact that the person has towards the financial result.

BCg management “a” share trust The ICT industry is faced with significant skills shortages and it is with this in mind that the BCG Management “A” Share Trust (“A” Share Trust) was

established. The objective of the trust is to grant “A” shares to participating employees to promote economic empowerment within the group as well as

to encourage employees to drive growth and profitability within the group.

rEMuNErAtIONREPORT CONTINUED


9331/082013

The trust allocated units (one unit in the trust equals one “A” share in the share capital of Business Connexion Group Limited) in the trust to executives

and senior management of the group. 43,5% of the units were allocated to black employees and 56,5% to non-black participating employees.

The allocation of units to participating employees was based on the following parameters:

• executive committee members with a division that generates revenue in excess of R500 000 000 qualified for 3 411 000 units (0,9% shareholding);

• executive committee members with a division that generates revenue less than R500 000 000 qualified for 1 895 000 units (0,5% shareholding); and

• the allocation to management in the E-upper grade with salaries in excess of R1 250 000 was based on their level of contribution to the business as

a whole and ranged from 490 942 to 1 097 004 units (0,13% to 0,29%).

The “A” shares were issued for notional loan funding calculated in terms of the following formula:

NO (notional outstanding) – NA (notional amount of R5,78 increased by 80% of the prime rate) – ND (notional dividend) – OV (option value –

value of zero for BEE participants).

On the ‘participation date’ the number of shares that each “A” shareholder will be entitled to will be calculated based on a formula taking into account

the notional outstanding (above formula) and the 30-day Business Connexion volume weighted traded price at that point in time.

The participation date is defined as the date when:

• the Notional Outstandings of the “A” Shares equal zero; or

• the Unwind Buy-Back has been implemented, whichever occurs earliest in time.

The Unwind Buy-Back will occur when “A” shareholders holding 20% or more of the “A” shares in issue, demand Business Connexion to buy back the

“A” shares determined in terms of the formula. If the Participation Date has not occurred by the sixth anniversary of the Effective Date (31 August 2010),

then Business Connexion shall be entitled to invoke the Unwind Buy-back at any time by delivering a written notice to that effect (“Buy-back Notice”) to

all the holders of “A” shares.

The “A” shareholders signed a subscription agreement to lock them in for a period commencing on the effective date and ending on:

• the 5th anniversary of the effective date; or

• the Participation Date.

After the participation date the “A” shares in issue shall rank pari passu with the ordinary shares in all respects.

the proposed new share incentive plansIn line with local and global best practice, BCX intends to adopt two new share plans, namely a forfeitable share plan and a share appreciation right

plan for executive directors and senior management. Non-executive directors of the company are not eligible to participate in the proposed new share

incentive plans.

The rationale behind the adoption of the proposed new share incentive plans is to align the interests of qualifying employees more closely with that

of Shareholders, with performance vesting conditions governing the vesting of a significant majority of the awards.

On adoption of the proposed new share incentive plans, no further awards will be made under the Business Connexion (2009) Executive Share Option

Scheme.

The proposed new share incentive plans will constitute a share incentive scheme as contemplated in Schedule 14 of the Listings Requirements.

Accordingly, the adoption of the proposed new share incentive plans is subject to approval by Shareholders by ordinary resolution (requiring a 75%

majority of the votes cast in favour of such resolution by all Shareholders present or presented by proxy at the Annual General Meeting).

The salient features of the proposed new share incentive plans are set out in Appendix A forming part of this Integrated Report.


31/082013

94

non-exeCutive direCtors Non-executive directors are appointed to the Business Connexion board based on their ability to contribute insight and experience appropriate to

assisting the group to achieve its objectives. Consequently, fees are set at levels to attract and retain the calibre of director necessary to contribute to a

highly effective board.

They do not receive short-term incentives, nor do they participate in any long-term incentive plans. No arrangement exists for emoluments in respect

of loss of office.

The annual fees payable to non-executive directors for the year commencing 1 September 2013 were approved by shareholders on 14 January 2013.

The fee structure for non-executive directors is split between a base fee in respect of their board membership and an attendance fee as well as

supplementary fees for committee membership.

The board recommends the fees payable to the chairman and non-executive directors for approval by the shareholders. Consideration is given to the

increased responsibility placed on non-executive directors due to onerous legal and regulatory requirements and the commensurate risk assumed.

Benchmarking information of companies of similar size and complexity and projected inflation rate over the period are factors considered when

reviewing the annual fees.

remuneration paid to non-executive directors for the year ended 31 august 2013

directors’ fees

Chairman’s fees

additional fees

Chairman of

committeemember of committee

total 2013

Total 2012

name period r’000 r’000 r’000 r’000 r’000 r’000 R’000

AC Ruiters#& Sept 2012 – Aug 2013 515,2 187,5 99,0 801,7 972,8

FL Sekha‡ 91,7

JM Poluta* Sept 2012 – 21 Jun 2013 112,7 3,8 73,9 190,4 362,6

NN Kekana& Sept 2012 – Aug 2013 155,0 107,0 262,0 307,0

M Lehobye*# Sept 2012 – Aug 2013 155,0 12,5 91,0 82,4 340,9 385,5

J John*& Sept 2012 – Aug 2013 155,0 235,4 53,5 443,9 529,5

DC Sparrow# Sept 2012 – Aug 2013 155,0 58,8 45,5 259,3 284,5

732,7 515,2 262,6 433,4 354,3 2 298,2 2 933,6

* Member of the Audit and compliance committee# Member of the Remuneration and nominations committee& Member of the Risk, sustainability, social and ethics committee

‡ FL Sekha resigned 19 January 2012.

remuneration paid to executive directors for the year ended 31 august 2013 Basic

salaryretention payments

allowances and benefits

pension contributions

total 2013

Total 2012

name period r’000 r’000 r’000 r’000 r’000 R’000

LB Mophatlane Sept 2012 – Aug 2013 5 443,7 1 440,0 184,9 7 068,6 7 040,9

V Olver Sept 2012 – Aug 2013 3 175,2 1 500,0 33,2 280,0 4 988,4 4 257,7

LN Weitzman Sept 2012 – Aug 2013 2 905,8 1 425,0 103,0 192,0 4 625,8 3 566,4

JR Jenkins Sept 2012 – Aug 2013 3 072,8 280,0 71,7 165,0 3 589,5 4 300,6

14 597,5 4 645,0 392,8 637,0 20 272,3 19 165,6

Executive directors are employed under local employment contracts for indefinite periods that require a notice of termination of 30 days on either side.

There are no restraints of trade, nor are there any special severance payment arrangements. They are required to retire from the group at the age of 60,

unless requested by the board to extend his or her term. Employment contracts entitle executives to standard group benefits, as well as participation



9531/082013

in the group’s short-term and long-term incentive schemes. Due to a number of corporate approaches the board approved retention payments at the

beginning of the year to ensure retention of key executives.

remuneration paid to prescribed officers for the year ended 31 august 2013 Basic

salaryretention payments

allowances and benefits

pension contributions

total 2013

Total2012

name period r’000 r’000 r’000 r’000 r’000 R’000

Prescribed officers Sept 2012 – Aug 2013 19 379,3 4 214,5 218,4 854,4 24 666,6 19 971,9

In line with the Companies Act of South Africa, remuneration paid to prescribed officers is reflected above. The group considers executive

committee members, excluding members who are executive directors, to be prescribed officers. Members of the executive committee are disclosed

on page 20 to 23.

The number of prescribed officers at 31 August 2013 was 8 (2012:8).

details of directors’ interests in securities at 31 august 2013 and as at 31 august 2012

2013 2012

namedirect

beneficial indirect

beneficialheld by

associates total

% of issued shares

Direct beneficial

Indirect beneficial

Held by associates Total

% of issued shares

Ordinary shares

LB Mophatlane 200 000 200 000 0,05JM Poluta 45 000 45 000 0,01DC Sparrow 171 575 1 148 806 1 320 381 0,33 171 575 1 398 806 1 570 381 0,39V Olver 32 000 32 000 0,01 32 000 32 000 0,01LN Weitzman 24 000 24 000 0,01 8 000 8 000 0,00

427 575 1 148 806 1 576 381 0,39 211 575 1 398 806 45 000 1 655 381 0,41

“A” shares

DC Sparrow 42 425 345 880 388 305 0,39 42 425 345 880 388 305 0,39

LB Mophatlane and NN Kekana hold 25% and 20% equity interests in Gadlex Holdings Proprietary Limited respectively. Gadlex Holdings Proprietary

Limited owns 94,6% of the issued share capital of Gadlex Proprietary Limited which holds 38 600 000 Business Connexion ordinary shares. Gadlex

Holdings Proprietary Limited holds 18 200 000 Business Connexion “A” shares.

details of executive directors’ share options at 31 august 2013 and as at 31 august 2012

name scheme31 August

2012options

exercised31 august

2013

LB Mophatlane Business Connexion Group Share Trust 133 334 133 334“A” shares 3 411 000 3 411 000

3 544 334 133 334 3 411 000

V Olver “A” shares 3 411 000 3 411 000

LN Weitzman Business Connexion Group Share Trust 16 000 16 000“A” shares 3 411 000 3 411 000

3 427 000 16 000 3 411 000

JR Jenkins “A” shares 3 411 000 3 411 000


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96

share options in issue at 31 august 2013 and as at 31 august 2012

issue nooption

pricespecial

dividend

effective option

priceoffer date

vesting dates

expiry dates

options at 31 august

2013

Business Connexion Group Share TrustIssue 1 R5,37 R1,00 R4,37 7 Nov 2005 One-third Nov 2008 Nov 2011

One-third Nov 2009 Nov 2012One-third Nov 2010 Nov 2013 383 772

Total share options in issue – Business Connexion Group Share Trust 383 772

Business Connexion (2009) Executive Share Option SchemeIssue 1 R3,26 R0,4 R2,86 1 June 2009 One-third June 2012 Sept 2012

One-third June 2013 Sept 2013 111 398One-third June 2014 Sept 2014 1 946 672

2 058 070

Issue 2 R4,76 R0,4 R4,36 1 Nov 2009 One-third Nov 2012 Feb 2013One-third Nov 2013 Feb 2014 345 584One-third Nov 2014 Feb 2015 345 584

691 168

Issue 3 R5,51 R0,4 R5,11 1 Sept 2010 One-third Aug 2012 Nov 2012One-third Aug 2013 Nov 2013 2 321 541One-third Aug 2014 Nov 2014 2 321 541

4 643 083

Issue 4 R4,75 R4,75 8 Feb 2012 One-third Feb 2015 May 2015 2 708 200One-third Feb 2016 May 2016 2 708 200One-third Feb 2017 May 2017 2 708 200

8 124 600

Total share options in issue – Business Connexion (2009) Executive Share Option Scheme 15 516 921

Issue noOption

priceSpecial

dividend

Effective option

priceOffer date

Vesting dates

Expiry date

Options at 31 August

2012

Business Connexion Group Share TrustIssue 1 R5,37 R0,6 R4,77 7 Nov 2005 One-third Nov 2008 Nov 2011

One-third Nov 2009 Nov 2012 511 079One-third Nov 2010 Nov 2013 556 695

Total share options in issue – Business Connexion Group Share Trust 1 067 774

Business Connexion (2009) Executive Share Option SchemeIssue 1 R3,26 R3,26 1 June 2009 One-third June 2012 Sept 2012 107 992

One-third June 2013 Sept 2013 2 033 538One-third June 2014 Sept 2014 2 033 538

4 175 068

Issue 2 R4,76 R4,76 1 Nov 2009 One-third Nov 2012 Feb 2013 439 480One-third Nov 2013 Feb 2014 439 481One-third Nov 2014 Feb 2015 439 481

1 318 442

Issue 3 R5,51 R5,51 1 Sept 2010 One-third Aug 2012 Nov 2012 2 799 105One-third Aug 2013 Nov 2013 2 799 105One-third Aug 2014 Nov 2014 2 799 105

8 397 315

Issue 4 R4,75 R4,75 8 Feb 2012 One-third Feb 2015 May 2015 2 966 533One-third Feb 2016 May 2016 2 966 533One-third Feb 2017 May 2017 2 966 534

8 899 600

Total share options in issue – Business Connexion (2009) Executive Share Option Scheme 22 790 425



9731/082013

31 august

2013

31 August

2012

movement in share optionsBusiness Connexion group share trustOpening balance of options granted 1 067 774 2 170 401 Options forfeited (102 332) (139 987)Options exercised (581 670) (962 640)

Total options outstanding to Business Connexion employees 383 772 1 067 774Shares awaiting transfer 66 666Number of ordinary shares on hand (1 053 294) (1 701 630)

Surplus of ordinary shares (699 522) (567 190)

Business Connexion (2009) executive share option schemeOpening balance of options granted 22 790 425 19 661 057 Options issued 9 374 600 Options replaced (650 000)Options forfeited (6 540 962) (4 480 556)Options exercised (732 542) (1 114 676)

Total options outstanding in Business Connexion (2009) Executive Share Option Scheme 15 516 921 22 790 425 Number of ordinary shares on hand in Business Connexion Proprietary Limited (2 361 549) (3 173 438)

Shortfall in ordinary shares 13 155 372 19 616 987

Total shortfall in ordinary shares 12 485 850 19 049 797

uCs zero cost option schemeordinary sharesOpening balance of options granted 245 989 394 530Options forfeited 27 172 3 492Options exercised 132 305 145 049

Total options outstanding in UCS zero cost option scheme 86 512 245 989Number of ordinary shares on hand in Business Connexion Proprietary Limited (90 004) (249 481)

Surplus of ordinary shares (3 492) (3 492)

“a” sharesOpening balance of options granted 60 639 97 555Options forfeited 863Options exercised 20 458 36 053

Total options outstanding in UCS zero cost options scheme 40 181 60 639Number of “A” shares on hand in Business Connexion Proprietary Limited (41 044) (61 502)

Surplus of “A” shares (863) (863)

details of options exercised during the yearBusiness Connexion Group Share Trust (issue 1) 581 670 962 640Business Connexion (2009) Executive Share Option Scheme 732 542 1 114 676 UCS zero cost option scheme– Ordinary shares 132 305 145 049– “A” shares 20 458 36 053

1 466 975 2 258 418

Closing share price 31 August – ordinary shares 5,16 4,85Fair value of Business Connexion Group Limited ordinary shares held (2013: 3 504 847, 2012: 5 124 549) 18 085 011 24 854 063

Closing share price 31 August – “A” shares 0,95 0,71Fair value of Business Connexion Group Limited “A” shares held (2013: 41 044, 2012: 61 501) 38 992 43 666

share based payment expense r’000 R’000

Issue 1 - Business Connexion (2009) Executive Share Option Scheme (1 658) (1 874) Issue 2 - Business Connexion (2009) Executive Share Option Scheme (276) 292 Issue 3 - Business Connexion (2009) Executive Share Option Scheme (1 407) 1 996 Issue 4 - Business Connexion (2009) Executive Share Option Scheme 1 469 928 “A” shares issued 12 100 12 133

10 228 13 475


31/082013

98

AT 31 AUGUST 2013

POSIT IONfINANCIALSTATEMENTS OF

group Company2013 2012 2013 2012

Notes r‘000 R‘000 r‘000 R’000

assets

non-current assetsProperty, plant and equipment 1 423 343 390 566Capitalised leased assets 2 57 223 51 422Goodwill 3 631 910 566 925Intangible assets 4 411 878 363 271Investment in subsidiaries 5 2 686 599 2 674 498Investment in associate and jointly controlled entity 6 94 579Long-term loans receivable 7 31 609 32 446 29 906 30 157Other investments 8 223 712 213 371 223 712 213 371Deferred tax assets 9 44 508 60 183

1 918 762 1 678 184 2 940 217 2 918 026

Current assetsAmounts owed by group companies 10 160 202 275 773Inventories 11 191 998 197 901Trade receivables 12 1 189 785 971 334Other receivables 13 297 858 239 034 14 939 15 341Prepayments 126 807 81 602 91 77Taxation prepaid 3 427 3 588 19Cash and cash equivalents 45 196 771 443 930 2 846 2 762Assets held for sale 14 13 882

2 020 528 1 937 389 178 078 293 972

total assets 3 939 290 3 615 573 3 118 295 3 211 998

equity and liaBilities

Capital and reservesShare capital 15 2 368 2 358 2 389 2 389Share premium 1 126 900 1 126 900 5 416 576 5 416 576Foreign currency translation reserves (9 014) (21 225)Retained earnings 1 019 250 916 157 (2 453 730) (2 486 988)Share-based payment reserve 92 777 81 554 98 633 86 533

Shareholders’ equity 2 232 281 2 105 744 3 063 868 3 018 510Non-controlling interests 168 563 95 841

total equity 2 400 844 2 201 585 3 063 868 3 018 510

non-current liabilitiesInterest bearing long-term liabilities 16 156 202 179 467Interest free long-term liabilities 17 21 871Post-retirement benefit obligations 18 14 906 10 614Contingent consideration 19 63 334Deferred tax liabilities 9 49 753 47 604

306 066 237 685

Current liabilitiesShort-term liabilities 16 75 239 89 191Amounts owed to group companies 20 21 715 148 287Trade payables 554 208 425 323Other payables 21 580 011 647 565 32 709 45 201Provisions 22 1 142 1 296Taxation payable 16 951 12 928 3Liabilities held for sale 14 4 829

1 232 380 1 176 303 54 427 193 488

total liabilities 1 538 446 1 413 988 54 427 193 488

total equity and liabilities 3 939 290 3 615 573 3 118 295 3 211 998


9931/082013

INCOMEFOR THE yEAR ENDED 31 AUGUST 2013

COMPrEhENsIvESTATEMENTS OF

group Company2013 2012 2013 2012

Notes r‘000 R‘000 r‘000 R’000

revenue 23 6 173 339 5 829 644

– Continuing operations 6 074 137 5 744 621– Discontinued operations 99 202 85 023

Cost of sales 4 305 127 3 996 112

– Continuing operations 4 263 787 3 957 963– Discontinued operations 41 340 38 149

gross profit 1 868 212 1 833 532

operating expenses/(income) 1 545 587 1 558 507 (21 403) (3 273)

– Continuing operations 1 529 478 1 541 927 (21 403) (3 273)– Discontinued operations 16 109 16 580

operating profit 24 322 625 275 025 21 403 3 273Share of profit/(losses) from associate and jointly controlled entity 6 1 553 (495)

operating profit before investment income 324 178 274 530 21 403 3 273Investment income 25 27 565 34 695 93 404 19 040

profit before finance costs 351 743 309 225 114 807 22 313Finance costs 26 25 485 27 484 3 3 222

profit before taxation 326 258 281 741 114 804 19 091Taxation 27 93 263 85 618 557 (7 672)

profit for the year 232 995 196 123 114 247 26 763

profit attributable to:equity holdersProfit for the year from continuing operations 149 086 127 505Profit for the year from discontinued operations 30 063 21 812

profit for the year attributable to equity holders 179 149 149 317

non-controlling interestsProfit for the year from continuing operations 53 846 46 806Profit for the year from discontinued operations

profit for the year attributable to non-controlling interests 53 846 46 806

total profit for the year attributable to:Profit for the year from continuing operations 202 932 174 311Profit for the year from discontinued operations 30 063 21 812

total profit for the year 232 995 196 123

other comprehensive incomeTranslation of foreign operations 13 100 5 894

total comprehensive income for the year 246 095 202 017

total comprehensive income attributable to:Equity holders 191 360 155 211Non-controlling interests 54 735 46 806

total comprehensive income for the year 246 095 202 017

earnings per sharefrom continuing and discontinued operationsBasic earnings per share (cents) 28 44,7 37,5Diluted earnings per share (cents) 28 44,5 37,2

from continuing operationsBasic earnings per share (cents) 28 37,2 32,0Diluted earnings per share (cents) 28 37,0 31,7

from discontinued operationsBasic earnings per share (cents) 28 7,5 5,5Diluted earnings per share (cents) 28 7,5 5,5


31/082013

100

FOR THE yEAR ENDED 31 AUGUST 2013

ChANgEsSTATEMENTS OF

Share capital

Share premium

Total share capital

Foreign currency translation reserve

Share-based payment reserve

Retained earnings/

(accumulated loss)Total

reservesShareholders’

equityNon-controlling

interestsTotal

equityR‘000 R‘000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

group

Balance at 31 august 2011 2 346 1 126 900 1 129 246 (27 826) 67 793 975 336 1 015 303 2 144 549 48 495 2 193 044

Profit for the year 149 317 149 317 149 317 46 806 196 123Movement in foreign currency translation reserve 5 894 5 894 5 894 5 894Non-controlling interests’ share of foreign currency translation reserve 707 707 707 (707)Movement in treasury shares and related reserves held by share purchase trust 12 12 6 719 6 719 6 731 6 731Share-based payments 13 761 13 761 13 761 13 761Non-controlling interest in dividends received from subsidiaries (1 271) (1 271)Sale of stake in business to management 2 500 2 500Non-controlling interest effect on loan restructuring 18 18Dividends paid (215 215) (215 215) (215 215) (215 215)

total changes in equity 12 12 6 601 13 761 (59 179) (38 817) (38 805) 47 346 8 541

Balance at 31 august 2012 2 358 1 126 900 1 129 258 (21 225) 81 554 916 157 976 486 2 105 744 95 841 2 201 585

Profit for the year 179 149 179 149 179 149 53 846 232 995Movement in foreign currency translation reserve 12 211 12 211 12 211 889 13 100Movement in treasury shares and related reserves held by share purchase trust 10 10 4 059 4 059 4 069 4 069Share-based payments 11 223 11 223 11 223 11 223Non-controlling interest in dividends received from subsidiaries (3 904) (3 904)Non-controlling interest on purchase of business 21 891 21 891Dividends paid (80 115) (80 115) (80 115) (80 115)

total changes in equity 10 10 12 211 11 223 103 093 126 527 126 537 72 722 199 259

Balance at 31 august 2013 2 368 1 126 900 1 129 268 (9 014) 92 777 1 019 250 1 103 013 2 232 281 168 563 2 400 844

Company

Balance at 31 august 2011 2 389 5 416 576 5 418 965 74 400 (2 295 066) (2 220 666) 3 198 299 3 198 299

Profit for the year 26 763 26 763 26 763 26 763Share-based payments 12 133 12 133 12 133 12 133Dividends paid (218 685) (218 685) (218 685) (218 685)

total changes in equity 12 133 (191 922) (179 789) (179 789) (179 789)



total changes in equity 12 100 33 258 45 358 45 358 45 358


IN EQUITy


10131/082013

Share capital

Share premium

Total share capital

Foreign currency translation reserve

Share-based payment reserve

Retained earnings/

(accumulated loss)Total

reservesShareholders’

equityNon-controlling

interestsTotal

equityR‘000 R‘000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

group

Balance at 31 august 2011 2 346 1 126 900 1 129 246 (27 826) 67 793 975 336 1 015 303 2 144 549 48 495 2 193 044

Profit for the year 149 317 149 317 149 317 46 806 196 123Movement in foreign currency translation reserve 5 894 5 894 5 894 5 894Non-controlling interests’ share of foreign currency translation reserve 707 707 707 (707)Movement in treasury shares and related reserves held by share purchase trust 12 12 6 719 6 719 6 731 6 731Share-based payments 13 761 13 761 13 761 13 761Non-controlling interest in dividends received from subsidiaries (1 271) (1 271)Sale of stake in business to management 2 500 2 500Non-controlling interest effect on loan restructuring 18 18Dividends paid (215 215) (215 215) (215 215) (215 215)

total changes in equity 12 12 6 601 13 761 (59 179) (38 817) (38 805) 47 346 8 541

Balance at 31 august 2012 2 358 1 126 900 1 129 258 (21 225) 81 554 916 157 976 486 2 105 744 95 841 2 201 585

Profit for the year 179 149 179 149 179 149 53 846 232 995Movement in foreign currency translation reserve 12 211 12 211 12 211 889 13 100Movement in treasury shares and related reserves held by share purchase trust 10 10 4 059 4 059 4 069 4 069Share-based payments 11 223 11 223 11 223 11 223Non-controlling interest in dividends received from subsidiaries (3 904) (3 904)Non-controlling interest on purchase of business 21 891 21 891Dividends paid (80 115) (80 115) (80 115) (80 115)

total changes in equity 10 10 12 211 11 223 103 093 126 527 126 537 72 722 199 259

Balance at 31 august 2013 2 368 1 126 900 1 129 268 (9 014) 92 777 1 019 250 1 103 013 2 232 281 168 563 2 400 844

Company



total changes in equity 12 133 (191 922) (179 789) (179 789) (179 789)



total changes in equity 12 100 33 258 45 358 45 358 45 358



31/082013

102


group Company2013 2012 2013 2012

Notes r’000 R’000 r’000 R’000

Cash flows from operating activitiesCash receipts from clients 5 951 344 5 819 430Cash paid to suppliers and employees (5 643 741) (5 329 152) 9 550 (5 428)

Cash generated from/(used in) operations 41 307 603 490 278 9 550 (5 428)Interest received 12 810 16 618 2 029 46Dividends received 5 324 17 980 81 033 17 692Finance costs (25 485) (22 322) (3)Dividends paid (80 115) (215 215) (80 989) (218 685)Taxation (paid)/refunded 42 (89 570) (101 434) (535) 8 033

net cash inflows/(outflows) from operating activities 130 567 185 905 11 085 (198 342)

Cash flows from investing activitiesAcquisition of subsidiaries 43 (83 143) (10 845)Additions to property, plant and equipment, capitalised leased assets and intangible assets 44 (264 887) (205 575)Proceeds from sale of subsidiaries 46 4 857Proceeds from the sale of property, plant and equipment, capitalised leased assets and intangible assets 8 212 8 098

net cash outflows from investing activities (339 818) (203 465)

Cash flows from financing activitiesRaising of long-term liabilities 46 627 23 594Repayment of capital element of finance leases (32 780) (29 275)Repayment of short-term liabilities (51 751) (51 387)(Repayments)/advances to group companies (11 001) 199 358Proceeds from disposal of interest in subsidiary 250

net cash (outflows)/inflows from financing activities (37 904) (56 818) (11 001) 199 358

(decrease)/increase in cash and cash equivalents (247 155) (74 378) 84 1 016Cash and cash equivalents at beginning of year 443 930 518 308 2 762 1 746Cash and cash equivalents held for sale (4)

Cash and cash equivalents at end of year 45 196 771 443 930 2 846 2 762

CAshSTATEMENTS OF

FLOWS


10331/082013


POLICIEsACCOUNTING

presentation of finanCial statementsThe principal accounting policies of the group and the company are set out below. These accounting policies are consistent with those applied in the

previous year. The group financial statements for the year ended 31 August 2013 comprise the consolidated financial statements of Business Connexion

Group Limited and its subsidiaries and the group’s interest in associates and jointly controlled entities (together referred to as the group and individually

as group entities).

1. Basis of preparation The consolidated financial statements and separate financial statements are prepared under the historic cost convention as modified by the

valuation of certain financial instruments to fair value. The financial statements are prepared using the accounting policies set out below and

are in accordance with the applicable International Financial Reporting Standards (IFRS), the South African Institute of Chartered Accountants

Financial Reporting Guides as issued by the Accounting Practices Committee, Financial Reporting Pronouncements as issued by the Financial

Reporting Standards Council and the requirements of the Companies Act of South Africa.

In the current year, the group adopted amendments to IAS 1 Presentation of Financial Statements: Presentation of items of Other Comprehensive

Income. The adoption of these amendments and improvements did not have a material effect on the financial statements.

At the date of approval of these financial statements, the following standards, interpretations and amendments were in issue, but not yet effective:

accounting standards type

effective date (financial years

beginning on or after)

IFRS 9 Financial Instruments New Standard 1 January 2015IAS 19 Employee Benefits: Defined Benefit Plans Amendment 1 January 2013IAS 27 Separate Financial Statements Amendment 1 January 2013IAS 28 Investments in Associates and Joint Ventures Amendment 1 January 2013IFRS 10 Consolidated Financial Statements New Standard 1 January 2013IFRS 11 Joint Arrangements New Standard 1 January 2013IFRS 12 Disclosure of Interests in Other Entities New Standard 1 January 2013IFRS 13 Fair Value Measurement New Standard 1 January 2013IFRS 7 Financial Instruments: Disclosures – Amendment

Offsetting Financial Assets and Financial Liabilities 1 January 2013IAS 32 Financial Instruments : Presentation Amendment 1 January 2014

Offsetting Financial Assets and Financial LiabilitiesIAS 36 Recoverable Amount Disclosures for Non-Financial Assets Amendment 1 January 2014IFRS 10, IFRS 12 and IAS 27 Investment Entities Amendment 1 January 2014

At 31 August 2013 the directors were in the process of assessing the impact of the adoption of these standards, interpretations and amendments

on the future financial statements of the group and the company.

2. Basis of ConsolidationsubsidiariesEntities (including special purpose entities) in which the group, directly or indirectly, has the power to exercise control over the operations are

considered to be subsidiaries. Control is achieved where an entity in the group has the power to govern the financial and operating policies of

another entity to obtain the benefits of its activities. In assessing control, potential voting rights that currently are exercisable are taken into account.

The investments in subsidiaries in the holding entity’s financial statements are carried at cost less any impairment losses. The fair value of

contingent considerations and transaction costs are included in the cost of investments in subsidiaries.

The acquisition method of accounting is used to account for the acquisition of subsidiaries by the group. On acquisition, the identifiable assets,

liabilities and contingent liabilities of a subsidiary are measured at fair value at the date of acquisition, except for non-current assets held for sale

which are carried at fair value less costs to sell. Re-acquired rights and share-based payments are excluded from the measurement requirements

of IFRS 3, but are recognised as part of the acquisition accounting if appropriate.


31/082013

104


2. Basis of Consolidation (continued)subsidiaries (continued)Transaction costs, other than those associated with the issue of debt or equity securities, directly attributable to the acquisition, such as finance

fees, legal fees, due diligence fees and other professional and consulting fees are recognised in profit or loss.

Any contingent consideration payable is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent

consideration are recognised in profit or loss.

The group measures goodwill at the fair value of the consideration transferred including the recognised amount of any non-controlling interest

in the acquiree, including previously held equity interests in the acquiree, less the net recognised amount (generally fair value) of the identifiable

assets acquired and liabilities assumed, all measured at the acquisition date.

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

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

Upon the loss of control, the group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other

components of equity related to the subsidiary. Any surplus or deficit arising on loss of control is recognised in profit or loss. If the group retains

any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is accounted for

as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained.

All significant inter-company transactions, balances and unrealised gains and losses are eliminated on consolidation.

transactions with non-controlling shareholdersThe non-controlling interests are measured at their proportionate interest in the identifiable net assets of the acquiree at date of acquisition.

The election is made on a transaction-by-transaction basis. Acquisitions or disposals of non-controlling interests, when control is not lost, are

accounted for as transactions with equity holders in their capacity as equity holders and, therefore, no goodwill is recognised as a result of

such transactions. Any difference between the compensation and the non-controlling interest disposed of or acquired is recognised in retained

earnings.

Losses applicable to the non-controlling interests, including negative “other comprehensive income”, are allocated to the non-controlling interest

even if doing so causes the non-controlling interest to be in a deficit position. The non-controlling interest is presented within equity separately

from the parent shareholders’ equity.

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

control all of the combining entities or businesses before and after the business combination.

In accounting for business combinations under common control, the assets and liabilities of the entities or businesses involved are transferred at

the carrying amounts recognised previously in the group controlling shareholder’s consolidated financial statements. Any difference between the

consideration paid and the carrying amounts of the assets and liabilities is recognised directly as a separate component of equity.

4. investment in assoCiates and Jointly Controlled entities (equity-aCCounted investees)Jointly controlled entities are those entities over whose activities the group has joint control, established by contractual arrangement and

requiring unanimous consent for strategic financial and operating decisions.

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

the entity, but in which it does not exercise control. Significant influence is presumed to exist when the group holds between 20% and 50% of the

voting power of another entity.

POLICIEs CONTINUED

ACCOUNTING


10531/082013

4. investment in assoCiates and Jointly Controlled entities (equity-aCCounted investees) (continued)Investments in associates and jointly controlled entities are accounted for using the equity method and are recognised initially at cost. The cost

of the investment includes transaction costs. The group’s investment includes goodwill identified on acquisition. Goodwill relating to associates

forms part of the carrying amount of the associates. The consolidated financial statements include the group’s share of the income and expenses

and equity movements of equity-accounted investees, after adjustments to align the accounting policies with those of the group, from the date

that significant influence commences until the date that significant influence ceases.

When the group’s share of losses exceeds its interest in an equity-accounted investee, the carrying amount of that interest, including any long-

term investments, is reduced to nil, and the recognition of further losses is discontinued, except to the extent that the group has an obligation

or has made payments on behalf of the investee. The investment in the associate is accounted for at cost less accumulated impairment in the

separate financial statements. Where the associate’s year-end does not coincide with the group’s year-end, the associate’s most recent unaudited

results are used.

5. foreign CurrenCy transaCtionsfunctional and presentation currencyItems included in the financial statements of each of the group’s entities are measured using the currency of the primary economic environment

in which the entity operates (functional currency). The consolidated financial statements are presented in South African Rand, which is the

holding company’s functional currency and selected as the group’s presentation currency.

The results and financial position of all group entities that have a functional currency different from the presentation currency are translated into

the presentation currency, as follows:

• assets and liabilities are translated at the closing rate at the reporting date;

• income and expenses are translated at an average exchange rate which approximates actual; and

• all resulting exchange differences are recognised in other comprehensive income and presented as a separate component in equity called

foreign currency translation reserve (FCTR). When the operation is a non-wholly-owned subsidiary, then the relevant proportionate share of

the translation difference is allocated to the non-controlling interests.

group companiesOn consolidation, exchange differences arising from the translation of borrowings, forming part of the net investment in a foreign operation, are

recognised in other comprehensive income and presented as a separate component in equity called foreign currency translation reserve (FCTR).

When a foreign operation is disposed of the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit

or loss as part of the gain or loss on disposal. When the group disposes part of its interest in a subsidiary that includes the foreign operation while

retaining control, the relevant portion of the cumulative amount is re-attributed to non-controlling interest.

When an inter-company loan, which forms part of the net investment in a foreign operation, is repaid a proportion of the cumulative amount of

exchange differences recognised in the foreign currency translation reserve is transferred to profit or loss.

Goodwill and fair value adjustments arising on acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and

translated at the closing rates.

transactions and balancesForeign currency transactions are translated into the functional currency using the exchange rate prevailing at the dates of the transactions.

Foreign exchange gains and losses resulting from settlement of such transactions and from the translation at year-end exchange rates of

monetary assets and liabilities denominated in foreign currency are recognised in profit or loss, except for differences arising on the translation

of available-for-sale equity instruments, a financial liability designated as a hedge of the net investment in a foreign operation, or qualifying cash

flow hedges, which are recognised in other comprehensive income. When an available-for-sale equity instrument is disposed of, all gains or

losses in equity are transferred to profit or loss.


31/082013

106

6. property, plant and equipmentProperty, plant and equipment represents tangible items that are held for use in the production or supply of goods or services, for rental to

others, or for administrative purposes and are expected to be used during more than one year.

Property, plant and equipment is stated at cost to the group less accumulated depreciation and any accumulated impairment loss. Cost includes

expenditure that is directly attributable to the acquisition of the asset. When parts of an item of property, plant and equipment have different

useful lives, they are accounted for as separate items (major components). Depreciation is calculated using the straight-line method to write off

cost less residual value over the expected useful lives of the assets.

The assets’ depreciation method, residual value and useful life are reviewed annually at each reporting date.

Leasehold improvements are depreciated over their lease period or useful life, whichever is the shorter. However, if at inception of the lease it is

reasonably certain that the lessee will obtain ownership of the asset by the end of the lease term, then the asset is depreciated over the expected

useful life of the asset.

Gains and losses on disposals of property, plant and equipment are determined by reference to their net carrying value at the date of sale and the

consideration received, and are taken into account in profit or loss.

Subsequent expenditure on an item of property, plant and equipment is recognised as part of its cost only if it meets the general recognition

criteria.

The estimated useful lives for the current and comparative years are:

Property 50 years

Furniture and fittings 6 years

Equipment 3 to 6 years

Vehicles 4 to 5 years

Rental assets 3 to 6 years

Land is not depreciated as it is determined to have an indefinite useful life.

7. disContinued operationsA discontinued operation is a component of the group’s business, the operations and cash flows of which can be clearly distinguished from the

rest of the group and which:

• represents a separate major line of business or geographical area of operations;

• is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations; or

• is a subsidiary acquired exclusively with a view to re-sale.

Classification as a discontinued operation occurs on disposal or when the operation meets the criteria to be classified as held-for-sale, if earlier.

When an operation is classified as a discontinued operation, the comparative statement of comprehensive income is re-presented as if the

operation had been discontinued from the start of the comparative year.


POLICIEs CONTINUED

ACCOUNTING


10731/082013

8. leasesLeases of property, plant and equipment where the group assumes substantially all the risks and rewards of ownership are classified as finance

leases. Finance leases are capitalised at the lower of the fair value of the leased asset or the net present value of the minimum lease payments.

The lease payments are allocated between the liability and finance charges to achieve a constant rate of return on the outstanding finance lease

balance. The outstanding lease obligation, net of finance charges and the following year’s liability, is included as a long-term interest-bearing

liability. The following year’s liability is included in short-term borrowings. Lease finance costs are recognised as an expense as they accrue.

The depreciable amount of the asset is depreciated over the shorter of the lease period or the useful life of the asset. The useful life, when longer

than the lease period, is used where there is a reasonable prospect that ownership of the asset will pass to the group.

Leased assets, where the risks and rewards of ownership remain with the lessor, are classified as operating leases. Payments made under

operating leases are recognised in profit or loss on a straight-line basis over the term of the lease.

Where a lease contract is deemed to be onerous, a provision for the lower of the cost of fulfilling the lease and any compensation or penalties

arising from failure to fulfil it, is raised. A lease is considered to be onerous when the unavoidable costs of meeting the obligation under the

contract exceed the economic benefits receivable.

Where the group is the lessor, the rental income from the operating leases is recognised in profit or loss on a straight-line basis over the term of

the relevant lease. Amounts due from the lessee are recorded as receivables. If the period of the lease is for greater than one year the receivable is

treated as long-term with the current portion reflected as trade receivables.

9. goodWillGoodwill arises on the acquisition of subsidiaries, associates or jointly controlled entities.

The group measures goodwill at the fair value of the consideration transferred including the recognised amount of any non-controlling interest

in the acquiree, including previously held equity interests in the acquiree, less the net recognised amount (generally fair value) of the identifiable

assets acquired and liabilities assumed, all measured at the acquisition date.

When the fair value of the identifiable assets and liabilities exceeds the consideration transferred, including non-controlling interest and

previously held equity interests in the acquiree, a bargain purchase gain is recognised immediately in profit or loss.

In respect of investments in associates and joint ventures, the carrying amount of goodwill is included in the carrying amount of the investment,

and any impairment loss allocated to the carrying amount of the investment in associate or joint venture as a whole.

Goodwill is recognised as an asset and carried at cost less accumulated impairment losses. It is reviewed for impairment at least annually or

where there is an indication of impairment. Any impairment is recognised immediately in profit or loss and is not subsequently reversed.

The group tests goodwill annually for impairment, or more frequently, if there are indicators that goodwill might be impaired.

The recoverable amount of a cash-generating unit is the higher of fair value less cost to sell and the value in use. The value in use is determined

using the estimated future cash flows discounted to their net present value using a pre-tax rate that reflects the market assessments of the time

value of money and the risks specific to the asset.

For the purpose of impairment testing, goodwill is allocated to each of the group’s cash-generating units expected to benefit from the synergies of

the acquisition. If the recoverable amount of the cash-generating units are less than that of the carrying amount of the units, the resulting impairment

loss is allocated to goodwill and then to the other assets of the units pro rata on the basis of the carrying amount of each asset in the unit.

On disposal of a subsidiary the attributable amount of goodwill is included in determining profit or loss on disposal.


31/082013

108

10. intangiBle assetsAn intangible asset is an identifiable, non-monetary asset without physical substance. It includes brands, client relationships, contract-based

intangible assets, capitalised development costs and certain costs of the purchase and installation of major information systems (including

packaged software).

Intangible assets are initially recognised at cost if acquired separately or internally generated or at fair value if acquired as part of a business

combination. If assessed as having an indefinite useful life, the intangible asset is not amortised but tested for impairment annually and impaired

if necessary. If assessed as having a finite useful life, the intangible assets are amortised over their useful lives using the straight-line basis and

tested for impairment if there is an indication that they may be impaired.

The residual values, amortisation method and useful lives are reviewed and adjusted if appropriate at each reporting date. Subsequent

expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other

expenditure, including expenditure on internally-generated goodwill and brands, is recognised in profit or loss as incurred.

Expenditure that enhances and extends the benefits of computer software programs beyond their original specifications and useful life, is

recognised as a capital improvement and added to the original cost of the software and the useful life is re-assessed. Computer software

development costs recognised as assets are amortised over their useful lives using the straight-line method.

research and development costsExpenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is

recognised in profit or loss as incurred.

Development activities involve a plan or design for the production of new or substantially improved products and processes. Development

expenditure is capitalised and recognised as assets if:

• a separately identifiable asset is created;

• it is probable that such expenditure has definite future economic benefits;

• the development costs can be reliably measured;

• the product or process is technically and commercially feasible;

• the group intends to and has sufficient resources to complete the development and to use or sell the asset.

The expenditure capitalised includes the cost of materials, direct labour, overhead costs that are directly attributable to preparing the asset for its

intended use, and capitalised borrowing costs and is classified as intangible assets.

Development costs initially written-off as an expense are not recognised as an asset in a subsequent period. The amortisation periods applicable

to intangible assets are as follows:

Brands 10 years

Client relationships 3 to 6 years

Computer software 3 to 10 years


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11. impairment of non-finanCial assets (exCluding goodWill)At each reporting date, the group reviews the carrying amounts of its non-financial assets, inventories and deferred tax assets, to determine

whether there is any indication that those assets may be impaired. If any such indication exists, the recoverable amount of the asset is estimated.

The recoverable amount is the higher of fair value less cost to sell and the value in use.

The value in use is determined using the estimated future cash flows discounted to their net present value using a pre-tax discount rate that

reflects the market assessments of the time value of money and the risks specific to the asset. Where it is not possible to estimate the recoverable

amount for an individual asset, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

Corporate assets do not generate separate cash inflows and are utilised by more than one cash-generating unit. Corporate assets are allocated

to the cash-generating units on a reasonable and consistent basis and tested for impairment as part of the testing of the cash-generating unit to

which the corporate asset is allocated.

If the recoverable amount of an asset or cash-generating unit is estimated to be less than the carrying amount, the carrying amount of the asset

or cash-generating unit is reduced to its recoverable amount. The impairment losses are recognised as an expense immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of

its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no

impairment loss been recognised for the asset or cash-generating unit in prior years. A reversal of impairment is recognised immediately in profit or loss.

12. assets held for saleNon-current assets classified as held for sale are measured at the lower of the carrying amount and fair value less cost to sell if the carrying

amount is recovered primarily through a sale transaction rather than through continuing use.

This condition is regarded as met only when the sale is highly probable and the assets (or disposal group) are available for immediate sale which

should be expected to qualify for recognition as a completed sale within one year from date of classification.

Immediately before classification as held for sale, the assets, or components of a disposal group, are remeasured in accordance with the

group’s accounting policies. Any impairment loss on a disposal group is first allocated to goodwill, and then to remaining assets and liabilities

on a pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets and employee benefit assets, which

continue to be measured in accordance with the group’s accounting policies.

Impairment losses on initial classification as held for sale and subsequent gains and losses on re-measurements are recognised in profit or loss.

Gains are not recognised in excess of any cumulative impairment losses.

13. finanCial instrumentsFinancial instruments carried by the group on the statement of financial position include long-term loans receivable, cash and cash equivalents,

other investments, trade and other receivables, trade and other payables, and long and short-term liabilities. The particular recognition and

measurement policies adopted are disclosed in the accounting policy associated with the item.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the group has

a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over

the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life

of the financial liability or, where appropriate, a shorter period.


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13. finanCial instruments (continued)financial assetsPurchases and sales of financial assets are recognised on trade-date, being the date on which the group commits to purchase or sell the asset.

Loans and receivables and deposits are recognised on the date that they are originated. Financial assets are initially recognised at fair value plus

transaction costs, except those carried at fair value through profit or loss where transaction costs are recognised immediately through profit or loss.

Financial assets are classified into the following categories: financial assets at fair value through profit or loss (FVTPL), loans and receivables,

available-for-sale financial assets and held-to-maturity investments. The classification depends on the purpose for which the investments were

acquired. Management determines the classification of its investments at initial recognition.

financial assets at fair value through profit or loss (fvtpl)This category has two sub-categories: financial assets held for trading, and those designated at fair value through profit or loss.

A financial asset is classified as held for trading if:

• it has been acquired principally for the purpose of selling in the near future; or

• it is part of an identified portfolio of financial instruments that the group manages together and has a recent actual pattern of short-term

profit-taking; or

• it is a derivative that is not designated and effective as a hedging instrument.

A financial asset, other than a financial asset held for trading, may be designated at FVTPL upon initial recognition if:

• such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

• the financial asset forms part of a group of financial assets or financial liabilities, or both, which is managed and its performance is evaluated

on a fair value basis, in accordance with the group’s documented risk management or investment strategy, and information about grouping is

provided internally on that basis; or

• it forms part of a contract containing one or more embedded derivatives, and IAS 39 Financial Instruments: Recognition and Measurement

permits the entire combined contract (asset or liability) to be designated at FVTPL.

Financial assets at fair value through profit or loss are subsequently carried at fair value. Realised and unrealised gains and losses from changes

in the fair value of the “financial assets at fair value through profit or loss” category are included in profit or loss in the period in which they arise.

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

reporting date.

loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise

when the group provides money, goods or services directly to a debtor with no intention of trading the receivable. Loans and receivables are initially

recognised at fair value less transaction costs and subsequently measured at amortised cost using the effective interest method less any impairment.

Loans and receivables are included in current assets, except for maturities greater than 12 months after the reporting date. These are classified as

non-current assets. Loans and receivables comprise of loans, trade receivables, other receivables and cash and cash equivalents.

available-for-sale financial assetsAvailable-for-sale financial assets are non-derivative financial assets that are either designated in this category or not classified in any of the

categories above. They are included in non-current assets unless management intends to dispose of the investment within 12 months of

reporting date.

Available-for-sale financial assets are subsequently carried at fair value. The fair value of quoted securities is based on bid prices in an active

market. If the market for a financial asset is not active (as for example unlisted securities), the group establishes fair value by using valuation

techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted

cash flow analysis and option pricing models refined to reflect the issuer’s specific circumstances.


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13. finanCial instruments (continued)financial assets (continued)available-for-sale financial assets (continued)Gains and losses arising from changes in fair value are recognised in other comprehensive income, with the exception of impairment losses,

interest calculated using the effective interest method and foreign exchange gains and losses on monetary assets, which are recognised directly in

profit or loss.

When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments in equity are transferred to profit or loss.

held-to-maturity investmentsHeld-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the group’s

management has the positive intention and ability to hold to maturity. Held-to-maturity investments are carried at amortised cost using the

effective interest method less any impairment.

Cash and cash equivalentsCash and cash equivalents comprise cash on hand and call deposits and other short-term highly liquid investments that are readily convertible to

a known amount of cash and are subject to an insignificant risk of changes in value. Cash and cash equivalents are measured at amortised costs.

impairment of financial assetsThe group assesses at each reporting date whether there is objective evidence that financial assets, other than those held at FVTPL, are impaired.

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of

the financial asset, the estimated future cash flows of the investment have been impacted.

In the case of equity securities classified as available-for-sale, a significant or prolonged decline of the fair value of the security below cost is

considered in determining whether the securities are impaired.

For all other financial assets, objective evidence of impairment could include:

• significant financial difficulty of the issuer or counterparty; or

• default or delinquency in interest or principal payments; or

• it becoming probable that the borrower will enter bankruptcy or financial re-organisation.

Financial assets classified as loans or receivables or held-to-maturity that are assessed not to be impaired individually are subsequently assessed

for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables classified as loans or receivables or held-to-

maturity could include the group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the

average credit period, as well as observable changes in national or local economic conditions that correlate with default on receivables.

For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present

value of estimated future cash flows, discounted at the financial asset’s original effective interest rate. Impairment losses are recognised in profit or loss.

The carrying amount of the financial asset is reduced by the impairment loss for all financial assets, with the exception of trade receivables, where

the carrying amount is reduced through the use of an impairment allowance account. When a trade receivable is considered uncollectible, it is

written-off against the allowance account. Subsequent reversals of impairment losses are credited against the allowance account. Changes in the

impairment allowance account are recognised in profit or loss.

In a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the

impairment was recognised on the financial asset measured at amortised cost, the previously recognised impairment loss is reversed through profit

or loss to the extent that the carrying amount of the financial asset at the date the impairment is reversed does not exceed what the amortised cost

would have been had the impairment not been recognised.

In respect of available-for-sale equity securities, impairment losses previously recognised through profit or loss are not reversed through profit or

loss. Any increase in fair value subsequent to an impairment loss is recognised in other comprehensive income.


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13. finanCial instruments (continued)financial assets (continued)derecognition of financial assetsThe group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset

and substantially all the risks and rewards of ownership of the asset to another entity. If the group neither transfers nor retains substantially all

the risks and rewards of ownership and continues to control the transferred asset, the group recognises its retained interest in the asset and an

associated liability for amounts it may have to pay.

If the group retains substantially all the risks and rewards of ownership of a transferred financial asset, the group continues to recognise the

financial asset and also recognises a collateralised borrowing for the proceeds received.

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

foreign currency fluctuations. Such derivatives are initially recorded at fair value and re-measured to fair value at subsequent reporting dates with

changes reflected in profit or loss.

The resultant gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in

which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months

and it is not expected to be realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities.

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

embedded derivativesDerivatives embedded in other financial instruments or non-derivative host contracts are treated as separate derivatives when their risks and

characteristics are not closely related to those of host contracts and the host contracts are not carried at fair value with unrealised gains or losses

reported in profit or loss. Changes in the fair value of separated embedded derivatives are recognised immediately in profit or loss.

financial liabilitiesFinancial liabilities are classified as either financial liabilities ‘at FVTPL’ or ’other financial liabilities’.

financial liabilities at fvtplFinancial liabilities are classified at FVTPL where the financial liability is either held for trading or it is designated at FVTPL.

A financial liability is classified as held for trading if:

• it has been incurred principally for the purpose of repurchasing in the near future; or

• it is a part of an identified portfolio of financial instruments that the group manages together and has a recent actual pattern of short-term

profit-taking; or

• it is a derivative that is not designated and effective as a hedging instrument.

A financial liability, other than a financial liability held for trading, may be designated as at FVTPL upon initial recognition if:

• such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

• the financial liability forms part of a group of financial assets or financial liabilities, or both, which is managed and its performance is

evaluated on a fair value basis, in accordance with the group’s documented risk management or investment strategy, and information about

the grouping is provided internally on that basis; or

• it forms part of a contract containing one or more embedded derivatives, and IAS 39 Financial Instruments: Recognition and Measurement

permits the entire combined contract (asset or liability) to be designated at FVTPL.

Financial liabilities at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss is recognised in

profit or loss.


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11331/082013

13. finanCial instruments (continued)financial liabilities (continued)trade and other payablesTrade payables are initially measured at fair value, less transaction costs, and are subsequently measured at amortised cost, using the effective

interest method.

other financial liabilitiesOther financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs and are subsequently measured at

amortised cost using the effective interest method.

derecognition of financial liabilitiesThe group derecognises financial liabilities when, and only when, the group’s obligations are discharged, cancelled or they expire.

14. inventoriesInventories are measured at the lower of cost and estimated net realisable value. Slow-moving inventory in excess of requirements or obsolete

inventory is written down to net realisable value.

Cost is determined using the weighted average cost method.

The values of merchandise and work in progress include direct costs and, where appropriate, a proportion of overhead expenditure (based on

normal operating capacity). It excludes borrowing costs.

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

completion and selling expenses.

15. provisionsprovisions representing liabilities of uncertain timing or amountProvisions are recognised when the group has a present legal or constructive obligation, as a result of past events, for which it is probable that an

outflow of economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

Provisions are measured at the estimated expenditure required to settle the present obligation. Where the effect of discounting is material,

provisions are measured at their present value using a pre-tax discount rate that reflects the current market assessment of the time value of

money and the risks for which future cash flow estimates have not been adjusted. The unwinding of the discount is recognised as a finance cost.

onerous contractsPresent obligations arising under onerous contracts are recognised and measured as a provision. An onerous contract is considered to exist

where the group has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits

expected to be received under it. The provision is measured at the present value of the lower of the expected cost of terminating the contract

and the expected net cost of continuing with the contract.

restructuringA restructuring provision is recognised when the group has developed a detailed formal plan for the restructuring and has raised a valid

expectation in those affected business units that it will carry out the restructuring by starting to implement the plan or announcing its main

features to those affected by it. The measurement of a restructuring provision includes only the direct expenditure arising from the restructuring,

which are those amounts that are both necessarily entailed by the restructuring and not associated with the ongoing activities of the entity.

WarrantiesProvisions for warranty costs are recognised at the date of sale of the relevant products, at the estimated expenditure required to settle the

group’s obligation.


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16. deferred tax assets and liaBilitiesDeferred tax assets and liabilities are recognised on all temporary differences arising between the tax base of assets and liabilities and their

carrying amounts in the financial statements. Such assets and liabilities are not recognised if the temporary difference arises from the initial

recognition of goodwill or from the initial recognition (other than in business combinations) of other assets and liabilities in a transaction that

affects neither the tax profit nor the accounting profit or from investments in subsidiaries, associates and jointly controlled entities and to the

extent that it is probable that they will not reverse in the foreseeable future.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary

differences can be utilised. A deferred tax asset for unutilised secondary tax on company credits, that arises from the distribution of dividends

before 1 April 2012 was recognised to the extent that it was probable that an entity would declare a dividend for which secondary tax on

company credits can be utilised.

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

Deferred tax is recognised in profit or loss, except when it relates to items credited or charged directly in equity or other comprehensive income,

in which case the deferred tax is recognised in equity or other comprehensive income, respectively.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities, and they relate

to income taxes levied by the same taxation authority and the group intends to settle its current tax assets and liabilities on a net basis or their

current tax assets and liabilities will be realised and settled simultaneously.

Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will

be realised.

Deferred tax is measured at the tax rates that are expected to be applied when the temporary differences reverse that have been enacted or

substantively enacted by the reporting date.

17. employee share optionsThe group issues equity-settled share options to certain employees and black equity employee (BEE) participants. Equity-settled share options

are measured at fair value (excluding the effect of non-market-based vesting conditions) at the date of grant. The fair value determined at the

grant date of the equity-settled share options is expensed on a straight-line basis over the vesting period, based on the group’s estimate of

the shares that will eventually vest and is adjusted for the effect of non-market based vesting conditions. The fair value for granted options with

no vesting conditions is expensed immediately.

A share-based payment reserve is created in equity in which share-based payments are recognised. Fair value is measured using the Monte Carlo

simulation model. The expected life used in the model has been adjusted, based on the management’s best estimate, for the effects of non-

transferability, exercise restrictions and behavioural considerations.

The group subsidiaries issue cash-settled share-based options to certain employees which are based on the market price of Business Connexion

shares. Cash-settled share-based options are measured at fair value (excluding the effect of non-market-based vesting conditions) at the date

of grant. The cash-settled share-based options are recognised as an expense with a corresponding liability over the period that the employees

unconditionally become entitled to payment. The fair value of the liability is re-measured at each reporting date and at settlement date. Changes

in the fair value of the liability are recognised in profit or loss.


POLICIEs CONTINUED

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18. post-retirement Benefit oBligations retirement obligationA defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate trustee-

administrated fund and will have no legal or constructive obligation to pay further amounts.

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

generally held in separate trustee-administered funds. The schemes are generally funded by payments from the employees and by the relevant

group entities, taking into account the recommendations of independent actuaries. The group’s contributions to these schemes are recognised in

profit or loss when the services are rendered by employees.

post-retirement healthcare obligationsA defined benefit plan is a post-employment benefit plan, other than a defined contribution plan.

For post-retirement healthcare obligations, the cost of providing benefits is determined using the projected unit credit method. Costs in respect

of vested past service are recognised in profit or loss. When past service costs have not vested, the past service costs are recognised as an

expense on a straight-line basis over the average period until the benefits become vested.

The post-retirement obligations, in the statement of financial position, represent the present value of future obligations. The group recognises all

actuarial gains and losses arising from defined benefit plans directly in profit or loss.

19. share Capitalordinary sharesOrdinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as

a deduction from equity, net of any tax effects.

repurchase of share capital (treasury shares)When share capital recognised as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs net of

tax effects, is recognised as a deduction from equity. Repurchased shares are classified as treasury shares and are presented as a deduction from

equity. When treasury shares are sold or reissued subsequently, the amount received is recognised as an increase in equity, and the resulting

surplus or deficit on the transaction is transferred to or from retained earnings.

20. dividendsDividends to equity holders are included in the statement of changes in equity in the year in which they are declared.

21. revenueRevenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated client returns, rebates and

other similar allowances.

rendering of servicesRevenue from a contract to provide services is recognised by reference to the stage of completion of the contract.

The stage of completion of the contract is determined as follows:

• Installation fees are recognised by reference to the stage of completion of the installation, determined as the proportion of the total time

expected to install to the time that has elapsed at the reporting date.

• Servicing fees included in the price of products sold are recognised by reference to the proportion of the cost to the total cost of providing

the servicing for the product sold, taking into account historical trends in the number of services actually provided on past goods sold.

• Revenue from time and material contracts is recognised at the contractual rates as labour hours are delivered and direct expenses are

incurred.


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ACCOUNTING

21. revenue (continued)sale of goodsRevenue from the sale of goods is recognised when all of the following conditions are satisfied:

• The group has transferred to the buyer the significant risks and rewards of ownership of the goods.

• The group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over

the goods sold.

• The amount of revenue can be measured reliably.

• It is probable that the economic benefits associated with the transaction will flow to the entity.

• The costs incurred or to be incurred in respect of the transaction can be measured reliably.

dividends and interest receivedDividends received from investments are recognised when the shareholder’s right to receive payment has been established, which in the case of

quoted securities is when the dividend is declared.

Interest received is accrued on a time basis, by reference to the principal amount outstanding and at the effective interest rate applicable, which

is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount.

The group generates revenue both in its capacity as an agent of certain clients and as a stand-alone principal.

Revenue earned in an agent relationship:

• the group acts as an agent on behalf of certain clients to procure services from third parties only to the extent that the client utilises the

services. In these cases revenue is recognised as the difference between invoice values issued and the supplier cost.

Revenue earned in a principal relationship:

• revenue arising from the rendering of services, which include computer processing services, implementation and support services,

and installation and maintenance charges, is recognised on the accrual basis based on the substance of the agreement.

22. Cost of salesWhen inventories are sold, the carrying amount is recognised as part of cost of sales. Any write-down of inventories to net realisable value and

any loss of inventory or reversals of previous write-downs or losses are recognised in cost of sales in the period the write-down, loss or reversal

occurs. Manpower costs, depreciation charges and any other expenses incurred in delivering a service are also recognised as part of cost of sales.

23. BorroWing CostsThe group capitalises borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the

cost of that asset. Any other borrowing costs are recognised in profit or loss in the period in which they are incurred using the effective interest

method.

24. taxationIncome tax expense represents the sum of current and deferred tax.

income taxThe current tax charge is based on the taxable profit for the period. Taxable profit differs from net profit as reported in the statement of

comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes

items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively

enacted by the reporting date.

Adjustments to tax payable in respect of previous years are also recognised in current tax for the period.

Current tax is recognised in profit or loss, except to the extent that it relates to a business combination, or items recognised directly in equity or in

other comprehensive income.


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24. taxation (continued)secondary tax on Companies (stC)STC was recognised as part of the current tax charge when the related dividend was declared before 1 April 2012.

dividend Withholding tax (dWt)DWT is a tax on shareholders receiving dividends and is applicable to all dividends declared on or after 1 April 2012.

Dividend tax is withheld on behalf of the shareholders at a rate of 15% on dividends declared. Amounts withheld are not recognised as part of

the tax charge but rather as part of the dividend paid recognised directly in equity.

Where withholding tax is withheld on dividends received, the dividend is recognised at the gross amount with the related withholding tax

recognised as part of the tax charge in the period in which the dividend is received.

25. segment reportingAn operating segment is a component of the group that engages in business activities from which it may earn revenues and incur expenses,

including revenues and expenses that relate to transactions with any of the group’s other components, and for which discrete financial

information is available.

An operating segment’s operating results are reviewed regularly by the chief executive officer to make decisions about resources to be allocated

to the segment and assess its performance. The group evaluates the performance of its segments based on operating profit.

All inter-segment transactions are eliminated on consolidation.

26. earnings per shareThe group presents basic, headline and diluted earnings per ordinary share. Basic earnings per share is calculated by dividing the profit or loss

attributable to ordinary shareholders of the group by the weighted average number of ordinary shares outstanding during the year, adjusted for

own shares held. Diluted earnings per share is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted

average number of ordinary shares outstanding for own shares held and for the effects of all potential dilutive ordinary shares attributable to

share options granted to employees.


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STATEMENTSfINANCIALNOTES TO THE

PropertyFurniture

and fittings Equipment VehiclesRental assets Total

R’000 R’000 R’000 R’000 R’000 R’000

1. property, plant and equipment

group

CostCost at 31 August 2011 217 308 71 316 440 436 20 748 5 471 755 279Additions 18 868 2 632 84 601 7 615 1 002 114 718Acquisition of businesses 257 990 219 1 466Transfers (11 032) (49) 10 653 148 (280)Disposals (1 724) (1 171) (24 826) (730) (1 492) (29 943)Disposal of business (326) (326)Currency translation differences 1 450 415 3 527 687 6 079

Cost at 31 August 2012 224 870 73 400 515 055 28 687 4 981 846 993Additions 7 460 2 899 131 102 10 587 3 398 155 445Acquisition of businesses 3 879 2 419 11 313 844 18 455Transfers (1 241) (80) (2 914) 485 5 079 1 329Disposals (4 491) (215) (12 254) (6 496) (2 376) (25 832)Disposal of business (17) (593) (5 525) (6 135)Currency translation differences 2 536 254 4 486 1 748 9 024Reclassification to assets held for sale (89) (4 374) (4 463)

Cost at 31 august 2013 232 996 77 995 636 889 35 855 11 082 994 817

accumulated depreciationAccumulated depreciation at 31 August 2011 46 423 51 846 245 244 9 477 5 340 358 330Depreciation 14 923 6 769 91 795 4 837 219 118 543Acquisition of businesses 209 894 170 1 273Transfers (39) 1 015 141 1 117Disposals (1 622) (1 124) (20 355) (575) (1 460) (25 136)Disposal of business (281) (281)Currency translation differences 97 482 1 810 192 2 581

Accumulated depreciation at 31 August 2012 59 821 58 143 320 122 14 242 4 099 456 427Depreciation 14 450 5 865 93 167 4 885 1 364 119 731Acquisition of businesses 2 696 1 476 9 485 771 14 428Transfers (604) (40) (1 935) 603 3 299 1 323Disposals (3 847) (367) (6 809) (4 512) (2 045) (17 580)Disposal of business (6) (585) (2 804) (3 395)Currency translation differences 44 225 2 771 572 3 612Reclassification to assets held for sale (81) (2 991) (3 072)

accumulated depreciation at 31 august 2013 72 554 64 636 411 006 16 561 6 717 571 474

Carrying value at 31 august 2011 170 885 19 470 195 192 11 271 131 396 949

Carrying value at 31 august 2012 165 049 15 257 194 933 14 445 882 390 566

Carrying value at 31 august 2013 160 442 13 359 225 883 19 294 4 365 423 343

A list of land and buildings is available for inspection at the registered office of the group.

The carrying value of freehold land and buildings pledged as security for long-term liabilities amounts to R9,3 million (2012: R8,0 million). Details of assets pledged as security for long-term liabilities are disclosed in note 16.


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Furniture and fittings

R’000Equipment

R’000Total

R’000

2. Capitalised leased assets

group

CostCost at 31 August 2011 971 104 660 105 631Additions 386 18 169 18 555Transfers 1 434 (2 079) (645)Disposals (222) (11 886) (12 108)Currency translation differences 159 15 174

Cost at 31 August 2012 2 728 108 879 111 607Additions 29 794 29 794Transfers (1 599) 3 023 1 424Assets scrapped (11 443) (11 443)Currency translation differences 223 21 244

Cost at 31 august 2013 1 352 130 274 131 626

accumulated depreciationAccumulated depreciation at 31 August 2011 713 47 882 48 595Depreciation 514 23 314 23 828Transfers 864 (1 179) (315)Disposals (221) (11 845) (12 066)Currency translation differences 128 15 143

accumulated depreciation at 31 august 2012 1 998 58 187 60 185Depreciation 81 28 026 28 107Transfers (942) (1 791) (2 733)Assets scrapped (11 393) (11 393)Currency translation differences 215 22 237

accumulated depreciation at 31 august 2013 1 352 73 051 74 403

Carrying value at 31 august 2011 258 56 778 57 036

Carrying value at 31 august 2012 730 50 692 51 422

Carrying value at 31 august 2013 57 223 57 223

Capitalised leased assets are encumbered as reflected in note 16.


31/082013

120


fINANCIALNOTES TO THE

STATEMENTS CONTINUED

group Company2013 2012 2013 2012

r’000 R’000 r’000 R’000

3. goodWillCarrying value at beginning of year 566 925 555 318Acquisition of businesses 105 122 16 470Impairment (40 137) (4 863)

Carrying value at end of year 631 910 566 925

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

Business Connexion proprietary limitedCost at beginning of year 184 399 184 399Disposal of division (22 326)Accumulated impairment (26 225) (21 362)


uCs subsidiariesCarrying value at beginning of year– UCS Technology Services Proprietary Limited 95 476 95 476– UCS Solutions Proprietary Limited 23 454 23 454– CEB Maintenance Africa Proprietary Limited 75 270 75 270– Accsys Proprietary Limited 33 271 33 271


Canoa group holdings proprietary limitedCarrying value at beginning and end of year 159 947 159 947

quad automation proprietary limitedCarrying value at beginning and end of year 16 470 16 470

netcampus proprietary limitedAdditions 55 274Impairment (35 274)

Carrying value at end of year 20 000

integr8 it proprietary limitedAdditions 72 174


total carrying value at end of year 631 910 566 925

The recoverable amount of a cash-generating unit is the higher of fair value less cost to sell and the value in use. The value in use is determined using the estimated future cash flows discounted to their net present value using a pre-tax rate that reflects the market assessments of the time value of money and the risks specific to the asset.

These calculations use cash flow projections based on historical information and financial budgets approved by management covering a three to five year period. The projected cash flows are discounted to their net present value using the weighted average cost of capital.

The goodwill impairment test conducted for the period under review applied a weighted average cost of capital of 16,7% with a 0,5% sensitivity and a perpetual growth rate of 4,0% with a 0,5% sensitivity.

Further breakdown of the goodwill of the UCS group has been provided in the financial statements. The composition of the cash-generating units for impairment testing purposes has not been affected by this.


12131/082013

Client ComputerBrands relationships software Total

R’000 R’000 R’000 R’000

4. intangiBle assets

group

CostCost at 31 August 2011 36 860 205 777 364 137 606 774Additions 72 302 72 302Acquisition of businesses 76 76Transfers (267) (267)Disposals (9 657) (9 657)Currency translation differences 1 299 1 299

Cost at 31 August 2012 36 860 205 777 427 890 670 527Additions 79 647 79 647Acquisition of businesses 12 118 38 353 17 470 67 941Transfers 4 282 6 029 (12 804) (2 493)Disposal of business (4 304) (4 304)Disposals (4 145) (4 145)Currency translation differences 1 721 1 721Reclassification to assets held for sale (26) (26)

Cost at 31 august 2013 53 260 250 159 505 449 808 868

accumulated amortisationAccumulated amortisation at 31 August 2011 1 229 39 935 186 958 228 122Amortisation 3 686 42 786 38 155 84 627Acquisition of businesses 76 76Transfers (637) (637)Disposals (5 733) (5 733)Currency translation differences 801 801

31 August 2012 4 915 82 721 219 620 307 256Amortisation 4 694 45 844 39 988 90 526Acquisition of businesses 2 968 2 968Transfers 1 569 4 388 (6 219) (262)Disposal of business (2 127) (2 127)Disposals (2 164) (2 164)Currency translation differences 800 800Reclassification to assets held for sale (7) (7)

accumulated amortisation at 31 august 2013 11 178 132 953 252 859 396 990

Carrying value at 31 august 2011 35 631 165 842 177 179 378 652



The intangible assets included above have finite useful lives, as detailed in the accounting policy, over which the assets are amortised. Intangible assets relating to client relationships are contracts acquired on acquisition of businesses and are amortised as and when the contract revenues are expected to be realised.


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122




group Company2013 2012 2013 2012

r’000 R’000 r’000 R’000

5. investment in suBsidiaries (annexure a)Shares at cost at beginning of year 4 649 904 4 637 771Increase in investment 12 101 12 133

Cost at end of year 4 662 005 4 649 904Impairment of investments in subsidiaries (1 975 406) (1 975 406)

Carrying value at end of year 2 686 599 2 674 498

6. investment in assoCiate and Jointly Controlled entityShares at cost 93 026 3 674Advances to associate 7 475

Investment in associate and jointly controlled entity 93 026 11 149Share of post-acquisition profit/(losses) 1 553 (3 159)Impairment (7 990)


The group concluded a transaction to sell its Q Data Dynamic (QDD) division to NorthgateArinso Africa Proprietary Limited, effective 1 August 2013, in exchange for a 50% interest in NorthgateArinso Africa Proprietary Limited.

The advances to associate were interest-free, unsecured and repayable on demand.

The group’s share of the financial position and results amounted to:

northgatearinso africa proprietary limitedRevenue 9 423Profit 1 553Total assets 47 177Total liabilities (45 124)

hawkstone isolutions proprietary limitedRevenue 17 226Loss 495Total assets 6 613Total liabilities (12 591)

The investment in Hawkstone iSolutions Proprietary Limited was fully impaired in the previous financial year as the entity was placed into liquidation.

7. long-term loans reCeivaBlevarious management trusts – uCs solutions proprietary limited 29 382 29 663 29 382 29 663

This loan is unsecured, bears interest at 80% of the rulingprime interest rate per annum and is not repayable within the next 12 months.

Bee “a” shareholder loans 524 494 524 494These loans are unsecured and are not repayable within the next 12 months.

R0,433 million bears interest at 80% of the ruling prime interest rate per annum. R0,061 million is interest free.

ntq mBi proprietary limited – nanoteq proprietary limited 1 703 2 289This loan is unsecured, bears interest at a rate of prime less 2% per annum and is not repayable within the next 12 months.

31 609 32 446 29 906 30 157


12331/082013

group Company2013 2012 2013 2012

r’000 R’000 r’000 R’000

8. other investmentsheld-to-maturitygadlex preference sharesCost at beginning of year 213 371 214 687 213 371 214 687“A” Preference share dividends capitalised/(redeemed) 10 341 (1 316) 10 341 (1 316)

Cost at end of year 223 712 213 371 223 712 213 371

details of unlisted investmentsGadlex Proprietary Limited - “A” preference shares 130 614 120 273 130 614 120 273Gadlex Proprietary Limited - “B” preference shares 15 810 15 810 15 810 15 810Gadlex Holdings Proprietary Limited - “C” preference shares 77 288 77 288 77 288 77 288

223 712 213 371 223 712 213 371

gadlex proprietary limited – “a” preference shares10 000 “A” preference shares with a nominal value of R0.01 (one cent) each. The shares are redeemable, and cumulative and have a coupon rate of 80% of the South African prime rate. The approximate redemption date changed from 7 June 2013 to 31 August 2015 as a result of the black economic empowerment (BEE) transaction concluded on 31 August 2010. In terms of the shareholders’ agreement, 80% of all dividends declared by Business Connexion Group Limited to Gadlex Proprietary Limited are to be utilised to pay the preference dividend due, and thereafter, the redemption of the preference shares.

gadlex proprietary limited – “B” preference shares1 000 “B” preference shares with a nominal value of R0.01 (one cent) each. The shares are redeemable, and cumulative and have a coupon rate of 80% of the South African prime rate and rank after the “A” preference shares. The approximate redemption date changed from 7 June 2013 to 31 August 2015 as a result of the BEE transaction concluded on 31 August 2010. In terms of the shareholders’ agreement, 80%, of all dividends declared by Business Connexion Group Limited to Gadlex Proprietary Limited are to be utilised to pay the preference dividend due, and thereafter, the redemption of the preference shares.

gadlex holdings proprietary limited – “C” preference shares10 000 “C” preference shares with a nominal value of R0,01 (one cent) each. The shares are redeemable, and cumulative and have a coupon rate of 80% of the South African prime rate and rank after the “A” and “B” preference shares. The approximate redemption date changed from 7 June 2013 to 31 August 2015 as a result of the BEE transaction concluded on 31 August 2010. In terms of the shareholders’ agreement 80% of all dividends declared by Business Connexion Group Limited to Gadlex Proprietary Limited are to be utilised to pay the preference dividend due, and thereafter, the redemption of the preference shares.

Preference dividends accrued on the “A”, “B” and “C” preference shares of R14,9 million (2012: R15,3 million) have been included in other receivables. Any shortfall of ordinary dividends declared by Business Connexion Group Limited relating to the ordinary shareholding of Gadlex Proprietary Limited compared to preference dividend accrued is capitalised as an investment in the “A” preference shares in the following year.

group Company2013 2012 2013 2012

r’000 R’000 r’000 R’000

9. deferred taxDeferred tax assets at beginning of year 60 183 53 046 1 536Deferred tax liabilities at beginning of year (47 604) (60 927)

Net deferred tax balance at beginning of year 12 579 (7 881) 1 536Recognised in profit or loss 43 19 887 (1 536)Acquisition of subsidiaries (17 615) 272Translation of foreign operations (252) 301

net deferred tax balance at end of year (5 245) 12 579

Deferred tax assets at end of year 44 508 60 183Deferred tax liabilities at end of year (49 753) (47 604)

(5 245) 12 579


31/082013

124




9. deferred tax (continued)The following are the major deferred tax assets and liabilities recognised by the group and the movements in the current and the previous year:

Balance at 31 august 2012

r’000

recognised in profit or loss

r’000

(acquisitions)/ disposal of businesses

r’000

translation of foreign

operationsr’000

Balance at 31 august 2013

r’000

group

Intangible assets (45 411) 14 664 (17 615) (48 362) Accelarated tax allowances (14 891) 5 571 (98) (9 418) Prepayments (6 335) (2 873) (9 208) Capitalised lease assets and liabilities (2 425) 1 102 (1 323) Provisions 55 768 (8 381) (552) 46 835Calculated tax losses 12 680 (8 128) 398 4 950Income received in advance 16 486 (5 614) 10 872Share options balance (3 293) 3 702 409

total 12 579 43 (17 615) (252) (5 245)

Balance at 31 August 2011

R’000

Recognised in profit or loss

R’000

(Acquisitions)/ disposal of businesses

R’000

Translation of foreign

operationsR’000

Balance at 31 August 2012

R’000

STC credits 1 536 (1 536) Intangible assets (59 177) 13 766 (45 411) Accelarated tax allowances (27 577) 12 686 (14 891) Prepayments (3 044) (3 291) (6 335) Capitalised leased assets and liabilities 5 890 (8 320) 5 (2 425) Provisions 49 930 5 564 267 7 55 768Calculated tax losses 5 084 7 302 294 12 680Income received in advance 17 246 (760) 16 486Share options balance 2 231 (5 524) (3 293)

total (7 881) 19 887 272 301 12 579

At 31 August 2013 the group had unutilised tax losses of R268,2 million (2012: R214,4 million) available for offset against future taxable profits. No deferred tax asset has been raised on the unutilised tax losses amounting to R254,5 million (2012: R178,1 million) due to the unpredictability of future taxable profit. If a deferred tax asset was to be raised, an amount of R70,5 million (2012: R49,2 million) would be recognised in profit or loss.

At reporting date, the group had unutilised capital gains tax losses of R501,8 million (2012: R526,7 million). A deferred tax asset has not been raised on this amount due to the uncertainty of future capital gains.

group Company2013 2012 2013 2012

r’000 R’000 r’000 R’000

10. amounts oWed By group CompaniesBusiness Connexion proprietary limited 133 221 240 969The loan is unsecured, interest free and has no repayment terms.

Business Connexion group share trustThe loan is unsecured, interest free and has no repayment terms. 15 948 15 908

uCs technology services proprietary limitedThe loan is unsecured, interest free and has no repayment terms. 6 868 12 468

accsys proprietary limitedThe loan is unsecured, interest free and has no repayment terms. 4 064 4 064

CeB maintenance africa proprietary limitedThe loan was unsecured, interest free and had no repayment terms. 2 263

uCs solutions proprietary limitedThe loan is unsecured, interest free and has no repayment terms. 101 101

160 202 275 773


12531/082013

group Company2013 2012 2013 2012

r’000 R’000 r’000 R’000

11. inventoriesCostMaintenance, components and consumables 131 943 200 685Merchandise 146 274 101 719Work in progress 13 280 14 620

291 497 317 024

Write-down of inventoriesMaintenance, components and consumables (89 404) (109 037)Merchandise (10 095) (10 086)

(99 499) (119 123)


12. trade reCeivaBlesTrade receivables 1 216 354 997 555Impairment allowance (26 569) (26 221)

Carrying value at end of year 1 189 785 971 334

Impairments are based on the objective evidence that the group will not be able to collect all the amounts due according to the original terms of trade receivables. Balances not impaired are considered recoverable. The carrying amount of the trade receivables approximate fair value because of the short period to maturity.

Standard credit terms are 30 days from date of invoice, unless otherwise stipulated in an agreement with clients. Based on historic default rates, the group believes that no impairment is necessary in respect of trade receivables not past due.

Trade receivables amounting to R496,3 million (2012: R513,2 million) have been ceded to Rand Merchant Bank and R26,2 million (2012: R33,5 million) to Nedbank. Refer to note 16.

No individual client represents more than 10% of the group’s trade receivables. Details of the group’s credit risk management policies are set out in note 38.

grossr’000

impairmentr’000

Carrying amount

r’000

trade receivables ageing 31 august 2013Not past due 927 713 927 713Past due 30 days 62 368 (68) 62 300Past due 60 days 16 906 (35) 16 871Past due 90 days 45 880 (35) 45 845Past due > 120 days 163 487 (26 431) 137 056

1 216 354 (26 569) 1 189 785

trade receivables ageing 31 august 2012Not past due 797 690 797 690Past due 30 days 83 044 83 044Past due 60 days 37 390 (559) 36 831Past due 90 days 20 414 (3 334) 17 080Past due > 120 days 59 017 (22 328) 36 689

997 555 (26 221) 971 334

group Company2013 2012 2013 2012

r’000 R’000 r’000 R’000

movement in the impairment allowance of trade receivablesBalance at beginning of year 26 221 15 758Amounts utilised (4 341) (1 430)Impairments raised 5 504 12 656Impairments released (815) (763)

Balance at end of year 26 569 26 221


31/082013

126




group Company2013 2012 2013 2012

r’000 R’000 r’000 R’000

13. other reCeivaBlesAccrual for uninvoiced income 133 842 114 382Asset finance receivables 21 807 33 530Deposits 3 436 2 988Employee advances and loans 7 523 7 691Fair value gain on forward exchange contracts 4 465 1 011Preference dividend accrual 14 939 15 341 14 939 15 341Receivable on disposal of properties 18 012Amounts owed by related party 41 429Other 70 417 46 079

297 858 239 034 14 939 15 341

The carrying amount of other receivables approximate fair value because

of the short period to maturity.

14. disposal group held for saleassets held for saleProperty, plant and equipment 1 391Intangible assets 19Trade receivables 3 196Other receivables 8 824Deferred tax assets 448Cash and cash equivalents 4

Balance at end of year 13 882

liabilities held for saleTrade payables 1 163Other payables 3 666

Balance at end of year 4 829

The group has entered into an agreement to dispose of its entire interest in its Q LINK business, which formed part of the Innovation division, to Summit Garnishee Solutions Proprietary Limited (SGS) as a going concern for a cash consideration of R187,5 million. SGS is a privately-owned company that is not related to the group. The effective date of the transaction is 1 September 2013. The consideration was settled in full on the date that the last suspensive condition is fulfilled.

Business Connexion has realised for some time that the core business and general strategy of Q LINK is different to that of the other divisions within the group. As the Q LINK service offering is more aligned to the financial services industry it makes perfect sense for SGS, who has similar strategies, to get closer to Q LINK.

There is no impairment loss included in the statement of comprehensive income.


12731/082013

group CompanyNumber of

shares R’000Number of

shares R’000

15. share Capitalauthorised share capital:ordinary shares31 August 2013 and 31 August 2012 ordinary shares of 0,59 cent each 847 457 627 5 000 847 457 627 5 000

“a” shares31 August 2013 and 31 August 2012 “A” shares of 0,59 cent each 150 000 000 885 150 000 000 885

issued share capital:ordinary sharesOrdinary shares of 0,59 cent in issue at 31 August 2011 404 972 468 2 346 404 972 468 2 389Ordinary shares held at 31 August 2012 (5 124 549) 12

ordinary shares of 0,59 cent in issue at 31 august 2012 399 847 919 2 358 404 972 468 2 389Treasury shares utilised during the year 1 709 706 10

ordinary shares of 0,59 cent in issue at 31 august 2013 401 557 625 2 368 404 972 468 2 389

“a” shares“A” shares of 0,59 cent in issue at 31 August 2011 100 133 334 100 133 334“A” shares held at 31 August 2012 (61 502) (61 502)

“a” shares if 0,59 cent in issue at 31 august 2012 100 071 832 100 071 832Treasury shares utilised during the year 20 458 20 458

“a” shares of 0,59 cent in issue at 31 august 2013 100 092 290 100 092 290

The “A” shares are legally issued but are not taken into account for accounting purposes as the substance of the transaction is that Business Connexion Group Limited has granted a share option which is accounted for as an equity-settled share-based payment in terms of IFRS2 Share -based Payment, i.e. they are still held by Business Connexion Group Limited pending their transfer to the participants in the “A” share transaction at 31 August 2015.

Ordinary shares held by the Business Connexion Group Share Trust and Business Connexion Proprietary Limited as treasury shares at 31 August 2013 were 3 414 843 (2012: 5 124 549) representing 0,85% (2012: 1,3%) of the issued ordinary share capital.

“A” shares held by Business Connexion Proprietary Limited at 31 August 2013 were 41 044 (2012: 61 502) representing 0,04% (2012: 0,06%) of the issued “A” share capital.


31/082013

128




Less thanone year

R’000

Between oneand five years

R’0002013

r’0002012R’000

16. interest-Bearing long-term liaBilities

group

liabilities under finance leases at 31 august 2013Future minimum lease payments 25 123 36 619 61 742 Lease finance charges (3 146) (3 207) (6 353)

Present value of minimum lease payments 21 977 33 412 55 389

liabilities under finance leases at 31 august 2012Future minimum lease payments 28 360 19 714 48 074Lease finance charges (2 499) (1 528) (4 027)

present value of minimum lease payments 25 861 18 186 44 047

Liabilities under finance leases relate to the lease of assets with lease terms ranging from three to five years.

These liabilities bear interest at fixed interest rates ranging between 2,0% and 10,22% (2012: 2,0%and 10,22%). A variable rate based on the base rate of the Bank of England plus 2% applies to a lease in GBP.

The liabilities are in respect of capitalised leased assets with a carrying value of R57,2 million (2012: R51,4 million) as shown in note 2. The group has the option to purchase these assets at the end of the lease term.

The fair values of the liabilities under finance leases approximate their carrying amounts.

loansStanbic TanzaniaThe loan bears interest at 9,0%, is secured by a guarantee from Business Connexion Proprietary Limited, and is repayable over 60 months. The base currency for this loan is USD.

4 820 3 740

Akiba TanzaniaThe loan bore interest at 9,0%, was secured by property, plant and equipment amounting to R17,5 million, and was repayable over 36 months. The base currency for this loan was USD. This loan was repaid in full during the current year

630

NedbankThis loan is secured by a cession of trade receivables amounting to R26,2 million (2012: R33,5 million) of CEB Maintenance Africa Proprietary Limited and bears an interest at 6,5% (2012: 6,5%).

1 570 3 751

Rand Merchant BankThe loan is secured by a cession of trade receivables amounting to R496,3 million (2012: R513,2 million) of Business Connexion Proprietary Limited, and is repayable in quarterly instalments, over 60 months. The loan bears interest at JIBAR plus 2%. An interest rate swap has been taken out for three years to fix the rate at 9,02%.

163 154 210 327

Barclays Commercial MortgageThe loan bears interest at the UK prime rate plus 1,25%, is secured by the freehold building at 4 Arlington Court, Arlington Business Park, Stevenage amounting to R9,3 million, and is repayable over 20 years. The base currency for this loan is GBP.

5 747 5 195

Business Connexion Zambia LimitedLoans and borrowings consist of a long-term loan obtained from Stanbic Bank Zambia Limited. The principal amount of the loan was USD 150 000 at a fixed interest rate at 11% per annum. It was obtained on 30 April 2013 and is repayable over a period of 35 months.

761 968

Total interest bearing long-term liabilities 231 441 268 658Transfer to short-term liabilities (75 239) (89 191)

156 202 179 467

17. interest free long-term liaBilities

group

atio Corporation proprietary limitedThe loan is unsecured, interest free and there are no repayment terms. 21 871


12931/082013

2013 2012r’000 R’000

18. post-retirement Benefit oBligations

group

post-retirement healthcare obligationsBalance at beginning of year 10 614 7 920Amendment to accruals based on changes in beneficiaries, assumptions and known increases in medical aid rates 3 846 1 703Interest 801 1 114Current year service costs 169 358Benefits paid (524) (481)


amounts recognised in profit or lossAmendment of accruals based on changes in beneficiaries, assumptions and known increases in medical aid rates 3 846 1 703Interest 801 1 114Current year service costs 169 358

4 816 3 175

It is not the group’s policy to offer post-retirement healthcare benefits. At 31 August 2013, 32 individuals (31 August 2012: 32) have the right to post-retirement healthcare benefits as a result of terms and conditions applicable in their employment contracts prior to becoming part of the group.

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

The method used to value the liabilities is the projected unit credit method.

The most significant assumptions are outlined below:Healthcare cost inflation (%) 7,0 7,0Discount rate (%) 7,35 7,35Average retirement age for in-service members. 63 63

Assumed mortality rates as follows: sa85 – 90 (light)

SA – 90 (light)

ultimate table ultimate tablepa (90)

ultimate tablePA (90)

ultimate table

group Company2013 2012 2013 2012

r’000 R’000 r’000 R’000

19. Contingent ConsiderationIntegr8 IT Proprietary Limited 70 000Fair value adjustment (6 666)

63 334

To the extent that Integr8 IT Proprietary Limited’s profit after tax exceeds the warranted profit, the seller will earn additional consideration amounting to R70,0 million, payable in the 2015 and 2016 financial years.


31/082013

130




group Company2013 2012 2013 2012

r’000 R’000 r’000 R’000

20. amounts oWed to group CompaniesBusiness Connexion international holdings proprietary limitedThis loan is interest–free, unsecured and has no repayment terms. 20 070 20 070accsys proprietary limitedThe loan bore interest at an average deposit rate that was earned by the group on investment of funds, was unsecured and had no repayment terms.

11 832

CeB maintenance africa proprietary limitedThe loan bore interest at an average deposit rate that was earned by the group on investment of funds, was unsecured and had no repayment terms.

9 333

uCs solutions proprietary limitedThe loan bore interest at an average deposit rate that was earned by the group on investment of funds, was unsecured and had no repayment terms.

58 302

uCs technology services proprietary limited.The loan bore interest at an average deposit rate that was earned by the group on investment of funds, was unsecured and had no repayment terms.

48 750

CeB maintenance africa proprietary limited loanThe loan is unsecured, interest free and has no repayment terms. 1 645


21. other payaBlesAccruals 129 841 144 628 370 2 138Accrual for leave pay 106 336 101 748Income received in advance 52 963 83 175Vendor payment accrual 26 185 49 543 13 363Payroll creditors 137 927 160 174 495VAT 50 778 51 960Liability relating to the executive share option scheme 6 074 9 725Interest rate swap 2 305 6 643Other 73 676 49 694 25 770 19 975

580 011 647 565 32 709 45 201

Legal Warranties TotalR’000 R’000 R’000

22. provisions

groupBalance at 31 August 2011 217 675 892Recognised in profit or loss (217) 621 404

Balance at 31 august 2012 1 296 1 296Recognised in profit or loss (154) (154)Balance at 31 august 2013 1 142 1 142

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

group Company2013 2012 2013 2012

r’000 R’000 r’000 R’000

23. revenue revenue – continuing operationsFor rendering services 3 243 347 3 737 494Arising from sale of goods 2 830 790 2 007 127

6 074 137 5 744 621

revenue – discontinued operationsFor rendering services 99 202 85 023

total revenue – continuing and discontinued operations 6 173 339 5 829 644


13131/082013

group Company2013 2012 2013 2012

r’000 R’000 r’000 R’000

24. operating profitoperating profit is stated after:administration, management and other fees 9 021 13 920

auditors’ remunerationAudit fees– Current year 13 082 11 420– Prior year under provision 1 600– Fees for other services 201 22

13 283 13 042

depreciation and amortisationProperty, plant and equipment– Property 14 450 14 923– Furniture and fittings 5 865 6 769– Equipment 93 167 91 795– Vehicles 4 885 4 837– Rental assets 1 364 219

119 731 118 543

Capitalised leased assets– Furniture and fittings 81 514– Equipment 28 026 23 314

28 107 23 828

Intangible assets– Brands 4 694 3 686– Client relationships 45 844 42 786– Computer software 39 988 38 155

90 526 84 627

directors’ emoluments– Emoluments for services as directors of the company 22 570 22 100– Less: Paid by subsidiaries (20 272) (19 166)

2 298 2 934

made up as follows:– Salaries and other benefits 15 627 13 207– Bonuses and performance-related payments 4 645 5 959– Remuneration paid to non-executive directors 2 298 2 934

22 570 22 100

operating lease charges– Land and buildings 121 129 97 876– Equipment 68 108 44 669– Vehicles 4 615 2 651

193 852 145 196

foreign exchange losses 3 448 7 588

research and development costs 13 053 30 797

employee costs– Salaries, bonuses and benefits 2 509 667 2 124 067– Contributions paid on behalf of employees 135 375 133 601

2 645 042 2 257 668

other disclosable itemsFair value of financial liability 24 181 (433)Loss on sale of subsidiary 144Impairment of investment in associates 5 985Share-based payment expenses 11 223 13 761Loss on sale of property, plant and equipment 2 436 720Bargain purchase (109)Profit on sale of business (83 999) (4 741)Impairment of goodwill 40 137 4 863Write-down of inventories 1 838 7 054Reversal of loan impairment (4 198) (1 418)


31/082013

132




group Company2013 2012 2013 2012

r’000 R’000 r’000 R’000

25. investment inComedividends receivedBanks 1 703Unlisted investments 15 262 15 341 14 939 15 341Subsidiaries 76 431 2 333Other 1 033

15 262 18 077 91 370 17 674

interest incomeBanks 5 484 14 707 47 76Loans and advances 6 557 1 880 1 987 1 268South African Revenue Services 262 31 22

12 303 16 618 2 034 1 366

27 565 34 695 93 404 19 040

26. finanCe CostsInterest on liabilities 21 722 23 176 3 3 222Interest on finance leases 3 419 4 012Other 344 296

25 485 27 484 3 3 222

27. taxationsouth african tax– continuing operations 71 174 70 399 557 (7 672)– discontinued operations 11 691 8 482foreign tax– continuing operations 10 398 6 737

93 263 85 618 557 (7 672)

Comprising:normal tax – continuing operations– current year 86 561 103 271 557 256– prior year over provision (6 093) (31 550) (31 333)Secondary tax on companies 21 924 21 869Withholding tax 1 692 3 325normal tax – discontinued operations– current year 11 594 8 535

93 754 105 505 557 (9 208)

deferred tax – continuing operations– current year (1 715) (20 206) 1 536– prior year under provision 1 127 372deferred tax – discontinued operations– current year 97 (53)

(491) (19 887) 1 536

93 263 85 618 557 (7 672)

% % % %

reconciliation of effective tax ratereconciliation between applicable tax rate and average effective rate:Effective tax rate 28,6 30,4 0,5 (40,2)Deferred tax raised on STC credits (0,5) (8,0)Witholding tax and dividend withholding tax (0,6) (1,2) (114,5)STC (8,0) Effect of foreign subsidiaries’ tax rates (0,3) (0,4) Capital gains tax (0,5) Prior year adjustment 1,7 11,3 164,1(Reduction)/increase in taxes due to exempt income, allowances and calculated tax losses (1,4) (3,1) 27,5 26,6 Exempt income 14,7 (4,1) 29,6 36,3 Disallowed expenses (11,8) 0,7 (2,1) (9,7)Calculated tax losses– deferred tax not provided for now utilised (4,3) 0,3

statutory tax rate 28,0 28,0 28,0 28,0

South African income tax is calculated at 28% (2012: 28%) of the calculated taxable income for the year. Taxation in the other jurisdictions is calculated at rates prevailing in those relevant jurisdictions.


13331/082013

2013 2012

28. earnings per share

group

reconciliation of treasury sharesNumber of treasury shares held by the share purchase trust and subsidiary at end of year 3 414 843 5 124 549Weighted average number of options exercised during the year in the share purchase trust 987 774 1 297 912

Weighted average number of treasury shares 4 402 617 6 422 461

Weighted average number of shares is calculated as follows:Number of ordinary shares in issue at end of year 404 972 468 404 972 468Weighted average number of treasury shares (4 402 617) (6 422 461)

Weighted average number of shares 400 569 851 398 550 007

Diluted weighted average number of shares is calculated as follows:Weighted average number of shares 400 569 851 398 550 007Potential dilutive options 1 590 695 2 059 028Options issued and exercised during year that were dilutive for a portion of period 441 375 487 933

diluted weighted average number of shares 402 601 921 401 096 968

Profit for the year attributable to equity holders (R’000) 179 149 149 317Basic earnings per share (cents) 44,7 37,5Diluted earnings per share (cents) 44,5 37,2from continuing operationsBasic earnings per share (cents) 37,2 32,0Diluted earnings per share (cents) 37,0 31,7

from discontinued operationsBasic earnings per share (cents) 7,5 5,5Diluted earnings per share (cents) 7,5 5,5

29. headline earnings per share

group r’000 R’000

Profit for the year attributable to equity holders 179 149 149 317Loss on sale of property, plant and equipment, capitalised leased assets and other intangible assets 2 436 720Loss on sale of subsidiary 144Impairment of investment in associate 5 985Reversal of loan impairment (1 418)Profit on sale of business (83 999) (4 741)Impairment of goodwill 40 137 4 863Bargain purchase of subsidiary (109)Tax effect of headline earnings adjustments (450) 563

headline earnings attributable to equity holders 137 164 155 433

Weighted average number of shares 400 569 851 398 550 007Diluted weighted average number of shares 402 601 921 401 096 968Headline earnings per share (cents) 34,2 39,0Diluted headline earnings per share (cents) 34,1 38,8

The group is not able to ascertain the extent of the ultimate dilution in 2015 in respect of the “A” shares issued and, therefore, has not included the potential dilution in diluted weighted average number of shares.

30. Capital Commitments

group r’000 R’000

Authorised – contracted 21 000 16 393Authorised – not contracted 28 807 751

49 807 17 144

Capital commitments will be financed out of existing group resources.

The capital commitments relate to capital expenditure on equipment.


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<1 year 2 to 5 years > 5 years totalr’000 r’000 r’000 r’000

31. operating lease Commitments

group

at 31 august 2013Land and buildings 82 174 115 870 198 044Equipment 13 404 33 390 18 171 64 965Vehicles 2 125 2 520 4 645Fixtures and fittings 449 259 708

98 152 152 039 18 171 268 362

at 31 august 2012Land and buildings 74 997 164 008 239 005Equipment 13 275 29 821 18 115 61 211Vehicles 119 206 325Furniture and fittings 190 190

88 581 194 035 18 115 300 731

The operating lease commitments for land and buildings relate largely to rentals of office space at all the regional locations. These leases have varying terms, escalation clauses and renewal periods.

There is no intention to purchase the equipment and vehicles reflected under operating lease commitments.

group Company2013 2012 2013 2012

r’000 R’000 r’000 R’000

32. guarantees

– Performance guarantees 60 844 91 838– Asset finance deals with recourse to Business Connexion

Proprietary Limited 53 242 16 011– Other 33 327 34 910

147 413 142 759

The performance guarantees relate mainly to contracts awarded in the rest of Africa and will terminate upon conclusion of the contracts.

Contracts generally do not extend beyond one year.

33. Contingent liaBilities

Company

The company has provided the following guarantees for Business Connexion Proprietary Limited in favour of Nedbank, Standard Bank and First National Bank.

Multi-option facilityA multi-option facility for up to R25 million, which may be availed by means of one or more of the following instruments, namely:

Direct facilities:– Overdraft facility– Overnight loans– Foreign finance

Indirect facility:– Letters of credit

Indirect facilityAn indirect facility for up to R20 million, which may be availed by means of letters of guarantee

Derivative facilityForward exchange contracts for up to R6 million, being 10% of the amount of the forward exchange contract


13531/082013

group Company2013 2012 2013 2012

r’000 R’000 r’000 R’000

34. related partiesThe group and company entered into the following transactions with subsidiaries, associates and other related parties.

dividends receivableGadlex Proprietary Limited and Gadlex Holdings Proprietary Limited 14 939 15 341 14 939 15 341

Contingent considerationTrawaral Trust 26 185 26 185

amounts owed by related party – currentTrawaral Trust – loan 41 429

For transactions with subsidiaries, associates and jointly controlled operations refer to notes 5, 6, 10, 19 and 20. For transactions with Gadlex Proprietary Limited and Gadlex Holdings Proprietary Limited refer to note 8.

The directors have certified that they did not have a material interest in any transaction of any significance with the group or any of its subsidiaries. The related party transactions entered into are on an arm’s length basis.

Refer to page 94 of the remuneration report for details of remuneration paid to senior management.

35. BorroWing poWersThe Memorandum of Incorporation of the company provides that the directors may from time to time:– borrow for the purpose of the company such sums they deem fit; or– secure the payment of any such sums or any other sums, as they deem fit, whether by the creation and issue of debentures, mortgage bonds

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

The borrowing powers are, therefore, considered to be unlimited.

36. retirement informationAll eligible permanent employees, other than those required to join a fund established by statute are required to join the Group Pension and Provident Fund as a condition of employment. Employees become members of both funds simultaneously. Business Connexion Proprietary Limited and certain of its subsidiaries contribute to the Group Provident Fund and employees contribute to the Group Pension Fund. These funds are registered in the Republic of South Africa in terms of the Pension Funds Act, 1956 and are approved by the South African Revenue Services. The funds are classified as defined contribution funds. Effective 1 March 2011, Business Connexion Proprietary Limited became a member of Alexander Forbes Retirement Fund.

The Group Pension and Provident Funds are reviewed annually by an actuary at the funds’ year end. At the last review date, 28 February 2013, the funds were certified as financially sound. The pension and provident funds within the Alexander Forbes Retirement Funds will continue to be audited annually at 31 March.

At the financial year end, 28 February 2013, the funds had an active membership of 3 220 members (2012: 3 203 members) in the provident fund and 3 220 (2012: 3 203) members in the pension fund. During the year, the company contributions to the Group Provident Fund amounted to R70,3 million (2012: R64 million). The combined asset size of the Business Connexion Group Pension and Provident Funds at the end of the year was approximately R1 305,7 million (2012: 1 089,8 million).

The duties and responsibilities of administering the Business Connexion Group Pension and Provident Funds are adequately segregated. Alexander Forbes Financial Limited is primarily responsible for the assets of the funds.

The funds have adequate fidelity guarantee insurance against negligence, theft, fraud and dishonesty on the part of any of the funds’ officers.

37. segmental analysisBusiness Connexion’s segmental analysis is based on the following operating segments:• Services division relates to the control and management of clients’ systems and services on an ongoing basis. It includes professional, cloud

services, infrastructure services, workspace services and global service integration management.• UCS division provides IT services in the retail services sector.• Canoa division provides managed print services to clients.• Technology division provides clients with hardware and network equipment for their computing needs.• International division provides the services of the Services, Technology and Innovation divisions outside the borders of South Africa.• Innovation division houses the group’s own intellectual property.• Corporate office relates to group shared services, investments in corporate entities and treasury functions.

Revenue and expenses are based on the actual transactions of the division. Corporate costs are allocated based on a corporate cost allocation model.

Content Distribution Services has been incorporated into the Services division and no longer forms part of the Investment division. The group has restated its segment report in line with the above.


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2013 2012r’000 R’000

37. segmental analysis (continued)total revenueServices division 2 168 567 2 012 395UCS division 1 170 859 1 093 148Canoa division 1 117 525 860 536Technology division 700 760 919 925Innovation division 512 400 498 714International division 539 454 485 199Inter-segmental revenue (36 226) (40 273)

6 173 339 5 829 644

inter-segmental revenueServices division (19 278) (16 179)UCS divisionCanoa divisionTechnology division (6 022) (3 909)Innovation division (3 716) (2 235)International division (7 210) (17 950)

(36 226) (40 273)

total external revenueServices division 2 149 289 1 996 216UCS division 1 170 859 1 093 148Canoa division 1 117 525 860 536Technology division 694 738 916 016Innovation division 508 684 496 479International division 532 244 467 249

6 173 339 5 829 644

depreciation and amortisationServices division 88 101 88 857UCS division 32 053 31 153Canoa division 4 995 4 002Technology division 7 585 14 650Innovation division 6 277 5 718International division 9 279 8 175Corporate office 90 074 74 443

238 364 226 998


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2013 2012r’000 R’000

37. segmental analysis (continued)operating profitServices division 157 636 190 965UCS division 100 355 116 854Canoa division 116 104 106 549Technology division 26 473 3 328Innovation division 93 570 67 615International division 11 071 11 695Corporate office (182 584) (221 981)

322 625 275 025

Capital expenditureServices division 118 244 76 365UCS division 34 565 30 401Canoa division 12 166 2 567Technology division 13 855 7 453Innovation division 15 015 31 276International division 37 213 16 680Corporate office 33 829 40 833

264 887 205 575

assetsServices division 983 343 733 691UCS division 585 890 381 652Canoa division 359 386 243 925Technology division 221 208 447 548Innovation division 218 279 201 427International division 475 479 339 649Corporate office 1 095 705 1 267 681

3 939 290 3 615 573

liabilitiesServices division 200 119 442 492UCS division 311 401 98 424Canoa division 169 464 105 059Technology division 146 228 403 487Innovation division 69 589 69 362International division 288 406 175 125Corporate office 353 239 120 039

1 538 446 1 413 988

share of profit/(losses) from associate and jointly controlled entityInnovation division 1 553Investment division (495)


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38. FINANCIAL INSTRUMENTS a) Financial risk management

The group has exposure to the following risks from its use of financial instruments:

• Market risk

• Credit risk

• Liquidity risk

This note presents information about the group and the company’s exposure to each of the above risks, the group’s objectives, policies

and processes for measuring and managing risk, and the group’s management of capital. Further quantitative disclosures are included

throughout these consolidated financial statements.

The board of directors has overall responsibility for the establishment and oversight of the group’s risk management framework.

The board has established the risk, sustainability, social and ethics committee, which is responsible for developing and monitoring

the group’s risk management policies. The committee reports regularly to the board of directors on its activities.

The group’s risk management policies are established to identify and analyse the risks faced by the group, to set appropriate risk limits

and control, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect

changes in market conditions and the group’s activities. The group, through its training and management standards and procedures,

aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

The risk, sustainability, social and ethics committee oversees how management monitors compliance with the group’s risk management

policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the group.

The risk, sustainability, social and ethics committee is assisted in its oversight roles by internal audit. Internal audit undertakes both

regular and ad hoc reviews of risk management controls and procedures, the result of which are reported to the risk, sustainability,

social and ethics committee.

The group’s financial instruments consist of cash and cash equivalents, other investments, loans and long-term loans receivable, trade

and other receivables, trade and other payables, long- and short-term liabilities, foreign exchange contracts and interest rate swaps.

Significant accounting polices

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and

the basis on which income and expenses are recognised, in respect of each class of financial asset and financial liability are disclosed in

note 13 of the accounting policies.

Treasury risk management

The group’s treasury function provides the group with access to local money markets and the group entities with the benefits of bulk

financing and depositing.

b) Market risk

Market risk is the risk that changes in market prices, such as foreign currency exchange rates, or interest rates, will affect the group’s

profit or loss or the value of its holdings of financial instruments. The objective of market risk management is to manage and control

market risk exposures within parameters, while optimising the return on risk.

Currency risk

The group’s activities expose it primarily to the market risk of changes in foreign currency exchange rates. The group is exposed to

currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of

group entities. The group’s policy is to take out forward cover for all trade commitments where this is possible and if not, the treasury

holds currency to match the exposures. Each operation manages its own trade exposure in consultation with the group treasury. The

risk of having to close out the contracts is considered low and the amounts and currencies involved are set out below. There are no

forward exchange contracts for periods beyond 90 days.


13931/082013

38. finanCial instruments (continued)

b) Market risk (continued)

Original contract

Fair value

Foreign currency

valueR’000 R’000 ’000

GROUP

United States Dollars (USD) 88 356 92 821 9 029British Pound (GBP) 627 623 39Euro (EUR) 123 127 9

Forward exchange contracts at 31 August 2013 89 106 93 571

United States Dollars (USD) 117 488 116 454 13 887British Pound (GBP) 26 27 2Euro (EUR) 554 576 54

Forward exchange contracts at 31 August 2012 118 068 117 057

The group exposure to significant currency risk was as follows:

USD KES MZN EURO NGN TZS GBP BWP ZMK’000 ’000 ’000 ’000 ’000 ’000 ’000 ’000 ’000

Gross exposure in the statement of financial position at 31 August 2013 (24 782) 34 655 19 441 1 069 64 733 72 553 569 (1) 537

Cash and cash equivalents 116 34 655* 19 441* 97 64 733* 72 553* 567* 537*Trade receivables 10 365 1 013 424Trade payables (9 196) (10) (291)Open purchase orders (26 067) (31) (131) (1)

Foreign exchange contracts in place 9 029 9 39

Net exposure 15 753 34 655 19 441 1 078 64 733 72 553 608 (1) 537

USD KES MZN EURO NGN TZS GBP ZMK’000 ’000 ’000 ’000 ’000 ’000 ’000 ’000

Gross exposure in the statement of financial position at 31 August 2012 (684) 560 37 105 200 (92 403) 86 235 601 299 795

Cash and cash equivalents 3 371 560* 37 105* 290 (92 403)* 86 235* 644* 299 795*Trade receivables 12 472 14 1Trade payables (9 964) (84) (22)Open purchase orders (6 563) (20) (22)

Foreign exchange contracts in place 13 887 54 2

Net exposure 13 203 560 37 105 254 (92 403) 86 235 603 299 795

* Amounts held in bank account of applicable currency.


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b) Market risk (continued)

The following exchange rates have been applied at year end: 2013 2012Average rates r’000 R’000

ZAR/USD 9,21 10,28 8,40ZAR/ZMK 0,0017 0,0019 0,0017ZAR/BWP 1,12 1,18 1,08ZAR/EURO 12,03 13,59 10,56ZAR/NZD 7,48 7.94 6,74ZAR/GBP 14,36 15,94 13,32ZAR/KES 0,11 0,12 0,10ZAR/MZN 0,31 0,34 0,29ZAR/NGN 0,06 0,064 0,053ZAR/TZS 0,0057 0,0064 0,0054

Foreign currency sensitivity analysisA 10% strengthening of the ZAR against the following currencies at 31 August 2013 would have (decreased)/increased profit before tax by the amount shown below. The analysis assumes that all other variables, in particular interest rates, remain constant and is applied against the gross statement of financial position exposure and foreign exchange contracts at the reporting date.

2013 2012r’000 R’000

USD (16 193) (10 515)KES 416 (6)MZN 661 (1 094)EURO 1 466 (593)NGN 414 492TZS 46 (46)GBP 969 (1 605)ZMK (161)

(12 221) (13 528)

A 10% weakening in the ZAR against the above currencies at 31 August 2013 would have had the equal but opposite effect on the above currencies to the amount shown above, on the basis that all other variables remain constant.

Interest rate risk

The sensitivity analysis below has been determined based on the exposure to interest rates as at the reporting date. A 50 basis point increase or decrease represents management’s assessment of the reasonably possible change in interest rates. If interest rates had been 50 basis points higher and all other variables were held constant, profit before tax for the year ended 31 August 2013 would increase by R1,1 million (2012: increase by R2,1 million). This is mainly attributable to the group’s exposure to interest rates on its cash and cash equivalents and other investments. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. This analysis is performed on the same basis for 2012.

group Company2013 2012 2013 2012

r’000 R’000 r’000 R’000

Long-term loans receivable 31 548 32 446 29 845 30 157Other investments 223 712 213 371 223 712 213 371Cash and cash equivalents 196 771 443 930 2 846 2 762Interest bearing long-term liabilities (156 202) (179 467)Short-term liabilities (75 239) (89 191)

220 590 421 089 256 403 246 290


14131/082013


c) Credit risk

Credit risk refers to the risk that the counterparty will default on its contractual obligations resulting in financial loss to the group. Potential areas of credit risk consist of loans to associates, trade receivables, other receivables, cash and cash equivalents, foreign exchange contracts and other investments.

Trade receivables consist mainly of a large, widespread customer base. The group monitors the customer base on an ongoing basis and where considered appropriate, or where necessary, an impairment allowance is made against the trade receivable. At year-end management do not consider there to be any material exposure that has not been covered by impairment. The risk of doing business in the rest of Africa is mitigated through advance payments and the use of letters of credit.

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

The group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The group’s exposure, and the creditworthiness of its counterparties, are continuously monitored. Credit exposure is reviewed in the business unit segment annually.

The ageing of trade receivables has been analysed in note 12.

The group’s and company’s total exposure to credit risk is as follows:

group Company2013 2012 2013 2012

r’000 R’000 r’000 R’000

Long-term loans receivable 31 609 32 446 29 906 30 157Other investments 223 712 213 371 223 712 213 371Amounts owed by group companies 160 202 275 773Trade receivables 1 189 785 971 334Other receivables 290 335 231 343 14 939 15 341Cash and cash equivalents 196 771 443 930 2 846 2 762Assets held for sale 12 024

1 944 236 1 892 424 431 605 537 404

d) Liquidity risk

Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The group’s approach to managing liquidity risk is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when due without incurring unacceptable losses or risking damage to the group’s reputation. The group manages liquidity risk by monitoring forecasted cash flows and ensuring the unutilised borrowing facilities are monitored.

The group has the following unutilised banking facilities:Overdraft facilities R175 million (2012: R196,7 million) Maturity profile of financial instruments including finance lease liabilities

<1 yearr’000

2 to 5 yearsr’000

2013r’000

GROUP

Financial assetsNon-derivative financial assetsLong-term loans receivable 31 609 31 609Other investments 223 712 223 712Trade and other receivables 1 475 655 1 475 655Cash and cash equivalents 196 771 196 771Assets held for sale 12 024 12 024Derivative financial assetsForward exchange contracts 4 465 4 465

1 688 915 255 321 1 944 326


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38. FINANCIAL INSTRUMENTS (continued)d) liquidity risk (continued)

Carrying value

Contractual outflows

2013 <1 year 2 to 5 years 2013r’000 r’000 r’000 r’000

financial liabilitiesnon-derivative financial liabilitiesInterest bearing long-term and short-term liabilities 231 441 88 550 168 595 257 145Interest free long-term liabilities 21 871 21 871 21 871Trade and other payables 783 910 783 910 783 910Liabilities held for sale 4 829 4 829 4 829derivative financial liabilitiesInterest rate swap 2 305 2 305 2 305

1 044 356 901 465 168 595 1 070 060

<1 year 2 to 5 years31 August

2012R’000 R’000 R’000

group

financial assetsnon-derivative financial assetsLong-term loans receivable 32 446 32 446Other investments 213 371 213 371Trade and other receivables 1 201 666 1 201 666Cash and cash equivalents 443 930 443 930derivative financial assetsForward exchange contracts 1 011 1 011

1 646 607 245 817 1 892 424

Carrying value


2012 <1 year 2 to 5 years 2012R’000 R’000 R’000 R’000

financial liabilitiesnon-derivative financial liabilitiesInterest bearing long- and short-term liabilities 268 658 107 056 203 934 311 170Trade and other payables 669 188 669 188 669 188derivative financial liabilitiesInterest rate swap 6 643 6 643 6 643

944 489 782 887 203 934 987 001

<1 year 2 to 5 years 2013r’000 r’000 r’000

Company

financial assetsLong-term loans receivable 29 906 29 906Amounts owed by group companies 160 202 160 202Other investments 223 712 223 712Trade and other receivables 14 939 14 939Cash and cash equivalents 2 846 2 846

177 987 253 618 431 605


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38. FINANCIAL INSTRUMENTS (continued)d) liquidity risk (continued)

Carrying value


2013 2013 <1 year 2 to 5 yearsr’000 r’000 r’000 r’000

financial liabilitiesnon-derivative financial liabilitiesAmounts owed to group companies 21 715 21 715 21 715Trade and other payables 26 140 26 140 26 140derivative financial liabilitiesDerivative relating to group share scheme 6 074 6 074 6 074

53 929 53 929 47 855 6 074

<1 year 2 to 5 years 2012 R’000 R’000 R’000

Company

financial assetsLong-term loans receivable 30 157 30 157Amounts owed by group companies 275 773 275 773Other investments 213 371 213 371Trade and other receivables 15 341 15 341Cash and cash equivalents 2 762 2 762

293 876 243 528 537 404

Carrying value


2012 2012 <1 year 2 to 5 yearsR’000 R’000 R’000 R’000

financial liabilitiesnon-derivative financial liabilitiesAmounts owed to group companies 148 287 148 287 148 287Trade and other payables 35 476 35 476 35 476derivative financial liabilitiesDerivative relating to group share scheme 9 725 9 725 9 725

193 488 193 488 183 763 9 725

e) fair values

fair valueCarrying

value Fair valueCarrying

value2013 2013 2012 2012

r’000 r’000 R’000 R’000

group

financial assetsnon-derivative financial assetsloans and receivablesLong-term loans receivable 31 609 31 609 32 446 32 446Trade receivables 1 189 785 1 189 785 971 334 971 334Other receivables 285 870 285 870 230 332 230 332Cash and cash equivalents 196 771 196 771 443 930 443 930Assets held for sale 12 024 12 024held-to-maturity investmentsOther investments 223 712 223 712 213 371 213 371derivative financial assetsForward exchange contracts 4 465 4 465 1 011 1 011

1 944 236 1 944 236 1 892 424 1 892 424


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38. finanCial instruments (continued)e) fair values (continued)

fair valueCarrying


value2013 2013 2012 2012

r’000 r’000 R’000 R’000

financial liabilitiesnon-derivatives financial liabilitiesother financial liabilitiesInterest bearing long-term and short-term liabilities 231 441 231 441 268 658 268 658Interest free long-term liabilities 21 871 21 871Trade payables 554 208 554 208 425 323 425 323Other payables 229 702 229 702 595 277 595 277Liabilities held for sale 4 829 4 829derivative financial liabilitiesInterest rate swap 2 305 2 305 6 643 6 643

1 044 356 1 044 356 1 295 901 1 295 901

fair valueCarrying


value2013 2013 2012 2012

r’000 r’000 R’000 R’000

Company

financial assetsnon-derivative financial assetsloans and receivablesLong-term loans receivable 29 906 29 906 30 157 30 157Amounts owed by group companies 160 202 160 202 275 773 275 773Other receivables 14 939 14 939 15 341 15 341Cash and cash equivalents 2 846 2 846 2 762 2 762investments held-to-maturityOther investments 223 712 223 712 213 371 213 371

431 605 431 605 537 404 537 404

financial liabilitiesnon-derivative financial liabilitiesother financial liabilities Amounts owed to group companies 21 715 21 715 148 287 148 287Other payables 26 635 26 635 35 476 35 476derivative financial liabilitiesDerivative relating to group share scheme 6 074 6 074 9 725 9 725

54 424 54 424 193 488 193 488

estimation of fair values The following summarises the major methods and assumptions used in estimating the fair values of financial instruments reflected in the tables above.

Loans and receivables The carrying value of loans and receivables which include cash and cash equivalents, with a remaining life of less than one year approximates fair value due to the short-term period to maturity. The fair value of long-term receivables is calculated based on the present value of future principal and interest cash flows.

Other financial liabilities The carrying value of other financial liabilities with a maturity of less than one year approximates fair value due to their short-term nature. For longer maturities fair value is calculated based on the present value of future principal and interest cash flows.

Forward exchange contracts and interest rate swaps The fair value of forward exchange contracts is based on quoted market prices by comparing the contracted forward rate to the present value of the current forward rate on an equivalent contract with the same maturity date. If a quoted price is not available, then fair value is estimated by discounting the difference between the contractual forward price and the current forward price for the residual maturity of the contract using a credit-adjusted risk-free interest rate (based on government bonds).The fair value of interest rate swaps is based on broker quotes. Those quotes are tested for reasonableness by discounting estimated future cash flows based on the terms and maturity of each contract and using market interest rates for a similar instrument at the measurement date. Fair values reflect the credit risk of the instrument and include adjustments to take account of the credit risk of the group and counterparty when appropriate.

InvestmentsThe fair value of held-to-maturity investments is calculated based on the present value of future principal and dividend cash flows.


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38. finanCial instruments (continued)e) fair values (continued)

fair value hierarchy The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

• Level 3: inputs for asset or liability that are not based on observable market data (unobservable inputs).

level 1r’000

level 2r’000

level 3r’000

totalr’000

group

31 august 2013 Other investments 223 712 223 712Forward exchange contracts 4 465 4 465

total assets 4 465 223 712 228 177

Interest rate swap 2 305 2 305

total liabilities 2 305 2 305

31 august 2012Other investments 213 371 213 371Foreign exchange contracts 1 011 1 011

total assets 1 011 213 371 214 382

Interest rate swap 6 643 6 643


Company

31 august 2013Other investments 223 712 223 712

total assets 223 712 223 712

Derivative relating to group share scheme 6 074 6 074


31 august 2012Other investments 213 371 213 371

total assets 213 371 213 371

Derivative relating to group share scheme 9 725 9 725


f) Capital risk management

There were no changes in the group’s approach to capital management during the year.

Neither the company nor any of its subsidiaries are subject to externally imposed capital requirements. The group manages its capital to ensure that entities in the group will be able to continue as going concerns while maximising the return to shareholders through the optimisation of debt and equity.

The capital structure of the group consists of debt, which includes the liabilities disclosed in note 16, cash and cash equivalents and shareholders’ equity, comprising issued capital, reserves and retained earnings.

39. CritiCal Judgements in applying the aCCounting poliCies In the process of applying the entity’s accounting policies, management has made judgements relating to receivables impairment, allowances,

inventory write-downs, recoverability of investments, the useful life of assets and impairment of assets that can have a significant effect the amounts recognised in the financial statements.


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40. key sourCes of estimation unCertainty The key assumptions concerning the future, other key sources of estimation, and uncertainty at the reporting date, that have significant risk of

causing material adjustments to the carrying amounts of the assets and liabilities within the next financial year, are:

impairment of goodwill Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill is

allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating units and a suitable discount rate in order to calculate net present value.

group Company2013 2012 2013 2012

r’000 R’000 r’000 R’000

41. reConCiliation of profit Before tax to Cash generated from/(used in) operationsProfit before tax 326 258 281 741 114 804 19 091adjustments for:Depreciation and amortisation 238 364 226 998Dividends received (15 262) (18 077) (91 370) (17 674)Interest received (12 303) (16 618) (2 034) (1 366)Finance costs 25 485 27 484 3 3 222Movement in provisions (8 949) 10 867Loss on sale of property, plant and equipment, capitalised leased assets and intangible assets 2 436 720Impairment of loans and advances, other investments (7 815) (1 418)Impairment of goodwill 40 137 4 863Impairment of associate 5 985Post-retirement benefit obligations movement 4 292 2 694Unrealised foreign exchange gains (16 310) (12 964)Share-based payment expense 11 223 13 761Fair value of financial liability 24 181 (433) (6 951)Gain on bargain purchase (109)Profit on sale of business (83 999) (4 741)

operating cash flow before working capital changes 527 629 520 862 21 403 (3 678)Changes in working capital:Decrease/(increase) in inventories 5 693 (17 502)Increase in trade receivables (199 316) (4 453)(Increase)/decrease in other receivables (60 141) 28 920 653 11 187(Increase)/decrease in prepayments (45 205) (3 906) (14) 58Increase/(decrease) in trade payables 115 514 (32 256)Decrease in other payables (36 571) (1 387) (12 492) (12 995)

307 603 490 278 9 550 (5 428)

42. taxation paid is reConCiled to the amount shoWn in profit or loss as folloWs:Amounts (unpaid and accrued for)/prepaid at beginning of year (9 340) (5 269) 19 (1 194)Recognised in profit or loss (93 263) (85 618) (557) 7 672Deferred tax recognised in profit or loss (491) (19 887) 1 536Amounts unpaid and accrued for at end of year 13 524 9 340 3 19

taxation (paid)/refunded (89 570) (101 434) (535) 8 033


14731/082013

2013 2012r’000 R’000

43. aCquisition of suBsidiaries

group

Property, plant and equipment 4 027 193Deferred tax assets 659 272Intangible assets 52 555Trade and other receivables 32 061 7 275Inventories 726 1 460Cash and cash equivalents (4 621) 5 328Loans to shareholders 1 726Interest bearing long-term liabilities (21 871) (8 007) Taxation receivable/(payable) 515 (280) Trade and other payables (24 130) (1 871) Interest free long-term liabilities (40)

net assets acquired 41 607 4 370

– Non-controlling interest (21 891)– Gain from bargain purchase (109)– Goodwill 100 685 16 470

total consideration 120 292 20 840

ComprisingCash paid 56 958 10 845Contingent consideration 63 334 9 995

total consideration – current year acquisitions 120 292 20 840

Contingent consideration paid – Canoa Group Holdings Proprietary Limited 26 188

total cash consideration 83 143 10 845

On 5 November 2012, Business Connexion Group Limited signed an agreement with Integr8 IT Proprietary Limited to acquire 100% of the issued share capital of Integr8 IT Proprietary Limited. Business Connexion Group Limited ceded and assigned all of its rights and obligations as purchaser under the Sale Agreement to its 70% held subsidiary, UCS Solutions Proprietary Limited, which it was entitled to do in terms of the Sale Agreement. On 1 February 2013, the suspensive conditions pertaining to the agreement with Integr8 IT Proprietary Limited were fulfilled and the transaction was completed. A consideration of R56,96 million was paid in cash at the time and the remaining balance of R70 million is payable to the extent that Integr8 IT Proprietary Limited’s profit after tax exceeds the warranted profits in the 2014 and 2015 financial years. The financial year end of Integr8 IT Proprietary Limited was June and it has been changed to 31 August in the 2013 financial year.

On 11 April 2013 Business Connexion Group signed an agreement with Netcampus Proprietary Limited to acquire 50% plus one share of the issued share capital of Netcampus Proprietary Limited in exchange for the net assets value of the Learning Solutions business. The financial year end of Netcampus Proprietary Limited was 30 June and it will be changed to 31 August in the 2014 financial year-end.

On 10 April 2012, Business Connexion Group signed an agreement with Quad Automation Proprietary Limited to acquire 100% of the issued share capital of Quad Automation Proprietary Limited. On 30 April 2012, the suspensive conditions pertaining to the agreement with Quad Automation Proprietary Limited were fulfilled and the transaction was completed. A consideration of R10,8 million was paid in cash at the time and the remaining balance of R10 million was paid to Quad Automation Proprietary Limited’s profit after tax exceeded the warranted profits in the 2013 financial year. The financial year end of Quad Automation Proprietary Limited is February each year and was changed to 31 August in the 2013 financial year.


31/082013

148




group Company2013 2012 2013 2012

r ‘000 R ‘000 r ‘000 R ‘000

44. additions to property, plant and equipment, Capitalised leased assets and intangiBle assetsReplacement 48 471 57 596Expansion 216 416 147 979

264 887 205 575

45. Cash and Cash equivalentsCash and cash equivalents consist of:Bank balances and cash 196 771 443 930 2 846 2 762

The group has the following unutilised bank facilities: Overdraft facilities: R175,0 million (2012: R196,7 million)

46. disposal of Business and suBsidiary Carrying value of assets soldProperty, plant and equipment 2 740 45Intangible assets 2 177Inventory 936 71Trade and other receivables 16 531Trade and other payables (34 840)Long-term liabilities 1 289Cash and cash equivalents 11 392

Total net asset value 225 116Profit on disposal 83 999 4 741Loan 6 360

Total consideration 90 584 4 857

The group concluded a transaction to sell its Q Data Dynamic (QDD) business to NorthgateArinso Africa Proprietary Limited, effective 1 August 2013, in exchange for a 50% interest in NorthgateArinso Africa Proprietary Limited.

The group concluded a transaction to sell its Avaya business to ATIO Proprietary Limited, effective 1 April 2012.

47. suBsequent events dividends20,0 cent dividend has been declared from income reserves (2012: 20,0 cents).

Corporate activity The Group has entered into an agreement to dispose of its entire interest in the Q LINK business to Summit Garnishee Solutions Proprietary Limited (SGS) as a going concern for a cash consideration of R187,5 million. SGS is a privately-owned company that is not related to the group.

The effective date of the transaction is 1 September 2013. The consideration was settled in full on the date that the last suspensive condition was fulfilled.


14931/082013

percentage

holding

number of

shares

amount

invested

r’000

net amount

advanced to/(by)

r’000

31 august 2013direct holdingssouth africaBusiness Connexion Proprietary Limited 100 57 836 1 618 330 133 220Business Connexion International Holdings Proprietary Limited 100 100 601 645UCS Technology Services Proprietary Limited 100 101 164 480 (32 605)Accsys Proprietary Limited 100 1 000 47 226 (4 443)UCS Solutions Proprietary Limited 70 7 000 126 145 (32 695)CEB Maintenance Africa Proprietary Limited 100 100 148 603 12 797

indirect holdings through uCs solutions proprietary limitedIntegr8 IT Proprietary Limited 100 5 126 958

indirect holdings through Business Connexion proprietary limitedBusiness Connexion Content Distribution Solutions Proprietary Limited 100 300 189 611Business Connexion Solutions Holdings Proprietary Limited 100 372 944 107 071Nanoteq Proprietary Limited 75 75 7 071 35 642Canoa Group Holdings Proprietary Limited 50,4 61 240 000 532Quad Automation Proprietary Limited 100 1 000 20 840 13 737Netcampus Proprietary Limited 50,2 101 22 000

namibiaBusiness Connexion Namibia Proprietary Limited 75 2 625 7 079

united kingdomBusiness Connexion Limited 100 2 100 4 062

tanzaniaBusiness Connexion Tanzania Limited 65 2 600 42 497

ZambiaBusiness Connexion Zambia Limited 85 4 250 3

mozambiqueBusiness Connexion Mozambique Limitada 100 100 14 753

nigeriaBusiness Connexion Networks ICT Services Limited 100 152 177 108 7 683 2 735

indirect holdings through Business Connexion international holdings proprietary limitedBCX Kenya Limited - ordinary shares 70 700 000 2 075 4 375BCX Kenya Limited - preference shares 23 000 000

ANNExurE AINVESTMENT IN SUBSIDIARIES


31/082013

150

Percentage

holding

Number of

shares

Amount

invested

R’000

Net amount

advanced to/(by)

R’000

31 august 2012direct holdingssouth africaBusiness Connexion Proprietary Limited 100 57 836 1 618 330 240 969Business Connexion International Holdings Proprietary Limited 100 100 601 645 (20 070) UCS Technology Services Proprietary Limited 100 101 164 480 (36 283) Accsys Proprietary Limited 100 1 000 47 226 (7 768) UCS Solutions Proprietary Limited 70 7 000 126 145 (58 201) CEB Maintenance Africa Proprietary Limited 100 100 148 603 (7 070)

indirect holdings through Business Connexion proprietary limitedBusiness Connexion Content Distribution Services Proprietary Limited 100 300 208 255Business Connexion Solutions Holdings Proprietary Limited 100 372 944 107 071Nanoteq Proprietary Limited 75 75 7 071 20 838Canoa Group Holdings Proprietary Limited 50,4 61 240 000 1 466Quad Automation Proprietary Limited 100 1 000 20 840 694

namibiaBusiness Connexion Namibia Proprietary Limited 75 2 625 7 079 (792)

united kingdomBusiness Connexion Limited 100 2 100 4 062

tanzaniaBusiness Connexion Tanzania Limited 65 1 650 42 497

ZambiaBusiness Connexion Zambia Limited 85 4 520 3 10 152

mozambiqueBusiness Connexion Mozambique Limitada 100 100 14 753 (171)

nigeriaBusiness Connexion Networks ICT Services Limited 100 152 177 108 7 683 6 330

indirect holdings through Business Connexion international holdingsBCX Kenya Limited - ordinary shares 70 700 000 2 075 4 375BCX Kenya Limited - preference shares 23 000 000

A full list of subsidiaries is available to shareholders, on written request, from the registered office of the company. The trading subsidiaries have been listed above.

ANNExurE AINVESTMENT IN SUBSIDIARIES

CONTINUED


15131/082013

ANALySISshArEhOLdEr

Company: Business Connexion group limitedregister date: 31 august 2013issued share capital: 404 972 468

shareholder spreadNumber of

shareholdings %

Number of

shares %

1 – 1 000 shares 3 337 66,29 750,933 0,191 001 – 10 000 shares 1 074 21,34 3 750 067 0,9310 001 – 100 000 shares 350 6,95 12 932 337 3,19100 001 – 1 000 000 shares 196 3,89 68 966 933 17,031 000 001 shares and over 77 1,53 318 572 198 78,66

total 5 034 100,00 404 972 468 100,00

puBliC/non-puBliC shareholders

Non-public shareholders 5 0,10 1 576 381 0,39

LB Mophatlane1 1 0,02 200 000 0,05 NN Kekana1 0 0,00 0 0,00 DC Sparrow3 1 0,02 1 320 381 0,33 V Olver 1 0,02 32,000 0,01 LN Weitzman 1 0,02 24,000 0,01

Public shareholders 5 029 99,90 403 396 087 99,61

total 5 034 100,00 404 972 468 100,001 LB Mophatlane and NN Kekana hold 25% and 20% equity interests in Gadlex Holdings Proprietary Limited respectively. Gadlex Holdings Proprietary Limited owns 94,6% of

the issued share capital of Gadlex Proprietary Limited which holds 38 600 000 Ordinary Shares. Gadlex Holdings holds 18 200 000 “A” Shares2 DC Sparrow is a related party as defined in section 10 of the Listings Requirements

suBstantial investment management & BenefiCial interests aBove 5% Number of

shares %

Investec Asset Management 63 919 416 15,78Allan Gray Investment Council 53 602 954 13,24Gadlex Proprietary Limited 38 600 000 9,53Mazi Capital Proprietary Ltd 36 675 457 9,06Old Mutual Asset Managers 30 859 947 7,62Coronation Asset Management Proprietary Ltd 25 611 303 6,32

total 249 269 077 61,55

BenefiCial shareholdingsTotal

shareholding

% of issued

capital

Gadlex Pty Ltd 38 600 000 9,53

total 38 600 000 9,53

BenefiCial oWners noW holding BeloW 5%Total

shareholding % Previous

Government Employee Pension Fund 18 122 770 4,48 5.00

total 18 122 770 4,48 5,00


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152

ANALySIS CONTINUED

shArEhOLdEr

geographiC split of investment managers & Company related holdingsTotal

shareholding

% of issued

capital

South Africa 372 160 922 91,90United States of America & Canada 5 652 047 1,40United Kingdom 6 977 231 1,72Rest of Europe 10 192 492 2,52Rest of the World1 9 989 776 2,46

total 404 972 468 100,00

geographiC split of BenefiCial shareholdersTotal

shareholding

% of issued

capital

South Africa 374 554 621 92,49United States of America & Canada 5 311 914 1,31United Kingdom 6 792 915 1,68Rest of Europe 10 182 029 2,51Rest of the World1 8 130 989 2,01

total 404 972 468 100,00

1 Represents all shareholdings except those in the above regions

BenefiCial shareholder Categories

Category

Total

shareholding

% of issued

capital

Unit Trusts/Mutual Fund 155 001 608 38,27Pension Fund 106 213 629 26,23Black Economic Empowerment 38 600 000 9,53Private investors 37 831 247 9,34Other Managed Funds 17 778 084 4,39Insurance Companies 13 393 163 3,31Hedge Fund 11 866 411 2,93Corporate Holdings 3 464 575 0,86University 781 362 0,19Charity 610 840 0,15Custodians 393 112 0,10Employees 311 419 0,08Remainder 18 727 018 4,62

total 404 972 468 100,00


15331/082013

dEfINItIONskey definitions used in the annual report1. accounting policies The specific principles, bases, conventions, rules and practices

applied in preparing and presenting the financial statements.

2. amortised cost Part of the cost of an asset which is written off as amortisation

or depreciation in the group’s books of account, and represents accumulated amortisation or depreciation to date.

3. asset A resource controlled by the group as a result of a past event from

which future economic benefits are expected to flow.

4. associate An entity over which the group has significant influence and that

is neither a subsidiary, nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policies of the entity but is not control or joint control over those policies.

5. available-for-sale assets Those assets which are designated as available-for-sale or are not

classified as loans and receivables, held-to-maturity investments or financial assets at fair value through profit and loss.

6. average debtors days Average trade receivables adjusted for value added tax, divided by

revenue for the period, multiplied by the number of days for the period.

7. Broad-based black economic empowerment (B-bBee) Government defines BEE as an integrated and coherent socio-

economic process that directly contributes to the economic transformation of South Africa and brings about significant increases in the numbers of black people that manage, own and control the country’s economy, as well as significant decreases in income inequalities. The ICT Charter defines BEE as the economic empowerment of all black people (Africans, Coloureds, Indians who are South African citizens), including women, workers, youth, people with disabilities and people living in rural areas, through diverse but integrated socio-economic strategies.

8. Carrying value The value at which an asset is recognised after deducting any

accumulated depreciation or amortisation and accumulated impairment losses.

9. Cash flow a. Financing activities: activities that result in changes to the capital

structure of the group. b. Investing activities: activities relating to the acquisition, holding

and disposal of property and equipment and long-term investments.

c. Operating activities: activities that are not financing or investing activities and arise from operations conducted by the group.

10. Cash and cash equivalents Cash comprises cash on hand and demand deposits. Cash

equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value.

11. Cash-generating unit The smallest identifiable group of assets that generate cash inflows

that are largely independent of the cash inflows from other assets or groups of assets.

12. Contingent liability A possible obligation that arises from past events and whose

existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity or a present obligation that arises from past events but is not recognised because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation, or the amount of the obligation cannot be measured with sufficient reliability.

13. deferred tax assets Deferred tax assets are the amounts of income taxation recoverable

in future periods in respect of: a. deductible temporary differences arising due to differences

between the taxation and accounting treatment of transactions; and

b. the carry-forward of unused tax losses.

14. deferred tax liabilities Deferred tax liabilities are the amounts of income taxation payable

in future periods due to differences between the taxation and accounting treatment of transactions.

15. depreciation or amortisation Depreciation refers to spreading a tangible asset’s cost over the asset’s

useful life. Amortisation refers to spreading an intangible asset’s cost over that asset’s useful life.

16. diluted weighted average number of shares Weighted average number of shares in issue adjusted for dilutive

options for the period. Dilutive options are options that have vested but have not yet been exercised.

17. earnings per share (eps) a. Basic EPS: profit attributable to equity holders for the period

divided by the weighted average number of ordinary shares in issue during the period.

b. Headline EPS: headline earnings divided by the weighted average number of shares in issue during the period.

c. Fully diluted EPS: the relevant earnings figure is divided by the diluted weighted average number of shares in issue for the period.

18. effective tax rate The taxation charge in the statement of comprehensive income as a

percentage of profit before taxation.


31/082013

154

19. employee benefits All forms of consideration (excluding share options granted to

employees) given in exchange for services rendered by employees.

20. fair value The amount for which an asset could be exchanged or a liability

settled, between knowledgeable and willing parties in an arm’s length transaction.

21. finance costs Interest and other costs incurred in connection with the borrowing

of funds.

22. finance lease A lease that transfers substantially all the risks and rewards

incidental to ownership of an asset. Title may or may not eventually be transferred.

23. financial instrument A contract that gives rise to a financial asset of one entity and

financial liability or equity instrument of another entity.

24. financial risk The risk of a possible future change in one or more of a specific

interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices and rates or credit index or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to a contract.

25. foreign exchange translation gains/losses The results and assets/liabilities of all foreign entities controlled

by the group are translated at the closing exchange rate and the differences arising are recognised in the statements of comprehensive income as translation of foreign operations.

26. going concern basis The assumption that the entity will continue in operation for the

foreseeable future.

27. headline earnings Headline earnings account for all the profits and losses from

operational, trading, and interest activities, that have been discontinued or acquired at any point during the year. Excluded from this figure are profits or losses associated with the sale or termination of discontinued operations, fixed assets or related businesses, or from any permanent devaluation or write off of their values.

28. impairment loss The amount by which the carrying amount of an asset or a cash-

generating unit exceeds its recoverable amount.

29. income taxation Direct taxation includes normal taxation on income and capital

gains tax (CGT).

30. indirect taxation Value added tax (VAT) and other taxes, levies and duties paid to

Government, excluding income taxation.

31. interest bearing liabilities to equity Interest bearing liabilities as a percentage of total equity.

32. international financial reporting standards The standards, as adopted by the International Accounting

Standards Board (IASB), the interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) of the IASB.

33. Jse limited (Jse) Previously the JSE Securities Exchange South Africa.

34. king iii (the code) The King Report on Corporate Governance for South Africa 2009,

which sets out the principles of good corporate governance for South African companies and organisations.

35. liability A present obligation of an entity arising from a past event, the

settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits.

36. liquidity risk The risk that the group will not be able to meet its financial

obligations as they fall due.

37. market risk The risk that changes in market prices, such as foreign exchange

rates, interest rates and commodity prices, will affect the group’s profit or loss.

38. net asset value per share Shareholders’ equity divided by the number of shares

in issue.

39. net assets Net operating assets plus cash and cash equivalents.

40. normal dividend per share Dividends paid divided by the number of shares in issue.

41. operating expenses Expenses associated with running a business but not considered

directly applicable to the current line of goods and services being sold. These include sales and marketing, and general and administrative costs (including the salaries of people working in these areas).

42. operating lease A lease other than a finance lease.

43. operating profit margin Operating profit for the period divided by revenue for the period.

dEfINItIONs CONTINUED


15531/082013

44. operational risk The risk of loss resulting from inadequate or failed internal

processes and systems, incompetence or external events.

45. post-employment benefits Employee benefits (other than termination benefits) that are

payable after the completion of the contract of employment.

46. present value A current estimate of the discounted value of future net cash flows.

47. recoverable amount The higher of an asset’s fair value less costs to sell at its value in use.

48. reputational risk The risk of impairment of the group’s image in the community

or the long-term trust placed in the group by its stakeholders as a result of a variety of factors, such as the group’s performance, strategy execution, ability to create shareholder value, or an activity, action or stance taken by the group. Such impairment could result in loss of business and/or legal action.

49. residual value The estimated amount which an entity would currently obtain from

the disposal of the asset.

50. restructuring A programme that is planned and controlled by management and

materially changes either the scope of a business or the manner in which that business is conducted.

51. return on equity Profit attributable to equity shareholders as a percentage of total

equity.

52. return on total assets Operating profit divided by total assets less cash and cash

equivalents and preference share investments.

53. revenue Increase in economic benefits in the form of inflows or

enhancements of assets or decrease of liabilities that result in increases in equity.

54. sea system The SEACOM submarine cable linking Southern and East Africa to

Europe and East Asia.

55. secondary tax on companies (stC) STC is a tax paid at company level on the net difference between

dividends paid and dividends received.

56. share-based payment transactions a. A cash-settled share-based payment transaction is the

acquisition of goods or services by incurring a liability to transfer cash or other assets to the supplier of those goods or

services for amounts that are based on the price (or value) of the entity’s shares or other equity instruments.

b. An equity-settled share-based payment transaction is a share-based payment transaction where goods or services are received and settled in equity instruments of the entity.

57. tangible net asset value Shareholders’ equity, less goodwill and fair value of contracts,

divided by the number of shares in issue.

58. tangible return on equity Profit attributable to equity shareholders plus the after tax cost of

the amortisation of intangible assets and goodwill impairment, divided by shareholders equity less intangible assets and goodwill. Intangible assets relate to fair value of contracts and brands.

59. tax base a. The tax base of an asset is the amount that is deductible for tax

purposes if the economic benefits from the asset are taxable or is the carrying amount of the asset if the economic benefits are not taxable.

b. The tax base of a liability is the carrying amount of the liability less the amount deductible in respect of that liability in future periods.

c. The tax base of revenue received in advance is the carrying amount less any amount of the revenue that will not be taxed in future periods.

60. temporary differences The differences between the carrying amount of an asset or liability

and its tax base.

61. total assets An entity’s non-current assets and current assets.

62. total equity An entity’s shareholders’ equity.

63. total liabilities An entity’s non-current liabilities and current liabilities.

64. treasury shares An entity’s own equity instruments, held by the entity or other

members of the consolidated group.

65. useful life The period over which an asset is expected to be available for use.

66. value in use The present value of the future cash flows expected to be derived

from an asset.

67. Weighted average number of shares The number of shares in issue increased by the shares issued during

the period, weighted on a time basis for the period during which they participated in the income of the group.


31/082013

156

GENERAL MEETINGANNuAL NOTICE OF

Business Connexion Group Limited(Incorporated in the Republic of South Africa)(Registration number: 1988/005282/06)(Share code: BCX ISIN: ZAE000054631)(“the company” or “Business Connexion”)

Notice is hereby given, in terms of section 62(1) of the Companies Act, 71 of 2008, as amended (the Companies Act) that the tenth Annual General Meeting (AGM) of the company will be held in the Business Connexion Fundi Auditorium, Business Connexion Park North, 789 Sixteenth Road, Randjespark, Midrand 1685, on Thursday, 16 January 2014 at 11:00 to consider, and if approved, pass the following resolutions with or without modification:

reCord dateThis notice has been sent to shareholders of the company (shareholders) who were recorded as such in the company’s securities register on Friday, 6 December 2013 being the notice record date set by the board of directors of the company (board) in terms of section 59 of the Companies Act determining which shareholders are entitled to receive notice of the annual general meeting.

The record date for purposes of determining which shareholders of the company are entitled to participate in and vote at the annual general meeting is Friday, 10 January 2014. Accordingly, the last date to trade in order to be registered in the securities register of the company and therefore be eligible to participate in and vote at the annual general meeting is Friday, 3 January 2014.

Shareholders are reminded that:• a shareholder entitled to attend and vote at the annual general meeting is entitled to appoint a proxy (or more than one proxy) to attend,

participate in and vote at the annual general meeting in the place of the shareholder, and shareholders are referred to the proxy form attached to this notice in this regard;

• a proxy need not also be a shareholder of the company; and• in terms of section 63(1) of the Companies Act, any person attending or participating in a general meeting of shareholders must present reasonably

satisfactory identification and the person presiding at the general meeting must be reasonably satisfied that the right of any person to participate in and vote (whether as shareholder or as proxy for a shareholder) has been reasonably verified.

eleCtroniC partiCipation By shareholdersShould any shareholder (or a representative or proxy for a shareholder) wish to participate in the annual general meeting by way of electronic participation, that shareholder should make an application in writing (including details as to how the shareholder or its representative (including its proxy) can be contacted) to so participate, to the transfer secretaries, at their address provided in this notice, to be received by the transfer secretaries at least 7 (seven) business days prior to the annual general meeting in order for the transfer secretaries to arrange for the shareholder (or its representative or proxy) to provide reasonably satisfactory identification to the transfer secretaries for the purposes of section 63(1) of the Companies Act and for the transfer secretaries to provide the shareholder (or its representative or proxy) with details as to how to access the annual general meeting by means of electronic participation. Shareholders participating electronically will not be able to vote electronically and must follow the standard voting arrangements. The Company reserves the right not to provide for electronic participation at the annual general meeting in the event that it determines that it is not practical to do so, or an insufficient number of shareholders (or their representatives or proxies) request to so participate.

presentation of annual finanCial statementsThe consolidated audited annual financial statements of the company and its subsidiaries (group), including the directors’ report, auditor’s report and the report by the Audit and compliance, Remuneration and nominations and risk, sustainability, social and ethics committees, of the company and the group for the year ended 31 August 2013 (AFS) as approved by the board on 15 November 2013, are presented to shareholders as required in terms of section 30(3)(d) of the Companies Act. The AFS are included in the integrated report of which this notice forms part.

ordinary resolutions1. re-appointment of external auditor

ordinary resolution number 1To re-appoint KPMG Inc (KPMG) as independent auditor of the company for the ensuing year.

“resolved that KPMG (as nominated by the company’s Audit and compliance committee and the board) be and are hereby re-appointed as the independent external auditor of the company, to hold office for the ensuing period terminating on the conclusion of the next annual general meeting of the company. It is noted that Mr Pierre Fourie from KPMG is the individual registered auditor who will undertake the audit for the financial year ending 31 August 2014.”


15731/082013

The percentage of voting rights that is required for this Ordinary Resolution Number 1 to be adopted is more than 50% (fifty percent) of the voting rights exercised on the resolution

Explanatory note:In compliance with section 90(1) of the Companies Act, a public company must each year, at its annual general meeting, appoint an auditor. The Audit and compliance committee has recommended the re-appointment of KPMG as auditors.

2. re-election of directors ordinary resolutions number; 2.1 and 2.2To consider, and if deemed fit, to re-elect, on an individual basis, the following directors who retire in terms of the current Memorandum of Incorporation (MOI) of the company but, being eligible, offer themselves for re-election as required under section 68(2) of the Companies Act. Accordingly, shareholders are requested to re-elect the directors named below by way of passing the separate ordinary resolutions.

ordinary resolution number 2.1“resolved that Mrs J John who is required to retire as a director of the company in terms of the MOI and who, being eligible, offers herself for re-election, be hereby re-elected as a director of the company”.

ordinary resolution number 2.2“resolved that Mr AC Ruiters who is required to retire as a director of the company in terms of the MOI and who, being eligible, offers himself for re-election, be hereby re-elected as a director of the company.”

ordinary resolutions numbers 2.3, 2.4 and 2.5To consider, and if deemed fit, to re-elect, on an individual basis, the following directors who retire in terms of the current MOI of the company due to being appointed during the period and, being eligible, offer themselves for re-election as required under section 68(2) of the Companies Act. Accordingly, shareholders are requested to re-elect the directors named below by way of passing the separate ordinary resolutions.

ordinary resolution number 2.3“resolved that Mr JA Bester who is required to retire as a director of the company in terms of the MOI, due to being appointed during the period and who, being eligible, offers himself for re-election, be hereby re-elected as a director of the company.

ordinary resolution number 2.4“resolved that Mr AB Darko who is required to retire as a director of the company in terms of the MOI, due to being appointed during the period and who, being eligible, offers himself for re-election, be hereby re-elected as a director of the company.

ordinary resolution number 2.5“resolved that Mr ME Ettling who is required to retire as a director of the company in terms of the MOI, due to being appointed during the period and who, being eligible, offers himself for re-election, be hereby re-elected as a director of the company.

The percentage of voting rights that is required for these ordinary resolutions numbers 2.1 to 2.5 to be adopted is more than 50% (fifty percent) of the voting rights to be cast on the resolutions

Additional information in respect of ordinary resolutions numbers 2.1 to 2.5Article 26.3.2 of the MOI provides that at each annual general meeting of the company one-third of the directors (or if there number is not three, or a multiple of three, the number nearest to one-third) shall retire from office. The directors who shall retire are determined in terms of Article 26.3 of the MOI. A brief CV of each of the directors mentioned above appears on pages 16 to 19 of the integrated report of which this notice forms part.

Article 26.3.3 of the MOI provides that at the next annual general meeting of the company, any one of the directors of the company shall be entitled, with the consent of the remaining directors on the board, to appoint any person as a director of the company, in terms of section 66(4)(a)(i), provided that such appointment must be ratified by the Shareholders at the next annual general meeting of the company. A brief CV of each of the directors mentioned above appears on pages 16 to 19 of the integrated report of which this notice forms part.


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3. election of independent audit and compliance committeeordinary resolution numbers 3.1, 3.2 and 3.3To appoint an Audit and compliance committee to conduct the duties and responsibilities as outlined in section 94(7) of the Companies Act. The board has recommended that Mrs J John, Mr JA Bester and AB Darko be appointed, on an individual basis, as members of the Audit and compliance committee.

ordinary resolution number 3.1Appointment of Mrs J John as a member of the Audit and compliance committee.

“resolved that subject to the passing of ordinary resolution number 2.1, Mrs J John be and is hereby elected as a member of the Audit and compliance committee of the company.”

ordinary resolution number 3.2Appointment of Mr JA Bester as a member of the Audit and compliance committee.

“resolved that subject to the passing of ordinary resolution 2.3 Mr JA Bester be and is hereby elected as a member of the Audit and compliance committee of the company.”

ordinary resolution number 3.3Appointment of Mr AB Darko as a member of the Audit and compliance committee.

“resolved that subject to the passing of ordinary resolution 2.4 Mr AB Darko be and is hereby elected as a member of the Audit and compliance committee of the company.”

Additional information in respect of Ordinary Resolutions Number 3.1, 3.2 and 3.3A brief CV of each of the independent non-executive directors mentioned above appears on pages 16 to 19 of the integrated report of which this notice forms part. The committee members have the required qualifications and experience to fulfil their duties.

The percentage of voting rights that is required for this ordinary resolution numbers 3.1 to 3.3 to be adopted is more than 50% (fifty percent) of the voting rights exercised on the resolution

Explanatory note:Section 94(2) of the Companies Act requires a public company, at each annual general meeting, to elect an Audit committee comprising at least three members unless (i) the company is a subsidiary of another company that has an Audit committee and (ii) the Audit committee of that other company will perform the functions required under section 94 on behalf of the subsidiary company.

Section 94(4) of the Companies Act requires, among other things, that each member of the Audit committee must be a director of the company.

4. non-binding approval of group remuneration policyordinary resolution number 4To approve the group’s remuneration policy by way of a non-binding advisory vote.

“resolved that the group’s remuneration policy, as set out in the Remuneration report on pages 89 to 97 of the integrated report of which this notice forms part is hereby approved by way of a non-binding advisory vote, as recommended in the King Code of Governance for South Africa 2009, King III.”

The percentage of voting rights that is required for this ordinary resolution number 4 to be adopted is more than 50% (fifty percent) of the voting rights to be cast on the resolution.

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5. general authority to place ordinary shares under control of the directorsordinary resolution number 5“resolved that, 2% (two percent) of the authorised, but unissued ordinary shares (16 949 152) in the authorised share capital of the company be and are hereby placed under the control and authority of the directors of the company as a general authority in terms of the MOI and that the board be and is hereby authorised and empowered to issue and otherwise dispose of such shares to such person or persons on such terms and conditions and at such times as the board may from time to time and in their discretion deem fit, subject to the provisions of the MOI.”

“resolved that, subject to the provisions of section 41 of the Companies Act and the Listings Requirements of the JSE Limited ( JSE) ( JSE Listings Requirements) the board be authorised to issue from the authorised, but unissued ordinary share capital of the company, up to 16 949 152 shares in the authorised share capital of the company from time to time, such authority to endure until the forthcoming annual general meeting of the company (whereupon this authority shall lapse, unless it is renewed at the aforementioned annual general meeting, provided that it shall not extend beyond 15 (fifteen) months after the date of this annual general meeting).”

The percentage of voting rights that is required for this ordinary resolution number 5 to be adopted is more than 50% (fifty percent) of the voting rights to be cast on the resolution.

Explanatory note:This ordinary resolution number 5 confirms the authority of the directors, subject to the JSE Listings Requirements to issue shares. In terms of the Companies Act, directors are authorised to issue the unissued shares of the company, unless otherwise provided in the company’s MOI or in instances as listed in section 41 of the Companies Act.

It is noted that any issue of shares or grant of options in terms of section 41(3) of the Companies Act and any issue of shares or grant of options to (i) directors, future directors, prescribed officers, future prescribed officers, (ii) persons related or inter-related to the company and (iii) nominees of the person referred to in (i) and (ii) must first be approved by way of a special resolution in terms of section 41 of the Companies Act and is not authorised in terms of this ordinary resolution.

6. adoption of the Business Connexion group limited share incentive plansordinary resolution number 6“resolved that, (i) the adoption of the Business Connexion (2013) Share Appreciation Right Plan and the Business Connexion (2013) Forfeitable Share Plan (collectively, “the new share incentive plans”) by the company, details of which are set out in Appendix A, be and is hereby approved in terms of Schedule 14 of the JSE Listings Requirements and (ii) the issue of ordinary shares by the company to participants in the new share incentive plans, be and is hereby approved.”

The percentage of voting rights that is required for this ordinary resolution number 6 to be adopted is more than 75% (seventy five percent) of the voting rights to be cast on the resolution.

speCial resolutions7. approval of non-executive directors’ remuneration – 2014/2015

special resolution number 1To resolve as a special resolution that the non-executive directors’ annual remuneration, in their capacity only as directors of the company be approved.


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“resolved that the following non-executive director’s fees be and is hereby approved in terms of sections 66(8) and 66(9) of the Companies Act for their services as directors of the company for the financial year ending 31 August 2015 provided that only 60% (sixty percent) of the respective fee per meeting shall be payable in the case of non-attendance of a meeting by a director:

Annual fee forthe year ending31 August 2014 Annual fee for the year ending

(approved at 31 August 2015 (Proposed)AGM of Fixed/ Attendance fee

Position 14 January 2013) Retainer per meeting Total

Chairman of the board 630 000 400 500 38 000 666 500Member of the board (excluding international director) 199 800 127 000 12 000 211 000Chairperson: Audit and compliance committee 260 000 165 000 27 500 275 000Member: Audit and compliance committee 100 000 63 500 10 500 105 500Chairperson: Remuneration and nominations committee 100 000 63 500 10 500 105 500Member: Remuneration and nominations committee 50 000 32 000 5 500 54 000Chairperson: Risk, sustainability, social and ethics committee 120 000 76 000 12 500 126 000Member: Risk, sustainability, social and ethics committee 60 000 38 000 6 500 64 000Rate of R2 500 per hour for all special meetings and additional board mandated work (unchanged). Unchanged Unchanged

Annual fee for the year ending 31 August 2014 and

31 August 2015 (Proposed)

Position CurrentFixed/

Retainer Attendance fee

per meeting Total

International Director £35 000 £3 000 £56 000

$52 500 $4 500 $84 000

The percentage of voting rights that is required for this special resolution number 1 to be adopted is at least 75% (seventy five percent) of the voting rights exercised on the resolution.

Additional information in respect of Special Resolution Number 1The reason for and the effect of this special resolution number 1 is to approve the basis for calculating the remuneration payable by the company to its non-executive directors for their services as directors of the company for the period ending 31 August 2015 and the new category of international director for 2014 and 2015. Further details on the basis of calculation of the remuneration are included in the Remuneration report on pages 89 to 97 of the integrated report of which this notice forms part.

Explanatory note:In terms of sections 66(8) and (9) of the Companies Act, remuneration may only be paid to directors for their service as directors in accordance with a special resolution approved by the Shareholders within the previous 2 (two) years.

It is noted that the remuneration payable to directors in their capacities as such and for their services as directors, as set out in the above special resolution number 1, reflects an increase of on average 6% (six percent) compared to the remuneration in respect of the year ended 31 August 2014 and is only in respect of remuneration payable to directors of the company in their capacities as such.

8. general authority to repurchase sharesspecial resolution number 2To consider and, if deemed fit, to pass the following special resolution relating to the repurchase of shares.

“resolved that the company and its subsidiaries be and are hereby authorised, by way of a renewable general approval in terms of the MOI and section 48 of the Companies Act to acquire, from time to time, the issued shares of the company, upon such terms and conditions and in such amounts as the directors of the company may from time to time determine, but subject to the MOI, the provisions of the Companies Act and the JSE Listings Requirements as amended from time to time, and provided that:

8.1 acquisitions by the company and its subsidiaries of shares in the share capital of the company may not, in the aggregate, exceed in any one financial year 20% (or 10% where such acquisitions relate to the acquisition by a subsidiary) of the company’s issued share capital;


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8.2 in determining the price at which the company’s shares are acquired by the company or its subsidiaries in terms of this general authority, the maximum price at which such shares may be acquired may not be greater than 10% above the weighted average of the market price at which such shares are traded on the JSE, as determined over the five business days immediately preceding the date of the acquisition of such shares by the company or its subsidiaries;

8.3 any such repurchase of securities will be effected through the order book operated by the JSE trading system and done without any prior understanding or arrangement between the company and the counter party (reported trades are prohibited);

8.4 this general authority shall only be valid until the company’s next annual general meeting, provided that it shall not extend beyond 15 months from the date this special resolution is passed;

8.5 at any point in time, the company will only appoint one agent to effect any repurchase(s) on its behalf;

8.6 any such general repurchases are subject to exchange control regulations and approvals at that point in time, where relevant;

8.7 a resolution has been passed by the board and/or the board of any subsidiary of the company confirming that the board and/or the board of the subsidiary of the company has authorised the repurchase, that the company and/or the subsidiary of the company satisfied the solvency and liquidity test contemplated in the Companies Act, and that since the test was done there have been no material changes to the financial position of the group;

8.8 the company and/or any subsidiary of the company may not repurchase securities during a prohibited period, as defined in the JSE Listings Requirements, unless the company has a repurchase programme in place where the dates and quantities of securities to be traded during the relevant period are fixed and not subject to any variation and full details of the programme have been disclosed in an announcement over SENS (the Securities Exchange News Service) prior to the commencement of the prohibited period; and

8.9 a press announcement will be published giving such details as may be required in terms of the JSE Listings Requirements as soon as the company and/or any subsidiary has cumulatively repurchased 3% of the number of shares of that class in issue at the time of granting of this general authority and for each 3% (three percent) in aggregate of the initial number of shares of that class acquired thereafter.

The company will ensure that its sponsor has discharged its duties with regard to the company’s working capital in writing to the JSE in terms of the JSE Listings Requirements, prior to entering the market to proceed with a repurchase.”


Additional information in respect of special resolution number 2The reason for and the effect of special resolution Number 2 is to grant the board a general authority, up to and including the date of the following annual general meeting of the company, to approve the company’s purchase of shares in itself, or to permit a subsidiary of the company to purchase shares in the company. Please refer to the additional disclosure of information contained in this notice, which disclosure is required in terms of the JSE Listings Requirements.

statement By the Board of direCtors regarding speCial resolution numBer 2The board is of the opinion that this authority should be in place should it become appropriate to undertake a share repurchase in the future, in particular the repurchase of shares by a subsidiary of the company for purposes of employee share schemes. Pursuant to and in terms of the JSE Listings Requirements, the board of directors of the company hereby states that:(a) the intention of the directors of the company and/or any of its subsidiaries is to utilise the general authority to acquire shares in the company if at

some future date the cash resources of the company are in excess of its requirements or there are other good grounds for doing so. In this regard the directors will take account of, inter alia, an appropriate capitalisation structure for the company, the long-term cash needs of the company, and the interests of the company;

(b) the method by which the company and/or its subsidiaries intends to acquire its shares, the maximum number of shares to be re-purchased and the date on which such acquisition will take place has not yet been determined. The directors of the company will only make the acquisition if at the time of the acquisition they are of the opinion that:


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• the company and the group will be able to pay its debts as they become due in the ordinary course of business for a period of 12 (twelve) months after the date of the general repurchase;

• the assets of the company and the group, fairly valued in accordance with International Financial Reporting Standards and recognised and measured in accordance with the accounting policies used in the latest audited financial statements will be in excess of the liabilities of the company and the group for a period of 12 (twelve) months after the date of the general repurchase;

• the issued share capital and reserves of the company and the group will be adequate for ordinary business purposes of the company or any acquiring subsidiary for a period of 12 (twelve) months after the date of the general repurchase;

• the working capital available to the company and the group will be sufficient for ordinary business purposes for a period of 12 (twelve) months after the date of the general repurchase;

• a working capital statement will be obtained from the company’s sponsors as and when any acquisition of its shares is contemplated; and• the company will provide its sponsor and the JSE with all documentation as required in Schedule 25 of the JSE Listing Requirements, and will not

commence any repurchase programme until the sponsor has signed off on the adequacy of its working capital, advised the JSE accordingly and the JSE has approved this documentation.

Explanatory note:The reason for this special resolution is to grant the company a general authority in terms of the MOI and Companies Act for the acquisition by the company or any of its subsidiaries of shares issued by the company, which authority shall be valid until the earlier of the next AGM of the company or the variation or revocation of such general authority by special resolution by any subsequent general meeting of the company, provided that the general authority shall not exceed beyond 15 (fifteen) months from the date of this AGM. The effect of the passing of this special resolution will be to authorise the Company or any of its subsidiaries to acquire shares issued by the company.

The directors are of the opinion that it would be in the best interests of the Company to extend the current authority for the repurchase of shares by the Company or its subsidiaries, allowing the company or any of its subsidiaries to be in a position to repurchase or purchase, as the case may be, the shares issued by the Company through the order book of the JSE, should the market conditions and price, as well as the financial position of the Company, justify such action, as determined by the directors.

Repurchases or purchases, as the case may be, will only be made after careful consideration, where the directors consider that such repurchase or purchase, as the case may be, will be in the best interests of the company and its shareholders.

9. general authority to provide financial assistance to related and inter-related companies and corporations special resolution number 3

“resolved that, the board of the company is hereby authorised in terms of section 45(3)(a)(ii) of the Companies Act, as a general approval (which approval will be in place for a period of two years from the date of adoption of this Special Resolution), to authorise the company to provide any direct or indirect financial assistance (“financial assistance” will herein have the meaning attributed to such term in section 45(1) of the Companies Act) that the board may deem fit to any related or inter-related company or corporation of the company (“related” and “inter-related” will herein have the meanings attributed to those terms in section 2 of the Companies Act), on the terms and conditions and for the amounts that the board may determine.

The main purpose for this authority is to grant the board the authority to provide inter-group loans and other financial assistance for purposes of funding the activities of the group. The board undertakes that:9.1 it will not adopt a resolution to authorise such financial assistance, unless the directors are satisfied that:

9.1.1 immediately after providing the financial assistance, the company would satisfy the solvency and liquidity test as contemplated in the Companies Act; and

9.1.2 the terms under which the financial assistance is proposed to be given are fair and reasonable to the company; and

9.2 written notice of any such resolution by the board shall be given to all shareholders of the company and any trade union representing its employees

9.2.1 within 10 business days after the board adopted the resolution, if the total value of the financial assistance contemplated in that resolution, together with any previous such resolution during the financial year, exceeds 0,1% of the company’s net worth at the time of the resolution; or

9.2.2 within 30 business days after the end of the financial year, in any other case.”


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Additional information in respect of special resolution number 3The reason for and the effect of the special resolution is to provide a general authority to the board of the company to grant direct or indirect financial assistance to any company or corporation forming part of the company’s group of companies, including in the form of loans or the guaranteeing of their debts. Prior to the commencement of the Companies Act on 1 May 2011, it was not a requirement to obtain Shareholder approval for such financial assistance. The board of the company provided such inter-group financial assistance to a subsidiary, as disclosed in the annual financial statements in note 10 on page 124 and the annexure listing the company’s investments in subsidiaries and associates on page 149 of the annual report of which this notice forms part.


10. adoption of the neW share inCentive plans – finanCial assistanCe in terms of seCtion 44 and seCtion 45 of the Companies aCtspecial resolution number 4“resolved that, to the extent required by the Companies Act, the board may, subject to compliance with the requirements of the MOI, the Companies Act and/or the JSE Listings Requirements, each as presently constituted and amended from time to time, authorise the company to provide direct or indirect financial assistance by way of loans, guarantees, the provision of security or otherwise, to: • any of its present or future subsidiaries and/or any other company or corporation that is or becomes related or inter-related to the company

for any purpose or in connection with any matter, including, but not limited to, the subscription of any option, or any securities issued or to be issued by the company or a related or inter-related company, for the purchase of any securities of the company or a related or inter-related company as contemplated in section 44 of the Companies Act; and

• any of its present or future directors or prescribed officers of the company or of a related or inter-related company, or to a related or inter-related company or corporation, or to a member of a related or inter-related corporation, or to a person related to any such company, corporation, director, prescribed officer or member as contemplated in section 45 of the Companies Act; and

• any other person who is a participant in the proposed new share incentive plans or the company’s share or other employee incentive schemes, for the purpose, or in connection with, the subscription of any option, or any securities, issued or to be issued by the company or a related or inter-related company, or for the purchase of any securities of the company or a related or inter-related company, where such financial assistance is provided for in terms of any such scheme that does not satisfy the requirements of section 97 of the Companies Act.”

Such authority to endure for a period of 2 (two) years commencing on the date of the passing of this special resolution number 4.


Additional information in respect of special resolution number 4The reason for Special Resolution number 4 is to obtain approval from the Shareholders to enable the company to provide financial assistance, when the need arises, in accordance with the provisions of section 44 and section 45 of the Companies Act. The effect of this Special Resolution is that the company will have the necessary authority as and when required. The board undertakes that, insofar as the Companies Act requires, it will not adopt a resolution to authorise such financial assistance, unless the directors are satisfied that:1. immediately after providing the financial assistance, the company would satisfy the solvency and liquidity test as contemplated in the

Companies Act; and 2. the terms under which the financial assistance is proposed to be given are fair and reasonable to the company.

11. shareholder approval for the issuing of shares in certain casesspecial resolution 5“resolved that, in terms of section 41 of the companies Act, the company is specifically authorised to issue up to a maximum of 26 263 691 new ordinary shares to a director, future director, prescribed officer or future prescribed officer or a person related or inter-related of the company, or to a director or prescribed officer of the company in terms of and pursuant to the BCX Share Incentive Plans or the company’s share or other employee incentive schemes to the extent that such schemes do not satisfy the requirements of section 97 of the Companies Act.



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additional disClosure of information in terms of seCtion 11.26 of the Jse listings requirementsThe JSE Listings Requirements require the disclosure of the following information, some of which appears elsewhere in the integrated report of which this notice forms part as set out below: • directors and management

See pages 16 to 23 of the integrated report.

• major shareholders of the company See page 151 of the integrated report.

• material changesThere have been no material changes in the financial or trading position of the company and its subsidiaries since the balance sheet date and the date of the notice.

• directors’ interests in securities See page 95 of the integrated report.

• share capital of the company See page 127 of the integrated report. This includes the share capital of the company in note 15. An analysis of the shareholders (including beneficial shareholders – who hold 5% or more of the issued share capital of the company – and of which the company is aware, but who are not registered Shareholders) can be found on pages 151 to 152.

• litigation statement In terms of section 11.26 of the JSE Listings Requirements, the directors, whose names appear on pages 16 to 19 of the integrated report, are not aware of any legal or arbitration proceedings, including 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’s financial position.

• directors’ responsibility statement The directors, whose names appear on pages 16 to 19 of the integrated report, collectively and individually accept full responsibility for the accuracy of the information pertaining to special resolution numbers 2 and 3 and certify that to the best of their knowledge and belief there are no facts that have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that the annual report and this notice contains all information required by law and the JSE Listings Requirements.

attendanCe and voting By shareholders or proxiesOn a poll, every shareholder of the company shall have one vote for every share held in the company by such shareholder.

All shareholders are encouraged to attend, speak and vote at the AGM.

An ordinary shareholder entitled to attend and vote at the AGM may appoint any individual (or two or more individuals) as a proxy or as proxies to attend, participate in and vote at the AGM in the place of the shareholder. A proxy need not be a shareholder.

A proxy appointment must be in writing, dated and signed by the shareholder appointing a proxy, and, subject to the rights of a shareholder to revoke such appointment (as set out below), remains valid only until the end of the AGM.

The appointment of a proxy is suspended at any time and to the extent that the shareholder who appointed such proxy chooses to act directly and in person in the exercise of any rights as a shareholder.

Shareholders who have dematerialised their shares, other than those shareholders who have dematerialised their shares with own name registration, should contact their Central Securities Depository Participant (CSDP) or broker in the manner and time stipulated in their agreement, in order to furnish them with their voting instructions and to obtain the necessary authority to do so, in the event that they wish to attend the AGM.

Please note that if you are the owner of dematerialised shares (i.e. have replaced the paper share certificates representing the shares with electronic records of ownership under the JSE’s electronic settlement system, Strate Limited (Strate)), held through a CSDP or broker and are not registered as an ‘own name’ dematerialised shareholder you are not recorded as a registered shareholder of the company, but appear on the sub-register of the company held by your CSDP. Accordingly, in these circumstances subject to the mandate between yourself and your CSDP or broker, as the case may be:• if you wish to attend the AGM you must contact your CSDP or broker, as the case may be, and obtain the relevant letter of representation from

them; alternatively;


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• if you are unable to attend the AGM but wish to be represented at the meeting, you must contact your CSDP or broker, as the case may be, and furnish them with your voting instructions in respect of the AGM and/or request them to appoint a proxy. you must not complete the attached form of proxy. The instructions must be provided in accordance with the mandate between yourself and your CSDP or broker, as the case may be, within the time period required by them.

CSDPs, brokers or their nominees, as the case may be, recorded in the company’s sub-register as holders of dematerialised shares held on behalf of an investor/beneficial owner in terms of Strate should, when authorised in terms of their mandate or instructed to do so by the owner on behalf of whom they hold dematerialised shares in the company, vote by either appointing a duly authorised representative to attend and vote at the AGM or by completing the attached form of proxy in accordance with the instructions thereon and returning it to the company’s transfer secretaries not less than 24 hours before the time appointed for the holding of the meeting (excluding Saturdays, Sundays and public holidays).

Shares held by a share trust or scheme will not have their votes at the AGM taken into account for purposes of resolutions proposed in terms of the JSE Listings Requirements. Shares held as treasury shares may also not vote. (The listed “A” shares created in terms of the black economic empowerment transaction will have full voting rights).

Shareholders of the company that are companies, that wish to participate in the AGM, may authorise any person to act as its representative at the AGM.

If you hold certificated shares (i.e. have not dematerialised your shares in the company) or are registered as an own name dematerialised shareholder (i.e. have specifically instructed your CSDP to hold your shares in your own name on the company’s sub-register), then:

• you may attend and vote at the AGM; alternatively

• you may appoint a proxy (who need not also be a shareholder of the company) to represent you at the AGM by completing the attached form of

proxy and, for administrative reasons, returning it to the office of the company’s transfer secretaries, Computershare Investor Services (Proprietary)

Limited, 70 Marshall Street, Johannesburg, 2001, South Africa or posted to the transfer secretaries at PO Box 61051, Marshalltown, 2107

(70 Marshall Street, Johannesburg 2001), South Africa, so as to be received by them by not later than 11:00 on Monday, 13 January 2014

(48 (forty-eight) hours (excluding Saturdays, Sundays and public holidays in the Republic of South Africa) prior to the meeting). Any forms of proxy

not received by this time must be handed to the chairperson of the AGM immediately prior to the AGM. Please also note that the attached form

of proxy may be delivered to the company at any time before the AGM and must be so delivered before your proxy may exercise any of your rights

as a shareholder at the AGM.

A proxy may delegate his/her authority to act on your behalf to another person, subject to the restrictions set out in the attached form of proxy as stipulated in section 58(3)(b) of the Companies Act.

Shares held by a share trust or scheme will not have their votes at the AGM taken into account for the purposes of the resolutions proposed in terms of the JSE Listings Requirements.

proof of identifiCation requiredSection 63(1) of the Companies Act requires that a person wishing to participate in the AGM (including any representative or proxy) must provide satisfactory identification (such as identity documents, driver’s licences or passports) before they may attend or participate at such meeting.

venuePlease take note that the AGM will be held at the in the Business Connexion Fundi Auditorium, Business Connexion Park North, 789 Sixteenth Road, Randjespark, Midrand 1685, on Thursday, 16 January 2014 at 11:00. A map and directions are included on page 166 of the report.

By order of the board

J de kokerGroup company secretary

5 December 2013

Business Connexion Park North789 Sixteenth RoadRandjespark, Midrand 1685Republic of South Africa


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GENERAL MEETINGANNuAL

MAP

Business Connexion Park North, 789 Sixteenth Road, Randjespark, Midrand

Tel: +27 (11) 266 5111 • Fax: +27 (11) 266 1088

suggested route

On the N1 towards Pretoria, take New Road offramp and turn right off the slipway, then first left into Sixteenth Road

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APPENdIx Asummary of the proposed neW share inCentive plansIn line with local and global best practice, Business Connexion Group Limited (BCX or company) intends to adopt two new share plans, namely a

Forfeitable Share Plan (FSP) and a Share Appreciation Right Plan (SAR Plan) (collectively the proposed new share incentive plans) for executive directors

and senior management of the group. Non-executive directors of the company are not eligible to participate in the proposed new share incentive

plans.

The rationale behind the introduction of the proposed new share incentive plans is to align the interests of participants of these plans (participants)

closely with that of shareholders in respect of the company’s performance by making the vesting of a significant majority of the awards under the

proposed new share incentive plans subject to company performance-related conditions. Further, through the delivery of ordinary shares in the share

capital of the company (shares), participants will become shareholders in the company.

On approval of the proposed new share incentive plans, no further awards will be made to participants under the company’s existing Business

Connexion (2009) Executive Share Option Scheme (existing plan).

The salient features of the proposed new share incentive plans are detailed below.

purpose Best practice requires a move away from the use of option-type plans only to the use thereof in conjunction with full share plans. Full share plans, like

the FSP, are less leveraged and have less upside than option-type plans, but provide more certain outcomes.

FSP instruments, aid retention and provide more certainty as these instruments are less volatile than option-type instruments. These instruments

therefore drive performance while supporting the company’s policy of retaining talent and expertise in line with its business strategy.

SAR Plan instruments are option-type instruments and provide more value leverage rather than actual share awards and can translate into significant

gains in the event of high share price increases. These instruments provide a strong incentive for participants to drive share price growth.

The rationale for the combination of the FSP and the SAR Plan is to attract, retain and reward participants through annual awards. The proposed

new share incentive plans will enable the selected employees to share in the success of the company and will incentivise them to deliver the

business strategy over the long-term. Furthermore, the proposed new share incentive plans will provide closer alignment between key employees

and shareholders.

partiCipants The proposed new share incentive plans will be aimed at executive directors and senior management (qualifying employees).

fsp Under the FSP, participants will become owners of shares (forfeitable shares) once the award is made and will immediately benefit from dividends and

have shareholder voting rights in respect of the forfeitable shares. However, participants shall not be entitled to dispose of or encumber the forfeitable

shares prior to the later of (i) the expiry of the performance period (defined below), if any, and (ii) the third anniversary of the award date (vesting date)

and the forfeitable shares will be subject to forfeiture until the vesting date.

Awards of forfeitable shares will comprise of retention awards and performance awards. The vesting of retention awards will be subject to the

condition that the participants remain employed with the group until the third anniversary of the award date (employment condition). The vesting of

performance awards will be subject to the employment condition and the satisfaction of company related performance thresholds (discussed below)

over the performance period (performance conditions).

sar plan Share appreciation rights (SARs) are conditional rights to receive a number of shares determined by reference to the appreciation of the share price

from the award date until the exercise date (appreciation amount). The reference price of the shares as at the award date and the exercise date will

be determined by reference to the 30-day VWAP of a share, as quoted on the exchange (exchange) operated by the JSE Limited ( JSE), immediately

preceding the award date and the exercise date respectively. Vesting of SARs will be subject to the fulfilment of the employment condition and the

performance condition. On the vesting date, provided the employment condition and performance condition have been fulfilled, the SARs will vest


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168

and become exercisable. Upon exercise of SARs, a participant will receive shares equal in value to the appreciation amount, or alternatively, with the

approval of the board of directors, a cash amount equal to the appreciation amount or a combination of shares and cash equal to the appreciation

amount. SARs not exercised within a period of 90 days from the vesting date will lapse.

Basis of aWards and aWard levels In line with the requirements of King III and best practice that regular, annual awards be made on a consistent basis to ensure long-term shareholder

value creation, awards of forfeitable shares and SARs will be made under the proposed new share incentive plans on an annual basis.

It is the intention that senior qualifying employees will receive a combination of awards under both the FSP and SAR Plan and less senior qualifying

employees will only participate in the SAR Plan.

Award levels will be set by reference to the qualifying employee’s total guaranteed cost of employment, function, grade, performance, the need for

retention and market practice. The award levels will be decided by the remuneration committee each time that awards are granted, by taking into

account the particular circumstances at that time. Annual allocations will be benchmarked and set at a market related level of remuneration whilst

considering the overall affordability thereof to the employer company.

performanCe ConditionsPerformance conditions will be determined by the remuneration committee for each annual award under the FSP (in the case of performance awards

as discussed above) and the SAR Plan, taking into account the business environment at the relevant time, and where considered necessary. Performance

conditions will be required to be fulfilled during the three financial years following the award date (performance period). The intended performance

conditions applicable to the first award of forfeitable shares and SARs are discussed below.

fspThe intended performance condition for the first award under the FSP is a combination of Headline Earnings Per Share (HEPS) (50%) and Total

Shareholder Return (TSR) (50%).

The proposed vesting scale, based on the HEPS performance of BCX over the performance period after taking the CPI inflation into account, is

as follows:

• If HEPS growth of BCX is below CPI inflation plus 5%, no awards will vest;

• If HEPS growth of BCX is equal to CPI inflation plus 5%, 30% of the awards will vest;

• If HEPS growth of BCX is equal to CPI inflation plus 10%, 100% of the awards will vest; and

• Linear vesting will be applied for performance between the above levels.

TSR will be measured relative to the following peer companies (Peer Group):

Datacentrix Holdings Limited;

Datatec Limited;

EOH Holdings Limited;

Gijima Group Limited;

MTN Group Limited;

Pinnacle Technology Holdings Limited;

Telkom SOC SA Limited; and

Vodacom Group Limited.

CONTINUED

APPENdIx A


16931/082013

The TSR will be measured as the compound annual growth rate (CAGR) in TSR for the company and Peer Group over the performance period after

holding the shares and reinvesting the dividends over the performance period. The Peer Group companies and BCX will be ranked based on their

respective CAGR in TSR. This ranking determines the vesting percentage.

The proposed vesting scale, based on the TSR performance of BCX relative to the Peer Group over the performance period, is as follows:

• If the ranking of BCX is below the 50th percentile of the Peer Group, no awards subject to the TSR performance condition will vest;

• If the ranking of BCX is at the 50th percentile of the Peer Group, 30% of the awards subject to the TSR performance condition will vest;

• If the ranking of BCX is at the 75th percentile of the Peer Group, 100% of the awards subject to the TSR performance condition will vest; and


sar planThe vesting of all awards under the SAR Plan will be subject to the achievement of specified performance conditions. The intended performance

condition for the first award under the SAR Plan is growth in HEPS.

The proposed vesting scale, based on the HEPS performance of BCX over the performance period after taking the CPI inflation into account, is

as follows:

• If HEPS growth of BCX is below CPI inflation plus 5%, no awards will vest;

• If HEPS growth of BCX is equal to CPI inflation plus 5%, 30% of the awards will vest;

• If HEPS growth of BCX is equal to CPI inflation plus 10%, 100% of the awards will vest; and


In line with King III, vesting will occur on a sliding scale. In line with corporate governance principles, performance conditions will not be retested if

they are not met at the end of the performance period, and to the extent that they are not satisfied, awards will lapse.

settlement of sharesThe rules of the proposed share incentive plans will be flexible in order to allow for settlement of shares through:

• the purchase of shares on the open market; or

• the use of treasury shares; or

• the issue of new shares (new shares).

The exact method of settlement of shares will be determined by the remuneration committee although the preference will be to use shares purchased

on the open market which will not result in a dilution to shareholders.

dilution limits and adJustmentsThe maximum aggregate number of shares which may at any one time be allocated under the proposed new share incentive plans and the existing

scheme shall not exceed 40 497 247 shares (overall limit).

The overall limit will apply to new shares, shares held in treasury and shares purchased in the open market which are used to settle awards under

the proposed new share incentive plans and the existing plan, provided that no more than 26 263 691 new shares in aggregate may be utilised for

settlement of awards under the existing plan and the proposed new share incentive plans.

Forfeitable shares which are awarded and are subsequently forfeited and shares subject to an award of SARs which subsequently do not vest, will

be excluded in calculating the overall limit. If necessary, the remuneration committee will adjust the overall limit (without the prior approval of

shareholders in a general meeting), to take account of a sub-division or a consolidation of the shares.

The maximum number of shares which may be allocated to a single qualifying employee in respect of all unvested awards under the proposed

new share incentive plans may not exceed 4 049 725 shares (individual limit). If necessary, the remuneration committee will adjust the individual

limit to take account of a capitalisation issue, a special dividend, a rights issue or a reduction of shares.


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170

The auditors, or other independent advisor acceptable to the JSE, shall confirm to the JSE in writing that any adjustments made to the overall limit or

the individual limit has been properly calculated on a reasonable and equitable basis, in accordance with the rules of the proposed shares incentive

plans. Any adjustments must be reported on in the company’s financial statements in the year during which the adjustment is made.

The issue of shares as consideration for an acquisition, and the issue of shares for cash or for a vendor consideration placing will not be regarded as a

circumstance that requires any adjustment to the overall limit or the individual limit.

Consideration The participant will give no consideration for receiving an award or for the settlement of an award of forfeitable shares or SARs.

termination of employment Participants whose employment with the group is terminated as a result of:

• resignation or dismissal on grounds of misconduct, proven poor performance or proven dishonest or fraudulent conduct will be classified as

“bad leavers” and will forfeit all unvested forfeitable shares and SARs. Vested SARs which have not been exercised as at the date of termination of

employment will also be forfeited;

• retirement, retrenchment, ill-health, disability, injury or the employer company ceasing to be part of the BCX group will be classified as “good

leavers” and their awards will remain subject to the original terms of the award so that their forfeitable shares and SARs will vest on the vesting date

subject to the fulfilment of the performance conditions;

• death will have the vesting of all their forfeitable shares and SARs accelerated to the termination of employment date.

Change of Control In the event of a change of control of the company occurring before the vesting date, a portion of the award will vest. This portion will be calculated by

reference to the percentage of the vesting period which has been completed as at the change of control date and the extent to which the performance

conditions (if applicable) have been met.

The portion of the award which does not vest as a result of the change of control will continue to be subject to the terms of the award, unless

the remuneration committee determines otherwise, in which event the remuneration committee will make such adjustments to the awards or

convert awards into awards in respect of shares in one or more other companies provided the participants are placed in a substantially similar

economic position.

Awards will not vest as a consequence of an internal reconstruction or similar event which does not result in a change of control as defined in the rules.

In this case the remuneration committee shall make such adjustment to the number of awards or convert awards into awards in respect of shares in

one or more other companies provided the participants are placed in substantially similar economic position.

variation in share Capital In the event of a variation in share capital such as a capitalisation issue, subdivision of shares, consolidation of shares, liquidation for the purpose

of reorganisation, special dividend, the shares ceasing to be listed on an exchange or any other event affecting the share capital of the company,

participants shall continue to participate in the proposed new share incentive plans. However, the remuneration committee will be entitled to make

such adjustment to the award or take such other action as may be necessary to place participants in a substantially similar economic position.

In the event of a liquidation of the company otherwise than for the purposes of a reorganisation, the awards will lapse.

amendments Subject to the provisions of the JSE Limited Listings Requirements, the remuneration committee may amend the rules of the proposed new share

incentive plans from time to time as it sees fit, provided that such amendments do not negatively affect the rights of participants under existing awards.

CONTINUED

APPENdIx A

PrOxy FORM OF

Business Connexion group limited(Incorporated in the Republic of South Africa)(Registration number 1988/005282/06)ISIN: ZAE000054631 Share Code: BCX(“the company” or “Business Connexion”)

This proxy form is only for use by:

1. registered shareholders who have not yet dematerialised their shares in the company, and

2. registered shareholders who have already dematerialised their shares in the company and are registered in their own names in the company’s sub-register.

For use by registered shareholders of the company at the tenth annual general meeting of the company which will be held in the Business Connexion Fundi Auditorium, Business Connexion Park North, 789 Sixteenth Road, Randjespark, Midrand 1685 on Thursday, 16 January 2014 at 11:00 and at any adjournment thereof.

I/We (please print name)

of

(Address in block letters)

being a holder of ordinary shares in the company and entitled to vote, do hereby appoint (refer to note 1):

1. or, failing him/her,

2. or, failing him/her,

the Chairman of the annual general meeting, as my/our proxy/ies to vote on a poll on my/our behalf at the annual general meeting of the company for the purpose of considering and, if deemed fit, passing, with or without modification, the resolutions to be proposed thereat and at each adjournment thereof and to vote for and/or against the resolution and/or abstain from voting in respect of the ordinary shares registered in my/our name/s in accordance with the instructions/notes overleaf.

Please indicate with an “X” or number of shares which you wish to vote in the spaces below how you wish your proxy to vote in respect of the resolutions to be proposed, as contained in the notice of the abovementioned annual general meeting.

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

for against abstainordinary resolutions

1.To re-appoint KPMG as external auditors and Pierre Fourie as the individual designated auditor of the company for the 2013/2014 financial year.

2. Re-election of directors: 2.1 J John2.2 AC Ruiters2.3 JA Bester 2.4 AB Darko2.5 ME Ettling

3.Election of independent Audit and compliance committee for the financial year commencing 1 September 2013 the members being: 3.1 J John 3.2 JA Bester3.3 AB Darko

4. Non-binding approval of group remuneration policy5. General authority to place shares under control of the directors6. Adoption of the Business Connexion Group Limited share incentive plans

special resolutions1. Approval of non-executive directors’ remuneration – 2014/20152. General authority to repurchase shares3. General authority to provide financial assistance to related and inter-related companies and corporations

4.Adoption of the Business Connexion Group Limited new share incentive plans – financial assistance in terms of section 44 and section 45 of the Companies Act

5. Approval for the issuing of shares in certain casesSigned by me/us this day of 2014

Signature

Assisted by me (where applicable) (refer to instruction 3)

Full name/s of signatory if signing in a representative capacity (refer to instruction 5)

* If this form of proxy is returned without any indication of how the proxy should vote, the proxy will exercise his/her discretion both as to how he/she votes and as to whether or not he/she abstains from voting.

NOTES1. Every shareholder present in person or by proxy and entitled to vote at the annual general meeting of the company shall in the event of a poll be entitled

to one vote in respect of each ordinary share in the company held by him/her.

2. Shareholders who have dematerialised their shares in the company and are registered in their own names are shareholders who appointed Computershare Custodial Services as their Central Securities Depository Participant (CSDP) with the express instruction that their uncertificated shares are to be registered in the electronic sub-register of shareholders in their own names.

instructions on signing and lodging the proxy form:1. The form of proxy must only be used by shareholders who hold shares in certificated form or shareholders who hold dematerialised shares and who are

recorded on the sub-register in electronic form in “own name”.

2. All other beneficial owners who have dematerialised their shares through a CSDP or broker and wish to attend the Annual General Meeting must provide the CSDP or broker with their voting instructions in terms of the relevant agreement entered into between them and the CSDP or broker.

3. A shareholder may insert the name of a proxy or the names of two alternative proxies of the shareholder’s choice in the space/s provided overleaf, with or without deleting “the chairman of the annual general meeting”, but any such deletion must be initialled by the shareholder. Should this space be left blank, the chairman of the annual general meeting will exercise the proxy. The person whose name appears first on the proxy form and who is present at the annual general meeting will be entitled to act as proxy to the exclusion of those whose names follow.

4. A shareholder’s voting instructions to the proxy must be indicated by the insertion of an “X” or the number of votes exercisable by that shareholder in the appropriate spaces provided. If an “X” has been inserted in one of the blocks to a particular resolution, it will indicate the voting of all the shares held by the shareholder concerned. Failure to do this shall be deemed to authorise the proxy to vote or to abstain from voting at the annual general meeting, as he/she thinks fit in respect of all the shareholder’s exercisable votes. A shareholder or his/her proxy is not obliged to use all the votes exercisable by his/her proxy, but the total number of votes cast, or those in respect of which abstention is recorded, may not exceed the total number of votes exercisable by the shareholder or by his/her proxy.

5. A minor or any person under incapacity must be assisted by his/her parent or guardian, as applicable, unless the relevant documents establishing his/her legal capacity are produced or have been registered by the transfer secretaries of the company.

6. To be valid, the completed form of proxy must be lodged with the transfer secretaries of the company:

Computershare Investor Services Proprietary Limited, 70 Marshall Street, Johannesburg 2001, or posted to PO Box 61051, Marshalltown, 2107 Republic of South Africa,

to reach the company on or before 11:00 on Monday, 13 January 2014 (at least 48 (forty eight) hours (excluding Saturdays, Sundays and Public holidays in the Republic of South Africa) before the time appointed for the holding of the annual general meeting.

7. Documentary evidence establishing the authority of a person signing this proxy form in a representative capacity must be attached to this proxy form unless previously recorded by the transfer secretaries or waived by the chairman of the annual general meeting.

8. The completion and lodging of this proxy form shall not preclude the relevant shareholder from attending the annual 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.

9. The completion of any blank spaces overleaf need not be initialled. Any alterations or corrections to this proxy form must be initialled by the signatory/ies.

10. The chairman of the annual general meeting may reject or accept any proxy form which is completed other than in accordance with these instructions provided that he is satisfied as to the manner in which a shareholder wishes to vote.

11. The chairman of the meeting shall be entitled to decline or accept the authority of a person signing the proxy form: a) under a power of attorney; or

b) on behalf of a company

unless his power of attorney or authority is deposited at the offices of the company or that of the transfer secretaries not later than 11:00 on Monday, 13 January 2014 (48 (forty eight) hours before the meeting).

12. Where there are joint holders of shares:a) any one holder may sign the form of proxy;

b) the vote(s) of the senior shareholders (for that purpose seniority will be determined by the order in which the names of shareholders appear in the company’s register of shareholders) who tenders a vote (whether in person or by proxy) will be accepted to the exclusion of the vote(s) of the other joint shareholder(s).

13. A deletion of any printed matter and the completion of any blank space need not be signed or initialed. Any alteration or correction must be signed and not merely initialled.

Business Connexion Group LimitedIncorporated in the Republic of South Africa

Registration number 1988/005282/06

Company secretaryJ de Koker

Registered office and business addressBusiness Connexion Park North

789 Sixteenth Road

Randjespark

Midrand, 1685

Postal addressPrivate Bag X48

Halfway House, 1685

Tel: + (27) 11 266 6630

Fax: + (27) 86 571 4020

Email: [email protected]

Websitehttp://www.bcx.co.za

Investor relationsThe chief executive officer, deputy chief executive officer and

chief financial officer are designated investor spokespersons

Business and postal addressBusiness Connexion Park North

789 Sixteenth Road

Randjespark

Midrand, 1685


Halfway House, 1685

Tel: + (27) 11 266 5111

Fax: + (27) 11 266 1088


Transfer secretariesComputershare Investor Services Proprietary Limited

Business address70 Marshall Street

Johannesburg, 2001

Postal addressPO Box 61051

Marshalltown, 2107

Tel: + (27) 11 370 5000

Fax: + (27) 11 688 5248

SponsorsOne Capital

Business address17 Fricker Road

Illovo

2196

Postal addressPO Box 784573

Sandton, 2146

Tel: + (27) 11 550 5000

Fax: 086 538 4299


AuditorsKPMG

Business addressKPMG Crescent

85 Empire Road

Parktown, 2193


Parkview, 2122

Tel: + (27) 11 647 5000

Fax: + (27) 11 647 6084

Designed by Published by

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