Surge 2013: Maximizing Scalability, Resiliency, and Engineering Velocity in the Cloud
INTEGRATED REPORT 31 AUGUST 2012 · the highest data centre resiliency, without compromising the...
Transcript of INTEGRATED REPORT 31 AUGUST 2012 · the highest data centre resiliency, without compromising the...
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 2
CONTENTS Table of
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 14
Executive committee 18
Chairman’s report 22
Chief executive officer’s report 26
Chief financial officer’s report 30
Group seven-year history 36
Value-added statement 38
OPERATIONAL REVIEWSServices division 40
UCS division 42
Technology division 44
Canoa division 45
Innovation division 46
Investment division 47
International division 48
GOVERNANCE, RISK AND SUSTAINABILITY
Page
Corporate governance report 50
Audit and compliance report 61
Risk management 63
Sustainability report 67
ANNUAL FINANCIAL STATEMENTSAnnual financial statements 81
OTHER INFORMATIONShareholder analysis 152
Definitions 156
SHAREHOLDER MEETING MATTERSNotice of annual general meeting 160
Map to the annual general meeting 170
Form of proxy Attached
Corporate information IBC
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WHEN ONE ENTITY IS ATTRACTED TO ANOTHER AND THEY JOIN, A COMPELLING CONNECTION OCCURS AND THE EFFECT IS EXTRAORDINARY. SOMETHING NEW IS CREATED AND POSSIBILITIES GROW ENDLESS. THIS IS THE AMPLIFYING POWER OF CONNECTIVE INTELLIGENCETM.
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VALUESCore
PROFILEBusiness Connexion is one of Africa’s largest black empowered informationand communications technology companies with offices in all majorSouth African centres, in six African countries, the United Kingdom and Dubai.
MISSION
To provide increasingly simple, content-rich and affordable knowledge solutions to Africa and the world.
VISION
Amplifying the power of Connective Intelligence.TM
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OUR VALUES
PassionInnovationTrustIntegrityExcellenceTeamworkMake a difference
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PROFILECorporate
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
With over 6 500 dedicated, knowledgeable and highly experienced employees across Africa, the UK and Dubai, and 33 years of operational experience, the group combines global ICT vendor partnerships, extensive technology resources and a passion to deliver high quality, high performance business solutions that meet the information management needs of today and the future.
The group has an extensive national and international footprint with more data centre capacity and cloud computing capability than any other service provider in South Africa.
With clients as its focus the group will continue to strive at providing excellent, effective and innovative solutions that strengthen and improve clients’ businesses.
Business Connexion is committed to conducting its 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, its level 3 Broad-based Black
Economic Empowerment rating all form part of the group’s
vision to be a leading emerging markets ICT player. Further
details on the group’s sustainability measures can be found
in the Sustainability report on pages 67 to 79.
AbOUT bUSINESS CONNExION CONNECTIVE INTELLIGENCE™ IS ABOUT USING THE WORLD’S MOST ADVANCED INFORMATION AND COMMUNICATION TECHNOLOGY (ICT) PRODUCTS AND SERVICES, WITH THE SKILLS AND EXPERIENCE OF SOME OF THE WORLD’S BEST qUALIFIED INDIVIDUALS, TO PROVIDE INCREASINGLY SIMPLE, CONTENT-RICH AND AFFORDABLE KNOWLEDGE SOLUTIONS TO AFRICA AND THE WORLD.
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Business Connexion enhances the lives of citizens throughout South Africa and Africa with ICT solutions ranging from:• the data centre which holds a Tier IV design certification
from the Uptime Institute which translates to less than 27 minutes downtime per annum;
• ICT solutions to all enterprise retailers in South Africa; • efficiently handling over 4 million accounts from
87 municipalities every month;• generating 30% of South Africa’s payslips using the
group’s payroll solutions;• managing the South African government’s payroll
system; • providing the technology backbone for the delivery
of over 40% of the petrochemical industry’s liquid fuel requirements; to
• processing more than 16 million switching transactions, including garnishee orders and union member fees, per month.
Business Connexion’s passion to deliver high quality, high performance business solutions has given rise to a number of accolades including:• largest data centre operations in the South African
market with 27% market share (Frost and Sullivan);• first place in Custom Application Development for 2011
owning 20% share of the South African market (BMI-T);• Tactical Partner of the year 2011 awarded to CEB
Maintenance by a strategic retail client; • winner of the Sustainability Award at the Technology Top
100 accolades presented to Accsys;• 1st, and currently the only, JSE listed ICT company
accredited as an Eskom Energy Services Company (ESCo);
• Citrix’s 1st South African-based Systems Integrator partner;
• SAP Services Partner Excellence award and All-in-One Reseller of the year award in 2011;
• average maturity rating of 3.55 on seventeen ITIL V3 processes;
• Cisco Services Partner of the Year and Cisco Managed Services Partner of the Year 2011 for Africa and Middle East;
• top 3 provider for SAP Hosting Services and only provider of SAP Cloud Services in South Africa; and
• Frost & Sullivan 2012 South African Customer Value Enhancement Award.
The group’s solution offerings which are detailed below are provided through it divisional operations which include the:• Services division;• UCS division;• Technology division;• Canoa division;• Innovation division; • International division; and• Investment division
Details on the operations of these divisions are included in the Operational reviews on pages 40 to 49.
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 experience in client service enable 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.
The group has taken aggressive action to adapt its business to better cope with the new economic environment and the realities of today.
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End to end communication solutions and infrastructure build:The group’s highly skilled solution architects, certified to the 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 best 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
consistent 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 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.
UCS Solutions:Through its UCS Solutions subsidiary the group provides outsourced application hosting services, integrated service management services, SAP and JDA application software services and strategic and optimisation consulting services to the retail industry.
Content Distribution Solutions (CDS): This capability enables Business Connexion to be a primary provider of faster and cost effective connectivity and content distribution network services to facilitate web applications, content management, and video and acceleration services bundled with interactive advertising.
PROFILECorporate
continued
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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, optimizing costs and maintaining equipment, delivering convenient, low cost, highly reliable printing and other related services.
Transactional switch collection solutions:This intelligent web-based one-stop collection solution offers businesses, including banks, insurance companies, medical schemes and unions, automated pull-type payments and reconciliations for a number of payment streams including large corporate payrolls and bank channels.
Human capital management (time and attendance, payroll, human resources and salary administration):Through a unique integrated approach that combines world-class human capital management, time and attendance, access control and ERP solutions, Business Connexion is able 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.
Desk-top support:CEB Maintenance specialises in the provision of general computer hardware services, including implementation, rollout, support and maintenance services.
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.• NorthgateArinso. • 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; SAP enterprise resource management solution provider.
• Symantec: Platinum certified partner; Enterprise Security Master Specialist .
• Synerion.• VMware: VMware Enterprise Solution Provider.
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Nigeria
South Africa
Zambia
NamibiaMozambique
Tanzania
Kenya
Swaziland
Lagos
Lusaka
Maputo
Windhoek
Nairobi
Dar-es-Salaam
Dubai
United KingdomLondon
FOOTPRINTGroup
South AfricaGauteng Johannesburg, Midrand, PretoriaWestern Cape Cape TownEastern Cape East London, Port ElizabethKwaZulu-Natal Durban
AfricaKenya NairobiMozambique MaputoNamibia WindhoekNigeria LagosTanzania Dar-es-SalaamZambia Lusaka
United Kingdom London
South Africa –Service centresBethlehemBloemfonteinGeorgeKimberleyKlerksdorpMiddelburg
South Africa –Points of presenceBethalJohannesburgLadysmithMmathathoPretoriaWitbank
Africa and Dubai –Points of presenceBotswana – GaboroneDubaiMozambique – Matola, TemaneNamibia – SwakopmundNigeria – AbujaSwaziland – Mbabane
MthathaNelspruitNewcastlePietermaritzburgPolokwane
SERVICECENTRES
REGIONALOFFICES
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FINANCIALGroup
highlights
REVENUE
0
100
200
300
400
500
600
700
800
900
May 06
SHARE PRICE
May 07 May 08 Aug 09* Aug 10 Aug 11 Aug 12 May 06 May 07 May 08 Aug 09* Aug 10 Aug 11 Aug 12
May 06 May 07 May 08 Aug 09* Aug 10 Aug 11 Aug 12 May 06 May 07 May 08 Aug 09* Aug 10 Aug 11 Aug 12
OPERATING PROFIT
HEADLINE EPS AND DIVIDEND PER SHARE
Headline EPS Dividend per share
0
10
20
30
40
50
60
70
80
0
50
100
150
200
250
300
0
1 000
2 000
3 000
4 000
5 000
6 000
EBITDA
May 06 May 07 May 08 Aug 09* Aug 10 Aug 11 Aug 120
100
200
300
400
500
600
• REVENUE INCREASED BY 35,1% TO R5 829,6 MILLION
• GROSS mARGIN ImPROVED FROM 30,9% TO 31,5%
• EbITDA INCREASED BY 59,6% TO R511,9 MILLION
• NORmALISED DILUTED
hEADLINE EARNINGS PER SHARE OF 54,3 CENTS
• DIVIDEND OF 20,0 CENTS
PER ShARE DELIVERING A 3,9% DIVIDEND YIELD
*15 month period
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STRUCTUREGroup ownership
# UK§ Previously known as Business Connexion Networks (Nigeria) Limited
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%
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. 200/018444/07
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%
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OVERVIEWOperational
Division Objective Performance Highlights
Services • ICT services integrator enabling our
clients’ businesses locally and globally
• Full service provider 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
the group – R1 982,6 million
• Operating profit margin improved
from 9,8% to 11,1%
• Growth and stability of annuity
revenue base
• Winner of the Frost & Sullivan
2012 South African Customer
Value Enhancement Award
• 20% market share in application
development
(BMI-T December 2011)
• Exclusive global partnership
with Rackspace
• Acquisition of Quad
Automation
UCS • Dominant ICT service provider in the
retail sector
• Enhance and extend data centre and
leveraged managed services offerings
• Total revenue of R1 093,2 million
• Operating profit margin of 10,7%
• Cross selling opportunities
identified and acted on
• Acquisition of Integr8 IT
• Successful integration of
UCS assets
• Provide 28% of sub-Saharan
African Retail IT services
(Gartner – 2012)
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
• Returned to profit despite revenue
decrease from R1 230,9 million to
R916,0 million
• R3,3 million operating profit
contribution; R11,0 million earned
in second half
• Regional sales force optimised
• Operating model redefined
Canoa • End-to-end client service offering
includes office automation
• Move into corporate client base
• Revenue of R860,5 million
• Operating profit margin of 12,4%
• Over performance on profit
warrantees
• Successful role out of managed
print solution to key corporate
clients
• Retention of Canon exclusivity
for Southern Africa
Innovation • Intellectual property hub of the group
• On-going investment in intellectual
property through development and
enhancement of software solution
offerings
• Revenue growth to R496,5 million
• Operating profit margin of 13,6%
• Proprietary solutions leveraged in
public sector
• White labelling of outsource
payroll solutions
• Successful conclusion of
Management Buy In transaction
in Nanoteq
• Integration of Accsys
• Improved debt collection from
municipalities
International • Support existing and future global
clients and partners wherever they
operate
• Service provider of choice in each of
its representative locations
• Revenue growth from R368,5 million
to R467,2 million
• Operating profit margin of 2,5%
• Approved data centre investments
for Nigeria and Kenya
• Market penetration into Ghana
• One of the largest ICT groups in
Southern Africa
• Strong presence in East Africa
• Established presence in West
Africa
• Largest employer of ICT skill
in Africa
Investment • House group’s new ventures
• Currently only Content Distribution
Solutions (CDS)
• Successfully redefined content
distribution solution offering’s
strategic intent
• Revenue of R13,6 million
• Supply contracts renegotiated for
improved affordability
• CDS remains strategic enabler
of the group’s cloud strategy
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STRATEGYGroup
Consistent with Business Connexion’s strategy embarked upon in 2009, the group has made significant progress in realigning the business to the changing dynamics within the ICT industry.
The financial results clearly highlight the strong contribution of the group’s acquisitions in recent years, where the UCS subsidiaries and Canoa Group performed ahead of expectation.
The strength of the group’s balance sheet enabled further acquisitions in the current period to augment the group’s portfolio of offerings and to address new markets.
CLIENTSThe African continent continues to be a focal point for the group. The strategic intent remains to grow its global presence by providing ICT services across the continent. The 2012 Gartner report analysing ICT Services in sub-Saharan Africa confirms Business Connexion’s leading position in ICT Business Services. This report defines ICT Business Services as constituting IT outsourcing, implementation services, consulting and business process outsourcing. Overall, the group has 10.5% market share of ICT business services in sub-Saharan Africa.
Business Connexion’s current footprint is successfully tapping into opportunities in growth markets beyond South Africa, including Mozambique, Zambia, Namibia, Tanzania, Kenya, Nigeria and Ghana. The African ICT industry is benefitting from steady growth in multiple sectors, driven by demand for infrastructure, natural resources and increased consumer spending.
During the year the group secured a significant contract for data centre services in Ghana and successfully renewed the services contract for the Umoja financial switch in Tanzania, which services banks in that country.
The group’s strategy to focus on selected industry vertical markets has paid off during the year, with a solid performance from the UCS division which focuses on the retail and supply chain vertical markets. The recent Gartner report further highlighted that the group also maintained its leading position in ICT services within the retail, insurance, manufacturing and natural resources verticals for sub-Saharan Africa.
OUR OFFERINGSWhile the group looks forward to the maturing of public cloud technology, the greatest demand is still for secure private cloud services. Business Connexion partnered with Rackspace, an acknowledged global leader in cloud technology, to provide a unique service option for the group’s clients who place the greatest emphasis on security.
With 27% market share, the group maintained its leading position in the South African data centre market according to the recent Frost and Sullivan industry analysis. During the year the board also approved the establishment of data centre services capabilities in both Kenya and Nigeria. Research indicates these markets represent strong growth potential.
Industry trends are pointing to a convergence of traditional IT services, telecoms, energy infrastructure and industrial automation. In line with this trend, the group acquired Quad Automation Proprietary Limited during the year. Business Connexion now has the largest talent pool of industrial solutions engineers as a key differentiator within the manufacturing and mining and natural resources vertical client bases.
Intergr8 IT Proprietary Limited is the most recent acquisition for the group and complements the infrastructure solutions and services that the group currently provides, specifically positioning us with targeted offerings for the mid-tier corporate market.
The group has a portfolio of specialised business units and services that include private on-premise and off-premise cloud services, public cloud services, virtualisation, storage, routing, switching, security, hosting, connectivity, internet services and disaster recovery. These services are further complemented by strong professional services capabilities.
The rationale is to create a complementary platform of services which can provide mature, cost-effective services to those mid-market corporates not historically serviced by Business Connexion. Broader benefits also include expected synergies on infrastructure and software sales through the group’s Technology division.
It is expected that Integr8’s IT offerings will enhance the group’s ability to win ICT-managed services market share in the public sector and in Africa, where there is a great demand for mature, yet cost-effective offerings.
Within the Innovation division’s portfolio, the group released its new eGovernment solution to complement its offerings to local authorities. This solution holds strong potential for the rest of the continent.
The potential of mobile technology as a significant driver of IT services for the foreseeable future is generally accepted. Business Connexion also developed a number of innovative mobile applications during the year, utilising its market leading position in the application development space
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latest BMI-T statistics.
On the human capital solutions front, the group’s white label payroll offering holds significant potential to service the growing demand for a cost-effective cloud offering. One of South Africa’s major banks now markets this solution to its clients under its own brand.
OUR ORGANISATIONThe Technology division was successfully repositioned following initiatives that included leadership changes, operating model refinements and vendor alignment.
These initiatives yielded the expected results, with the Technology division returning to profitability once again. The Technology division is core to Business Connexion’s strategic plans and its focus includes sourcing, solutioning and financing of selected technologies.
The group also revisited its client engagement functions and optimised the regional sales force structures during the year for a more co-ordinated approach with client relationships.
In line with the group’s strategic intent to expand across
the continent, the group continues to invest in building the
right sales and technical capacity within the organisation to
support these growth initiatives.
TALENTThe group constantly endeavours to be an organisation
which attracts, retains and develops great talent. Its strategic
initiative relating to talent seeks to unlock the true potential
of its people by creating a high performance culture which
empowers people to perform, recognises achievement and
celebrates innovation. Business Connexion trained
650 trainees though its internship programme over the past
five years. Of the 142 trainees in 2012, the group achieved an
internal employment rate exceeding 70%.
To date a further 101 leaders have participated in the
group’s new leadership development programmes.
Business Connexion continues to embrace diversity and
remains committed to creating an environment that
maximises the potential of the group’s employees.
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
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DIRECTORSBoard of
SOUND GOVERNANCE PRACTICES ARE ESSENTIAL TO EARNING THE TRUST OF STAKEHOLDERS
ANTHONY (TONY) RUITERS
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
BENJAMIN MOPHATLANE
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 of Business Connexion. 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
VANESSA OLVER
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 and was simultaneously appointed to the board.
Vanessa qualified as a chartered accountant by completing her articles at Deloitte & Touché. 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. (formerly CGNU 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, the Certified Public Accountants of Illinois, Chicago, USA as well as the Institute of Directors.
Appointed to the board on 1 August 2009
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LAWRENCE WEITZMAN
Chief financial officer
BCom (Hons) (University of Pretoria), CTA, CA(SA)
Lawrence has vast experience in finance, spanning well over 15 years, where he held several group financial management positions in the ICT and financial sectors.
He joined Business Connexion in February 2005 as a 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
JOHN JENKINS
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. Prior to taking on his current role, John served as group executive of the Services division for five years.
Appointed to the board on 31 August 2011
JENITHA JOHN
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
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DIRECTORSBoard of
continued
JOHN POLUTA
Independent non-executive director
BCom, BAcc (Wits), CA(SA)
John worked at Deloitte & Touche locally and in the USA. In 1998 he joined Barnard Jacobs Mellet as a research analyst, later moving to a senior analyst role at JP Morgan in Johannesburg and London. He is currently an executive director of Mowana Investments Proprietary Limited.
John is a member of the Audit and compliance committee.
Appointed to the board on 2 April 2009
NKENKE (NAT) KEKANA
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
MAMOROKE LEHOBYE
Independent non-executive director
BCom (UCT), HDAC (Wits), CA(SA)
Mamoroke serves on the audit
committee of the National Treasury.
Mamoroke serves on the group’s Audit
and compliance committee and she’s the
chairperson of the Remuneration and
nominations committee.
Mamoroke is a member of the following
professional bodies: the Institute
of Internal Auditors, the Institute of
Directors, and the South African Institute
of Chartered Accountants.
Appointed to the board on 1 May 2010
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DEAN SPARROW
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
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SOUND GOVERNANCE PRACTICES ARE ESSENTIAL TO EARNING THE TRUST OF STAKEHOLDERS
COmmITTEEExecutive
VANESSA OLVER
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 and was simultaneously appointed to the board.
Vanessa qualified as a chartered accountant by completing her articles at Deloitte & Touché. 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. (formerly CGNU 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 divisions offerings, vertical sector solutions and application development.
Vanessa is a member of the South African Institute of Chartered Accountants, the Certified Public Accountants of Illinois, Chicago, USA as well as the Institute of Directors.
Appointed to the Executive committee on
1 August 2009
LAWRENCE WEITZMAN
DATE OF BIRTH: 10 April 1969
QUALIFICATIONS: B Com (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 15 years, where he held several group financial management positions in the ICT and financial sectors.
He joined Business Connexion in February 2005 as a 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 Executive committee on
1 September 2011
BENJAMIN MOPHATLANE
DATE OF BIRTH: 12 May 1973
QUALIFICATIONS: B Com 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 of Business Connexion. 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 Executive committee on 2 February 2004
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IAN BRYAN
DATE OF BIRTH:14 May 1967
QUALIFICATIONS: BCom (Honours) (University of Natal), CA(SA)
DESIGNATION: Group executive: Canoa division
EXPERIENCE: Ian has extensive knowledge in managed print solutions, and in his current role at Business Connexion heads up the Canoa division responsible for all Canon-related business. His responsibility is to ensure that the proof of concepts that are underway in the Business Connexion client base are finalised and that the pipeline of potential clients continues to grow.
Appointed to the Executive committee on
1 September 2011
MATTHEW BLEWETT
DATE OF BIRTH: 8 December 1970
QUALIFICATIONS: B Com (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. As group executive: special projects, 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.
Appointed to the Executive committee on
1 September 2008
JOHN JENKINS
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. Prior to taking on his current role, John served as group executive of the Services division for five years.
Appointed to the Executive committee on
8 May 2007
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COmmITTEEExecutive
continued
THEMBA GUMBI
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.
Appointed to the Executive committee on
1 September 2011
GRACE DIPALE
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 16 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, Internet Solutions and UCS Solutions.
At Business Connexion, Grace leads the Human Resources Business Partnering, Human Capital Operations and Centre of Excellence teams. This group-wide executive role is prioritised by the group chief executive officer in recognition of the fundamental role that HR plays in talent management and the successful implementation of the employee value proposition in all operational divisions.
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.
Appointed to the Executive committee on
1 September 2011
JANE CANNY
DATE OF BIRTH: 3 May 1957
QUALIFICATIONS: Associate Member for the Institute of Chartered Secretaries & 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 various 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
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RODWELL ZVARAYI
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 a deep appreciation of doing business outside the borders of South Africa. 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.
Appointed to the Executive committee on
1 September 2010
DOUGLAS WOOLLEY
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 will play 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 on15 March 2012
ISAAC MOPHATLANE
DATE OF BIRTH: 12 May 1973
QUALIFICATIONS: Bachelor Degree (University of Pretoria)
DESIGNATION: Group executive: Innovation 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.
In his current role, Isaac provides leadership and directions in the Innovation division which houses the group’s own software and packaged intellectual property.
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.
Appointed to the Executive committee on
2 February 2004
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ChAIRmAN’Sreport
2012 PROVED TO BE A FRUITFUL YEAR AS THE FINANCIAL RESULTS STARTED TO SHOW THE BENEFITS FROM THE STRATEGIC PLANNING EFFORTS WE INITIATED IN 2008/2009. I STATED IN MY REPORT FOR THE 2008 YEAR THAT “… THE BOARD AND EXECUTIVE LEADERSHIP TOOK A DEEP INTROSPECTIVE LOOK AT WHAT NEEDED TO CHANGE WITHIN THE BUSINESS”. WE REVIEWED WHAT IT WOULD TAKE TO MAKE BUSINESS CONNEXION MORE RELEVANT TO OURSELVES, AS THE BOARD AND MANAGEMENT, AND OTHER STAKEHOLDERS (SHAREHOLDERS, CLIENTS AND STAFF). THIS INCLUDED POSITIONING THE GROUP SO THAT IT WOULD EVOLVE TO REMAIN RELEVANT IN AN EVER CHANGING ENVIRONMENT.
In 2009 the initial planning developed into a seven-year growth strategy and I reported in that year that “Our leadership team has defined a strategy for the business in conjunction with the board to focus on continued organic growth, complemented by strategic acquisitions of related businesses, which will make Business Connexion a dominant player in the ICT market in Africa”. This strategy has remained consistent in the main since then, although it has been refined through input from clients, staff, management and shareholders.
ELEMENTS OF OUR SEVEN-YEAR GROWTH STRATEGYThe seven-year growth strategy covered four main areas, namely:• Establishing the group as a convergence player with
capabilities in the distinct areas of content, printing, telecommunications and information technology.
• Focussing on specific vertical sectors and innovation.• Expanding into new markets and growing foreign
earnings.• Exploration and consideration of merger and acquisition
opportunities to complement our existing services portfolio and enhance our scale in high growth areas.
Further details of the growth strategy areas are included in the Chief executive officer’s report and the Strategy report on pages 26 to 29 and 12 to 13 respectively.
In developing and executing the strategy we incorporated the following elements:
LEADERSHIPThroughout the process it has been essential for the group to ensure that key leadership and shareholders understood the plan and bought into the strategies behind the plan. Critical to this process was an insistence by shareholders that the group get the correct leadership team in place to deliver the plan.
The group has continually evolved and, as I mentioned last year, some tough decisions were taken in certain underperforming business units.
We are now confident that – through a combination of management changes, new appointments and strong leaders that joined the group through the recent acquisitions – Business Connexion has built a strong and competent management team. This team, which includes the Executive committee and the other senior leaders, has the depth and breadth of skills needed to continue to execute on the group’s strategy and to grow the business further.
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EFFICIENCY AND ENHANCING DELIVERY TO CLIENTSThe strategy also required us to review the efficiency of our delivery and the relevance of our solutions. At the same time the group reviewed, together with input from clients, what it perceived was necessary for the future needs of our clients and potential new areas and markets to grow in.
To improve efficiency the group focussed inwardly on its structure and its costs. During the earlier years this focus lead to various changes to business units, delivering services to clients, outsourcing of certain non-core areas and consolidation of various functions to create economies of scale. It also set the group structure in place to allow for future acquisitions and their integration into the group.
At the same time efficiencies were implemented to enhance delivery to clients and processes removed if they reduced service delivery standards to clients.
ACqUISITIONThrough the acquisitions of the last two years the group has been able to bolster its business and strengthen its product offering to clients. The acquisitions also broadened the markets that the group served and allowed for vertical industry specialisation, expanded the product offering and strengthened the group’s depth of management. The group now has significant businesses servicing the retail and supply chain, mining, financial services, oil and gas and public sectors.
In particular, the acquisition of certain underlying subsidiaries of UCS Group Limited and 50% plus one share in the Canoa Group completed last year have proved very successful and now contribute significantly to the overall group results.
The agreement to purchase Integr8 IT, a leader of annuity based infrastructure management and managed services to the mid-market corporates throughout South Africa, will help the group expand into this growing market segment.
THE REST OF AFRICAThe group has identified that the rest of Africa is a key growth area, and building our capacity across Africa to better service our clients’ growing needs on the continent, remains a focus. The International division which includes our operations in Mozambique, Namibia, Nigeria, Tanzania, Zambia and Kenya as well as the groups UK operations is now profitable. With the group’s strong cloud based offering in South Africa and plans to develop data centres in Nigeria and Kenya, Business Connexion is in a unique position to deploy its infrastructure across Africa, thereby complying with in-country data protection laws that form a barrier to entry for many other players.
This expanded capacity in Africa has seen the group secure new business in both West and East Africa.
Both the acquisition strategy and expansion into the rest of Africa were needed to ensure that the group remained relevant to our clients who operate in South Africa and those that operate beyond the borders of South Africa. It has provided the group with the necessary scale and diversity. It has been particularly pleasing to see the return of certain work to Business Connexion where competitors have not been able to match the required needs, and service levels, demanded of them by clients. We believe that we are nearing the point where we have the capacity to service clients wherever they are.
INNOVATIONWhile the group continues to build its services related business it intends to enhance its offering in the Innovation division. The division improved its earnings during the year and the focus will be on new products, either solutions developed in-house or through acquisitions that enhance the group’s ability to provide essential new technology to meet clients’ needs as they evolve.
Tony RuitersIndependent non-executive chairman
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ChAIRmAN’Sreport continued
THE FOUNDATION WE HAVE BUILTBusiness Connexion has an established presence in Africa with:• the group being one of the largest ICT groups in
Southern Africa – South Africa, Namibia, Mozambique, Zambia and Botswana;
• a strong presence in East Africa – Tanzania, Kenya; and• an established presence in West Africa – Nigeria.
The group is the largest employer of ICT skills in Africa with:• over 6 500 ICT skilled people in its workforce;• a multi-disciplined skill set; and• vast experience in delivering large projects throughout
Africa.
A strong annuity base of revenue with:• long-term outsourcing and support contracts;• 56,8% of group revenue coming from annuity based
contracts; and• a robust blue-chip client base.
An African leader in cloud services offerings being:• a leader in the South African market for data centre
services with a 27% market share according to Frost and Sullivan, 2011;
• a Tier IV certified data centre with multiple data centres throughout South Africa and Tanzania; and
• plans to develop further data centres in Nigeria and Kenya.
Business Connexion is the largest IT outsourcer in sub-Saharan Africa with:• over 33 years of experience as a leading full-service ICT
outsourcer;• an outsourcing market share in sub-Saharan Africa
according to Gartner of 15%; and• large multi-term contracts with global clients across
multiple industries.
The group has market leading applications development skills with:• a strong application development team; • multi-platform and device development expertise; and• the highest market share in application development,
20% of the South African market according to BMI-T.
The group now has a large distributed ICT support services capability :• arising from the merger with UCS and Canoa. Business
Connexion has the largest ICT support services footprint with in excess of 1000 skilled engineers based in multiple locations across Africa.
The group has developed proprietary niche ICT solutions:• with its own IP solutions within the Innovation, Services
and UCS divisions, including payroll, human resources, municipal management, retail management and financial switching; and
• these solutions can be leveraged in the public sector throughout Africa.
The group has market dominance in key African industry verticals with:• a strategic focus on key industry verticals – wholesale
and retail, manufacturing and resources, mining and natural resources, public sector, petrochemical and financial services; and
• a major dominance of 28% market share in the sub-Saharan retail industry sector subsequent to the merger with UCS.
Some key strategic partners include:• exclusive partnerships with the likes of Canon and
Rackspace; and• strategic partnerships with companies like Argility, IBM,
Cisco, Microsoft, EMC, HP, SAP, Oracle, NorthgateArinso.
ACKNOWLEDGEMENTSFirstly, I would like to sincerely thank Benjamin for the clarity of thought and direction he has shown to the business, often in times of severe stress and challenges, over the last five years. Benjamin has certainly played a major role in the reshaping of Business Connexion into the group it is today.
LEADERSHIP The group’s executive and its other top leaders have worked tirelessly to reshape the business and I thank them for their efforts. As the group executed its strategic growth plan it inevitably threw up a number of leadership challenges. These challenges and the poor performance in some divisions over the period led us to take decisive action at times. However, the core group of leaders, together with excellent managers from companies we have acquired, have formed a cohesive and effective management team. I thank you all.
STAFFOur staff have again performed admirably in these challenging times. We will continue to invest in your development to allow you to continue to give our clients the superior “Business Connexion service” we are proud of. I personally thank you for all that you have done to make Business Connexion the great company it is and the even better company it aspires to be.
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CLIENTSOnce again the board acknowledges the support of our many loyal clients and we value clients who have returned to the group. While we are looking to expand into other markets our key strategic growth initiatives have, and will continue to be, carried out primarily with these loyal clients in mind. We hope that your businesses continue to grow and thrive.
As I mentioned last year Business Connexion touches the lives of many people across the African continent through, amongst other areas: retailer operating systems, internet content distribution, smaller and medium sized municipalities systems, bank transactions, share transactions, tax payments, printing solutions, document storage and many other IT related services. We aim to continue to do so as the business grows and the areas of technology expand.
SHAREHOLDERSOver a number of years key shareholders have often engaged with the board. I am truly appreciative of the constructive and invaluable input from shareholders that has helped to shape our group. The group would not be in the position it is today without your support.
Your ongoing support as owners will be key to us growing your company further. We look forward to ongoing interaction and continuing to learn from your collective wisdom.
BOARDTo my fellow board members a warm thank you for the advice and support you have given me and your active participation, often over challenging decisions and issues that we have had to deal with, particularly in the past years.
CHANGES TO THE BOARDWe were sorry to see Felleng Sekha resigning from the board on 19 January 2012 after her service as a board member, a member of the Remuneration and nominations committee, and the Risk, sustainability, social and ethics committee. Felleng was appointed as a partner at Brunswick Group LLP in August 2011 and subsequently indicated that, due to a conflict of interest with clients and possible future clients, she would have to step down from the Business Connexion board. I take this opportunity to thank Felleng for her valued contribution to the group.
IN CONCLUSIONThe group is now certainly in a much stronger position than it has been for some time. The group now:• is a robust business with the necessary scale and diversity
of revenue streams and clients across varied industries, sizes of client and geographies to better weather changing and challenging economic environments;
• has a core group of leaders within its top 100 or so managers to effectively lead the business into the future and provide the depth of skills, diversity and succession planning needed for a sustainable business. This leadership team has been complimented by strong leadership in the companies we acquired over the years;
• has a happy and content staff compliment who enjoy coming to work, shown by the excellent service given to our clients, and the group is attracting some of the best IT skills in Africa;
• is established across sub-Saharan Africa with sufficient scale to grow and to service our clients’ needs across the continent; and
• is an established corporate citizen with focus across financial, social and environmental issues enhancing the group’s sustainability.
We have a firm foundation and will continue to cautiously make strategic acquisitions that enhance scale and further diversify the group’s product offerings. Care will be taken that the group seeks to be at the forefront of appropriate new technology through innovation or acquisition to ensure we continue to deliver the best solutions for the needs of our clients in the ever changing environment.
Our strategy must ensure that we continue to improve our return on shareholders’ equity (ROE). While we intend to continue to grow the business it will be done in such a way that it remains earnings enhancing and not ROE dilutive over the medium term.
Tony RuitersIndependent non-executive chairman
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A RELENTLESS FOCUS ON OUR SEVEN-YEAR GROWTH STRATEGY, FIRST INTRODUCED IN 2009, WAS REWARDED WITH A FIRM RECOVERY ACROSS OUR BUSINESS IN SPITE OF CONTINUED CHALLENGING ECONOMIC TRADING CONDITIONS. THIS GROWTH STRATEGY INCLUDED DISTINCT CAPABILITIES WE WISHED TO ENTRENCH OR ESTABLISH, SECTORS TO SERVICE, INNOVATION, GROWTH IN NEW MARKETS AND OUR FOREIGN EARNINGS AND STRATEGIC MERGERS AND ACqUISITIONS TO COMPLEMENT OUR EXISTING SERVICES PORTFOLIO AND ENHANCE OUR SCALE IN HIGH GROWTH AREAS.
Our key financial metrics showed strong growth, a direct
result of the group’s seven-year growth strategy, and the
strategic acquisitions over the past two years that have
made significant contributions to the group’s results.
Importantly, the staff and operations of the acquired
companies have been fully integrated and Business
Connexion is functioning as a cohesive group in the market.
Last year, I expressed my confidence in the leadership
changes and I am happy to report that they have proved
effective with the turnaround seen in the Africa operations,
Innovation division and Technology division.
YOUR GROUPBusiness Connexion now employs more than 6 500
employees on the African continent. With revenue in excess
of R5,8 billion, the group is positioned as the largest listed
ICT services business in Africa. Business Connexion holds
the number one position in ICT outsourcing in sub-Saharan
Africa (Gartner 2011, March 2012) and is the leading South
African cloud-based services provider (Frost and Sullivan,
2011). Business Connexion was also recognised as the largest
application development company in South Africa with a
20% market share (BMI-T 2010, December 2011).
As a values driven and high performance organisation, the
group’s ability to attract, retain and develop talent is a key
differentiator in maintaining competitive advantage.
This financial year was another significant year with regards
to the group’s investment in people through our talent
management initiatives, succession planning, internship
programme and the launch of two new leadership
development programmes to enhance leadership
capabilities.
More than ever, African expansion presents a significant
opportunity for Business Connexion and accessing these
markets remains a key strategic focus. The continued
progress in Africa is pleasing with the group’s operations
across the continent maturing. This has translated into an
improved and less volatile financial performance with the
group taking market-leading positions in some key, high
growth African economies.
OPERATING RESULTSThe group generated diluted earnings per share (EPS)
of 37,2 cents for the financial year (2011: 27,6 cents)
and diluted headline EPS for the year of 38,8 cents
(2011: 17,2 cents). The group’s results, however, have been
complicated by the inclusion of earn-out payments, as a
result of good performances from companies acquired,
amortisation of intangibles and various transactional costs.
On a normalised basis (excluding these items mentioned
above) diluted headline EPS would be 54,3 cents
(2011: 44,0 cents).
Our return on equity (ROE) increased to 7,1% for 2012 from
4,3% in 2011. Tangible ROE increased from 7,5% to 13,8%,
ExECUTIVEChief
officer’s report
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which is closer to our target ROE. We understand that
increasing this ratio is key for the longer term sustainability
of the group and will, accordingly, continue to focus on
improving it.
Most of the divisions recorded improved performances:
• The Services division remains the largest contributor and
grew revenue by 9,7% for the year to R1 982,6 million.
• Last year the group invested R873,2 million in certain
underlying subsidiaries of UCS Group Limited and
50% plus one share in the Canoa Group. Both these
divisions exceeded their target earnings for the year.
The UCS division is now the second biggest division
and contributed revenue of R1 093,2 million with an
operating profit of R116,9 million. The Canoa division
contributed R860,5 million in revenue and R106,5
million in operating profit.
• It was particularly pleasing to see the refocused
Technology division returning to profitability in the
second half on slightly reduced revenue. The division’s
revenue remains muted as corporates are reluctant
to spend on infrastructure upgrades in the current
depressed economic conditions.
• The Innovation division increased revenue by 19,0%
to R496,5 million. This increase is attributed to QDD’s
restructure (as previously reported), the inclusion of
Accsys (the payroll business that formed part of the
acquired UCS subsidiaries) and Nanoteq’s improved
performance on the back of its international expansion.
• The International division showed strong growth of
26,8% and Africa is proving to be an area of good
growth potential. We have managed to secure some key
commitments and, on the back of this, we are setting up
data centres in Nigeria and Kenya.
The one area that disappointed, with results below our
expectations, was Content Distribution Solutions (CDS).
CDS delivers the group’s local and international connectivity
requirements, as well as enabling the delivery of Limelight
Networks content services in sub-Saharan Africa. Despite
this poor performance, CDS remains key to the group as an
enabler of our cloud strategy.
Further details on the group’s financial performance have
been set out in the Chief financial officer’s report on
pages 30 to 35.
SUSTAINABILITY AND TRANSFORMATION Business Connexion retained a level 3 B-BBEE rating during
the 2012 financial year.
The group’s transformation goals and scorecard cover
all aspects of transformation including ownership,
management control, employment equity, skills
development, preferential procurement, enterprise
development and corporate social investment. These issues
are covered in further detail in the Sustainability report on
pages 67 to 79.
The group continues to integrate sustainability into all
aspects of its business. Financial sustainability was enhanced
through the acquisition of the UCS subsidiaries and the
Canoa Group, and the changes to the management
structures during the last financial year and reported on
in my report in the 2011 integrated report. Environmental
sustainability remains a focus for the group with the group’s
efforts in this regard including reducing the number of
buildings it utilises thereby reducing its electricity and water
usage and ensuring its large data centres limit their impact
on the environment. Social sustainability is incorporated
within the group’s transformation initiatives as we believe it
is the most pressing area for ongoing growth of our country
as a whole.
Benjamin Mophatlane
Chief executive officer
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ExECUTIVEChief
officer’s reportcontinued
GROWTH STRATEGY I mentioned above that we set our growth strategy in 2009.
This strategy remains largely unchanged. Our ‘Connective
Intelligence’ vision is firmly centred on delivering a
complete set of managed services which meets the need
our clients have for efficient, low cost and high quality ICT.
The strategy focuses on four core areas:
• Establishing Business Connexion as a convergence player
with capabilities in the distinct areas of content, printing,
telecommunications and information technology.
Continued organic growth within the local market
through our existing services offering. Cloud computing
remains at the heart of the group’s services offering.
• Focusing on specific vertical sectors and innovation.
This strategy is working well and we now have
significant businesses servicing the retail and financial
services, mining and natural resources, petrochemical
manufacturing and public sectors.
• Expanding into new markets and growing foreign
earnings. The group has operations in Mozambique,
Namibia, Nigeria, Tanzania, Zambia and Kenya, where
the focus is on providing increasingly simple, content-
rich and affordable knowledge solutions. With our
growth across Africa we are now ready to develop data
centres in Nigeria and Kenya. Business Connexion is
busy rolling out the platform to launch its cloud-based
services offering throughout the rest of Africa. With a
significant share of the platform as a service market in
South Africa, it is poised to dominate this part of the
next IT revolution, as peers may still need to develop
and build their infrastructure. Business Connexion
is deploying this infrastructure across the continent
and can therefore comply with the in-country data
protection laws that form a barrier to entry for many
other players. Cloud services are changing the future
of IT, and Business Connexion is optimally positioned
with its consolidated approach to data centres, network
infrastructure and applications.
• Exploration and consideration of merger and acquisition
opportunities to complement our existing services
portfolio and enhance our scale in high growth areas.
I mentioned the success of this strategy and am pleased
with the ongoing growth and success of the acquisitions
made over the past two years. Post the year-end, Business
Connexion entered into an agreement to purchase
Integr8 IT Proprietary Limited (“Integr8 IT”), subject to
certain conditions. Further details follows in my report.
RECENT ACqUISITIONSThe two acquisitions made in 2011 have broadened the
group’s focus, contributed to improved profitability and
enhanced its ongoing sustainability.
To enhance the group’s penetration into the mid-market
corporates, the group has entered into a sale of shares,
repurchase and subscription agreement with Integr8 IT, in
terms of which it will purchase 100% of its issued
share capital.
Business Connexion’s current strategy around developing
the Connexion Zone is primarily focused on the enterprise
market. The acquisition of Integr8 IT enhances our
competitive advantage in the mid-market corporates,
creating a complementary platform of services and
broadens UCS Solutions’ historic retail-focused
infrastructure services.
Integr8 IT is one of the largest privately owned ICT
managed services companies. It was established in 2001
and is a leader of annuity-based infrastructure management
and managed services to the mid-market corporates
throughout South Africa. The company owns and operates
the Nerve CentreTM, a digital hub of people, technology
and process that regulates, monitors and maintains the
technology infrastructure for many leading corporations.
OUTLOOKThere is no doubt that our business is about scale and
diversity and I believe we have achieved both. Business
Connexion is benefiting from being a larger and more
diversified enterprise with an expanded client base.
Cross selling opportunities and synergies are contributing and
should continue to contribute positively to future results.
I believe that with the group’s growing African footprint,
broad client base, reputation and proven abilities, it is well
positioned to meet the challenges posed by the rapid
changes and consolidation in the ICT industry and take full
advantage of its market position.
In order to remain a trusted partner to our clients and
a responsible corporate citizen, we have and must
continue to tailor our services to the increasingly diverse
and sophisticated needs of our clients and adjust to the
ongoing changes and challenges of the communities and
environment in which we live and work.
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I said last year that it had become important to ensure that
the group optimises its structure to unlock the collective
strengths of the new enlarged group. We repositioned a
number of executives and made some key appointments
which have all proved successful and, together with their
committed teams, are well placed to continue growing the
business.
We have built a great breadth and depth of businesses,
revenue streams, skills and services across a diverse
geographic base. We also ended this year in the strongest
financial position that we have been in for the last eight years.
This sets a great platform from which to grow in the
years ahead.
APPRECIATIONWithin trying economic conditions, our people have
managed to do the very best for our clients with integrity,
ingenuity and persistence. Once again I thank you for your
effort and we look forward to your ongoing support.
Thank you to my Executive committee. The new team has
worked well together this year and I look forward to the
year ahead. Thank you to our chairman, Tony Ruiters, for his
leadership of the board and to my fellow directors for their
valuable guidance and business insight.
As always, in closing, I wish to thank our clients, suppliers
and shareholders for their continuing belief in, and support
of, Business Connexion.
Benjamin Mophatlane
Chief executive officer
30
BUSINESS CONNEXION HAS ENJOYED AN EXCELLENT YEAR IN WHAT HAS BEEN, AND CONTINUES TO BE, DIFFICULT ECONOMIC TRADING CONDITIONS.
Having successfully progressed in all the areas of the group’s
seven-year growth strategy, there is no doubt that the strong
growth in key financial measures has been a direct result of
this strategy.
It has been particularly pleasing to see the strategic
acquisitions we made over the past two years contribute
significantly to the group’s results.
FINANCIAL PERFORMANCEThe group continues to pursue its objectives of growing
sustainable earnings and in line with the trading statement
released on 25 October 2012, the group generated diluted
earnings per share (EPS) of 37,2 cents for the financial
year (2011: 27,6 cents) and diluted headline EPS for the
year of 38,8 cents (2011: 17,2 cents). On a normalised
basis (excluding earn-out payments for acquisitions and
amortisation of intangibles) diluted headline EPS would be
54,3 cents (2011: 44,0 cents).
On the back of the improved profitability, return on equity
increased to 7,1% (2011: 4,3%) and return on total assets
increased to 9,3% (2011: 5,3%). Tangible return on equity
was 13,8% (2011: 7,5%).
31 August 31 AugustR million 2012 2011
Revenue 5 829,6 4 314,2Cost of sales 3 996,1 2 979,1
Gross profit 1 833,5 1 335,1Gross profit margin (%) 31,5% 30,9%
Operating expenses 1 558,5 1 177,4
Operating profit 275,0 157,7Share of losses from
associates (0,5) (0,2)
Operating profit before
investment income 274,5 157,5Investment income 34,7 27,3
Profit before finance
costs 309,2 184,8Finance costs 27,5 18,1
Profit before tax 281,7 166,7Taxation 85,6 64,4Non-controlling interests 46,8 9,7
Profit attributable to
equity holders 149,3 92,6
Headline earnings 155,4 57,5
Revenue grew by 35,1% to R5 829,6 million for the
year, bolstered not only by the acquisitions of the UCS
subsidiaries and Canoa Group, but also from good growth
from the other divisions which collectively grew by 14,1%,
excluding the Technology division.
FINANCIALChief
officer’s report
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The group’s annuity revenue base remains intact with annuity revenue at 56,8% of total revenue.
The Services division’s revenue grew by 9,7% for the year to R1 982,6 million, compared to R1 806,9 million for the previous year. The growth in revenue is a consequence of the division’s dominant cloud services offering and its professional services business, specifically in the application development business which is developing innovative, fit for purpose services and solutions for clients. The Services division remains committed to developing unique and innovative solutions which will drive client business value.
The UCS division contributed R1 093,2 million to group revenue with an operating profit of R116,9 million while the Canoa division contributed R860,5 million in revenue and R106,5 million in operating profit. Both these performances are ahead of targeted forecasts on acquisition and demonstrate the synergistic benefits of the divisions within the group.
The refocus within the Technology division has generated positive results with the division returning to profitability and contributing R3,3 million to operating profit for the year. The division achieved an operating profit of R11,0 million in the second half of the year reflecting the ongoing improvement in earnings.
The Innovation division increased revenue by 19,0% to R496,5 million following the restructure previously reported in Q Data DynamiQue (QDD) and the inclusion of Accsys, the payroll business that formed part of the acquired UCS subsidiaries. All business units within the Innovation division have performed according to expectations with Q LINK continuing to perform in tough market conditions. Nanoteq’s improved performance is attributable to their international expansion.
The International division has seen revenue growth of 26,8% to R467,2 million for the year, demonstrating the exciting growth potential in Africa. With approved investments for setting up data centres in Nigeria and Kenya, the group is well positioned to extend its cloud service offerings to the rest of the African continent.
Business Connexion established Content Distribution Solutions (CDS) to deliver the group’s local and international connectivity requirements, as well as to enable the delivery of Limelight Networks content services in sub-Saharan Africa, the primary market being South Africa. Although the results are not what were expected, CDS enables Business Connexion’s cloud strategy. CDS is shown in the Investments division results.
Lawrence Weitzman
Chief financial officer
SEGMENTAL REVENUE ANALYSIS31 August
2012
31 August
2011R’000 % R’000 %
Services division 1 982,6 34,0 1 806,9 41,9UCS division 1 093,2 18,8 353,2 8,2Technology division 916,0 15,7 1 230,9 28,5Canoa division 860,5 14,8 136,1 3,2Innovation division 496,5 8,5 417,1 9,7International division 467,2 8,0 368,5 8,5Investment division 13,6 0,2 1,5 0,0
5 829,6 100,0 4 314,2 100,0
32
FINANCIALChief
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Gross profit margin improved to 31,5% for 2012, from
30,9% for 2011, mainly as a result of the higher margins
from the UCS and Canoa divisions, but also from improved
margins in the Services, Innovation and International
divisions.
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 acquisitions of the UCS subsidiaries
and Canoa Group) by 7,8% to R992,1 million for the year
(2011: R920,2 million).
The growth in revenue, improved margins and cost control
has resulted in strong growth in operating margin. Excluding
intangible asset amortisation, fair value adjustments and
event-related costs listed in the table below ,the normalised
operating profit margin grew from 4,3% in 2011 to 6,3%
in 2012.
2012 2011R’000 % R’000 %
Operating profit as reported 275,0 4,7 157,7 3,7Amortisation of intangible assets relating to
the UCS subsidiaries and Canoa Group 49,2 15,5Fair value adjustment on Canoa Group
earn-out payment 26,2Impairment of Hawkstone iSolutions 6,0 2,5Profit on sale of businesses (4,6) (74,3)Merger and acquisition costs 14,9 31,2Cost of restructuring 47,2Other 3,4 6,1
Normalised operating profit 370,1 6,3 185,9 4,3
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The key adjustments for 2012 listed in the table on page 32
comprise:
• Intangible assets created as a result of the acquisition
of the UCS subsidiaries and Canoa Group are amortised
over their useful lives, resulting in an amortisation charge
of R49,2 million for the year (2011: R15,5 million).
• Canoa Group exceeded their profit targets and as a result
Business Connexion was required to make an additional
earn-out payment of R26,2 million. In terms of IFRS 3,
this payment is deemed to be a fair value adjustment
of a liability and is recorded through the statement of
comprehensive income. A further earn-out payment
of R26,2 million will be made in 2013 contingent on
the profit target for the year ended 31 August 2013
being achieved.
• Business Connexion also impaired its remaining
investment in its associate, Hawkstone iSolutions
Proprietary Limited.
FINANCE COSTSFinance costs increased to R27,5 million on the back of
the R250,0 million term debt facility that was put in place
during the previous year.
TAXATIONThe effective tax rate for the group was 30,4% for the year.
The big movements in the group’s tax charge were primarily
as a result of the over provision 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 R16,2 million on the special dividend paid in
January 2012.
STATEMENT OF FINANCIAL POSITION31 August 31 August
2012
R’000
2011
R’000
Property, plant and
equipment 442,0 453,9Goodwill and intangibles 930,2 934,0Other non-current assets 306,0 273,9Current assets (excluding
cash) 1 493,4 1 502,7Cash and cash equivalents 443,9 518,3
Total assets 3 615,5 3 682,8
Shareholders’ equity 2 105,7 2 144,6Non-controlling interests 95,8 48,5Non-current liabilities 237,7 319,5Current liabilities 1 176,3 1 170,2
Total equity and liabilities 3 615,5 3 682,8
Key elements of the statement of financial position include
the following:
PROPERTY, PLANT AND EqUIPMENTAdditions to fixed assets and software were mainly in
the data centre environment to meet existing and future
capacity demands from clients.
34
FINANCIALChief
officer’s reportcontinued
GOODWILL AND INTANGIBLESGoodwill increased by R16,5 million following the
acquisition of Quad Automation Proprietary Limited,
effective 1 April 2012.
The increase in goodwill was partially offset by the
impairment of goodwill relating to SiloFX Enterprise
Integrators (“Silo FX”) of R4,9 million. Business Connexion is
impairing the goodwill created on SiloFX over three years as
its contracts come to an end after this period.
Amortisation of the intangible assets created through the
acquisition of the UCS subsidiaries and Canoa Group in the
previous financial year of R390,0 million and R204,7 million
respectively, amounted to R49,2 million for the year.
WORKING CAPITAL MANAGEMENTWorking capital management remains a key focus area
within the group and has reduced quite substantially as a
result of the ongoing focus.
Key movements in working capital include:
InventoryThe group’s investment in inventory increased mainly from
the Canoa division as it is in the final stages of delivering on
a large new managed print solutions contract.
Trade receivablesThe group has made good progress in collecting debts from
local municipalities. Average debtor days on the whole
book dropped to 54,6 days from 65,5 days in 2011.
The profile of trade receivables was as follows:
Other working capital balances remained at similar levels
to 2011.
CASH FLOWSThe group continues to generate strong cash flows from
operations, which increased from R258,5 million to
R520,8 million.
Capital expenditure, dividends and tax payments were the
main contributors to the cash outflows.
Before the payment of the special dividend, the group
generated R85,0 million in cash for the year.
31 August 31 August2012
R’000
2011
R’000
Operating cash flows 520,8 258,5Working capital changes (30,5) 162,9Capital expenditure (205,6) (252,5)Acquisition of subsidiaries (10,8) (250,0)Proceeds on sale of
investments 192,0Other financing activities (56,9) 188,7Other 25,2 (9,8)
242,2 289,8Taxation paid (101,4) (59,3)Dividend paid – ordinary (55,8) (71,0)
Increase in cash before
special dividend 85,0 159,5Dividend paid – special (159,4)
(Decrease)/increase in cash (74,4) 159,5
0
200
400
600
800
1 000
TRADE RECEIVABLES
May 08 Aug 09 Aug 10 Aug 11 Aug 12
>60 days
31 – 60 days
1 – 30 days
Current
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CORPORATE ACTIVITY In November 2012 Business Connexion entered into a sale
of shares, repurchase and subscription agreement with
Integr8 IT Proprietary Limited (“Integr8 IT”), in terms of
which it will purchase 100% of the issued share capital of
Integr8 IT.
Integr8 IT is one of the largest privately owned ICT-
managed services companies.
The consideration payable by Business Connexion is up to
R126,0 million in cash, and will be settled through an initial
payment of R56,0 million payable on the closing date and
three potential earn-out payments of up to a maximum of
R70,0 million payable on 15 October 2013, 15 October
2014 and 15 October 2015. Shareholders should refer
to the Chief executive officer’s report on pages 26 to 29
for further detail.
DIVIDENDSBusiness Connexion 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 increased its dividend per share by 42,9% to
20,0 cents per share from 14,0 cents per share in the
previous financial year. This represents a 3,9% dividend yield
based on Business Connexion’s 30-day volume weighted
average share price.
OUTLOOK FOR 2013With the scale of operation that has been built over
the last couple of years, the group is well placed to
weather the challenging economic environment and
continue its growth in its existing markets. In addition, the
acquisition of Integr8 IT offers an exciting new market for
the group in infrastructure management and managed
services to the mid-market corporates throughout
South Africa.
The group will look to ways of further enhancing its
return on shareholders’ equity and will be considering the
possibility of share buy-backs at an opportune time, subject
to shareholder approval.
CONCLUSIONI take this opportunity to thank shareholders and
investment analysts for their continued support. I also
extend my thanks to the shared services team for their
ongoing contribution.
Lawrence Weitzman
Chief financial officer
36
SEVEN-YEARGroup
history31 August 31 August 31 August 31 August 31 August 31 May 31 May 31 May
2012 2012 2011 2010 2009 2008 2007 2006 5 yr CAGR 12 months 12 months 12 months 15 months 12 months 12 months 12 months
% Actual Actual Actual Actual Actual Actual Actual
Statement of comprehensive incomeRevenue 9,1 5 829 644 4 314 181 4 059 979 5 496 127 4 118 534 3 551 125 3 207 679 Cost of sales 7,2 3 996 112 2 979 118 2 899 924 4 036 713 3 030 566 2 536 463 2 229 381
Gross profit 1 833 532 1 335 063 1 160 055 1 459 414 1 087 968 1 014 662 978 298 Operating expenses 14,0 1 558 507 1 177 391 962 767 1 326 811 923 972 846 486 816 228
Operating profit 13,8 275 025 157 672 197 288 132 603 163 996 168 176 162 070 Share of losses from associates 495 217 2 231 Net investment income 7 211 9 253 27 098 52 369 48 889 33 343 21 942
Profit before tax 7,3 281 741 166 708 222 155 184 972 212 885 201 519 184 012 Taxation 85 618 64 400 76 087 80 256 84 811 34 232 46 040 Non-controlling interest 46 806 9 721 22 821 2 216 13 373 30 397 21 649
Attributable profit 6,8 149 317 92 587 123 247 106 932 114 701 136 890 116 323
Depreciation 152 297 119 384 87 473 121 731 81 907 75 997 48 707 Amortisation 84 627 43 569 25 394 28 191 22 665 35 975 21 854
EBITDA 511 949 320 625 310 155 282 525 268 568 280 148 232 631 EBITDA % 8,8% 7,4% 7,6% 5,1% 6,5% 7,9% 7,3%OP% 4,7% 3,7% 4,9% 2,4% 4,0% 4,7% 5,1%
Statement of financial positionNon-current assets: other 6,7 949 076 895 130 696 429 717 627 733 296 564 527 500 367 Non-current assets: intangible assets 47,5 729 108 766 666 145 575 145 575 154 093 112 505 113 505 Current assets excluding cash and cash equivalents 6,4 1 493 459 1 502 749 1 256 265 1 141 320 1 165 034 1 046 786 1 032 514 Cash and cash equivalents (4,1) 443 930 518 308 358 823 333 431 524 272 585 843 743 307
Total assets 8,8 3 615 573 3 682 853 2 457 092 2 337 953 2 576 695 2 309 661 2 389 693
Total equity 9,7 2 201 585 2 193 044 1 550 643 1 418 393 1 526 813 1 460 006 1 317 159 Non-current liabilities 19,1 237 685 319 526 40 760 41 321 117 970 157 021 155 365 Current liabilities 5,8 1 176 303 1 170 283 865 689 878 239 931 912 692 634 917 169
Total equity and liabilities 23,1 3 615 573 3 682 853 2 457 092 2 337 953 1 576 695 2 309 661 2 389 693
Working CapitalInventories 197 901 178 939 138 172 189 579 110 162 95 144 49 596 Trade receivables 971 334 970 084 771 394 686 274 840 243 746 851 544 573 Trade payables (425 323) (457 128) (318 250) (231 249) (349 627) (311 035) (217 584) Other receivables 239 034 250 604 242 282 166 676 118 865 110 745 106 307 Other payables (647 565) (622 384) (478 965) (564 775) (491 861) (337 982) (468 852)
335 381 320 115 354 633 246 505 227 782 303 723 14 040
Financial ratiosReturn on total equity 7,1% 4,3% 8,0% 6,8% 7,5% 6,7% 8,6%Return on total assets 9,3% 5,3% 10,4% 7,4% 8,9% 10,5% 10,7%Equity to total liabilities 155,7% 147,2% 171,1% 154,2% 145,4% 171,8% 122,8%Gross profit margin 31,5% 30,9% 28,6% 26,6% 26,4% 28,6% 30,5%Operating profit margin 4,7% 3,7% 4,9% 2,4% 4,0% 4,7% 5,1%Average debtor’s days 54,6 65,5 58,6 57,3 63,5 59,7 55,4 Net asset value per share (cents) 520,0 529,6 508,4 540,1 581,3 555,9 501,5 Tangible net asset value per share (cents) 339,9 336,4 460,1 483,6 520,8 511,4 452,7
Share PerformanceWeighted average number of shares (000) 398 550 331 689 260 854 257 300 254 806 251 601 247 867 Diluted weighted average number of shares (000) 401 097 335 172 307 636 261 082 259 577 260 327 260 758 Basic earnings per share (cents) 37,5 27,9 47,2 41,6 45,0 54,4 46,9 Diluted earnings per share (cents) 37,2 27,6 40,1 41,0 44,2 52,6 44,6Headline earnings per share (cents) 39,0 17,3 47,6 37,5 45,1 38,8 45,6Diluted headline earnings per share (cents) 38,8 17,2 40,3 36,9 44,3 37,5 43,3Shares in issue at period end (000) 404 972 404 972 303 729 262 637 262 637 262 637 262 637 “A” shares in issue (000) 100 133 100 133 75 100 Share price – ordinary (cents) 485 520 552 450 535 760 830Share price – “A” shares (cents) 71 70Normal dividend per share (cents) 14 23 18 18 15 15 20Special dividend per share (cents) 40 60 17
for periods ended 31 August and 31 May
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31 August 31 August 31 August 31 August 31 August 31 May 31 May 31 May2012 2012 2011 2010 2009 2008 2007 2006
5 yr CAGR 12 months 12 months 12 months 15 months 12 months 12 months 12 months% Actual Actual Actual Actual Actual Actual Actual
Statement of comprehensive incomeRevenue 9,1 5 829 644 4 314 181 4 059 979 5 496 127 4 118 534 3 551 125 3 207 679 Cost of sales 7,2 3 996 112 2 979 118 2 899 924 4 036 713 3 030 566 2 536 463 2 229 381
Gross profit 1 833 532 1 335 063 1 160 055 1 459 414 1 087 968 1 014 662 978 298 Operating expenses 14,0 1 558 507 1 177 391 962 767 1 326 811 923 972 846 486 816 228
Operating profit 13,8 275 025 157 672 197 288 132 603 163 996 168 176 162 070 Share of losses from associates 495 217 2 231 Net investment income 7 211 9 253 27 098 52 369 48 889 33 343 21 942
Profit before tax 7,3 281 741 166 708 222 155 184 972 212 885 201 519 184 012 Taxation 85 618 64 400 76 087 80 256 84 811 34 232 46 040 Non-controlling interest 46 806 9 721 22 821 2 216 13 373 30 397 21 649
Attributable profit 6,8 149 317 92 587 123 247 106 932 114 701 136 890 116 323
Depreciation 152 297 119 384 87 473 121 731 81 907 75 997 48 707 Amortisation 84 627 43 569 25 394 28 191 22 665 35 975 21 854
EBITDA 511 949 320 625 310 155 282 525 268 568 280 148 232 631 EBITDA % 8,8% 7,4% 7,6% 5,1% 6,5% 7,9% 7,3%OP% 4,7% 3,7% 4,9% 2,4% 4,0% 4,7% 5,1%
Statement of financial positionNon-current assets: other 6,7 949 076 895 130 696 429 717 627 733 296 564 527 500 367 Non-current assets: intangible assets 47,5 729 108 766 666 145 575 145 575 154 093 112 505 113 505 Current assets excluding cash and cash equivalents 6,4 1 493 459 1 502 749 1 256 265 1 141 320 1 165 034 1 046 786 1 032 514 Cash and cash equivalents (4,1) 443 930 518 308 358 823 333 431 524 272 585 843 743 307
Total assets 8,8 3 615 573 3 682 853 2 457 092 2 337 953 2 576 695 2 309 661 2 389 693
Total equity 9,7 2 201 585 2 193 044 1 550 643 1 418 393 1 526 813 1 460 006 1 317 159 Non-current liabilities 19,1 237 685 319 526 40 760 41 321 117 970 157 021 155 365 Current liabilities 5,8 1 176 303 1 170 283 865 689 878 239 931 912 692 634 917 169
Total equity and liabilities 23,1 3 615 573 3 682 853 2 457 092 2 337 953 1 576 695 2 309 661 2 389 693
Working CapitalInventories 197 901 178 939 138 172 189 579 110 162 95 144 49 596 Trade receivables 971 334 970 084 771 394 686 274 840 243 746 851 544 573 Trade payables (425 323) (457 128) (318 250) (231 249) (349 627) (311 035) (217 584) Other receivables 239 034 250 604 242 282 166 676 118 865 110 745 106 307 Other payables (647 565) (622 384) (478 965) (564 775) (491 861) (337 982) (468 852)
335 381 320 115 354 633 246 505 227 782 303 723 14 040
Financial ratiosReturn on total equity 7,1% 4,3% 8,0% 6,8% 7,5% 6,7% 8,6%Return on total assets 9,3% 5,3% 10,4% 7,4% 8,9% 10,5% 10,7%Equity to total liabilities 155,7% 147,2% 171,1% 154,2% 145,4% 171,8% 122,8%Gross profit margin 31,5% 30,9% 28,6% 26,6% 26,4% 28,6% 30,5%Operating profit margin 4,7% 3,7% 4,9% 2,4% 4,0% 4,7% 5,1%Average debtor’s days 54,6 65,5 58,6 57,3 63,5 59,7 55,4 Net asset value per share (cents) 520,0 529,6 508,4 540,1 581,3 555,9 501,5 Tangible net asset value per share (cents) 339,9 336,4 460,1 483,6 520,8 511,4 452,7
Share PerformanceWeighted average number of shares (000) 398 550 331 689 260 854 257 300 254 806 251 601 247 867 Diluted weighted average number of shares (000) 401 097 335 172 307 636 261 082 259 577 260 327 260 758 Basic earnings per share (cents) 37,5 27,9 47,2 41,6 45,0 54,4 46,9 Diluted earnings per share (cents) 37,2 27,6 40,1 41,0 44,2 52,6 44,6Headline earnings per share (cents) 39,0 17,3 47,6 37,5 45,1 38,8 45,6Diluted headline earnings per share (cents) 38,8 17,2 40,3 36,9 44,3 37,5 43,3Shares in issue at period end (000) 404 972 404 972 303 729 262 637 262 637 262 637 262 637 “A” shares in issue (000) 100 133 100 133 75 100 Share price – ordinary (cents) 485 520 552 450 535 760 830Share price – “A” shares (cents) 71 70Normal dividend per share (cents) 14 23 18 18 15 15 20Special dividend per share (cents) 40 60 17
38
31 August 31 August2012 2011
Notes R’000 % R’000 %
Revenue 5 829 644 4 314 181 Cost of services and products 3 184 854 2 039 655
Value added 2 644 790 99,7 2 274 526 98,8Investment income 34 695 1,3 27 329 1,2Fair value adjustment (26 185) (1,0)
Total wealth created 2 653 300 100 2 301 855 100
Distributed as follows:Employees– Employees costs 1 2 257 668 85,1 1 972 401 85,7Providers of capital– Financial costs 27 484 1,0 18 076 0,8Governments 2 170 768 6,4 157 047 6,8Retained in the group for future growth 197 380 7,4 154 331 6,7
– Depreciation and amortisation 236 924 8,9 162 953 7,0– Profit attributable to equity holders 149 317 5,6 92 587 4,0– Dividend paid (215 215) (8,1) (69 253) (3,0)– Foreign currency translation reserve 5 894 0,2 (252) 0,0– Deferred tax movement 20 460 0,8 (31 704) (1,3)
Total wealth distributed 2 653 300 100,0 2 301 855 100,0
Value-added ratiosAverage number of employees 6 548 6 453 Revenue per employee (R’000) 890 669 Wealth created per employee (R’000) 405 357
VALUE-ADDEDstatement
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31 August 31 August2012 2011
Notes R’000 R’000
1. Employee costsPaid to employees 2 124 067 1 782 749 Contributions paid on behalf of employees 133 601 189 652
2 257 668 1 972 401
2. GovernmentsTax 105 505 85 241 Skills development levies 15 123 15 259 Rates and taxes paid to local authorities 4 603 1 289 Customs duties, import surcharges and excise taxes 45 537 55 257
170 768 157 047
South African government 161 655 149 567 Other governments 9 114 7 480
170 768 157 047
3. Additional amounts collected on behalf of governmentsValue added tax 372 446 302 460 Employee tax deducted from remuneration paid 498 490 420 130
870 936 722 591
South African government 832 558 693 780 Other governments 38 378 28 810
870 936 722 591
Donations and community investments 4 858 4 164
COMMENTARYTotal revenue for the 12 months ended 31 August 2012 amounted to R5 829,6 million. The cost of sold services and products
amounted to R3 184,9 million. After interest income and the fair value adjustment relating to the acquisition of Canoa Group
Holdings, wealth created amounted to R2 653,3 million. This created wealth was distributed to employees in the form of
salaries amounting to R2 257,7 million, interest on borrowed funds of R27,5 million and taxes paid to governments-
of R170,8 million.
The balance of R197,4 million has been reinvested in the business for future growth.
40
SERVICESOperational review
division
Revenue
R1 982,6 mILLION34,0% OF GROUP REVENUE
34,0%
The Business Connexion Services division offers a full range
of ICT infrastructure services. The majority of these service
offerings are delivered from the most technologically
advanced, and reliable, data centres in Africa.
The Services division has continued to be successful
in renewing outsourcing contracts, extending existing
contracts and acquiring new clients. The division’s
regional footprint has expanded with new business in the
industrial sector.
The division has a diverse skills base as its foundation.
Further to this, the specialists within the division have
the flexibility to design services specific to client
requirements or, if appropriate, to provide traditional
ICT outsource services. The resultant benefit to
the client is an enhanced level of business performance,
enriched information application, and flexible information
technology which together talks to Connective
Intelligence. Creating value for our clients is at the heart
of Business Connexion’s overall strategy and winning the
2012 South African Client Value Enhancement Award
from Frost & Sullivan is testament that we are achieving this
strategic business intent.
The division has maintained the Tier IV status for the
Midrand data centre verifying that it is fully compliant with
the most up-to-date international design guidelines and
best practice for high availability. In 2011, the data centre
operations were awarded the Frost & Sullivan Market Share
Leader award which reflects the group owning 27% of the
South African data centre market compared to 23% in the
previous year and with the nearest competitors at 16% and
15% respectively.
Although the mobile data revolution is still in its infancy,
every day more people are getting connected to access
information, communicate and collaborate in the Internet
economy. Companies such as Google and Apple, together
with mobile network operators and content providers,
are fuelling the revolution to capitalise on this enormous
potential. The application development team has capability
31 August
2012
R’million
31 August
2011
R’million
Growth
%
% of
total
Revenue R1 982,6 R1 806,9 9,7 34,0Operating profit R219,3 R177,2 23,8 79,7Operating margin 11,1% 9,8%
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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 client’s business and have helped to
modernise their application portfolios to take advantage of
new technologies. These unique integrated solutions help
clients build systems that enable them to enhance, and
grow, their business. According to BMI-TechKnowledge’s
SA IT Services Market Sizing and Forecast 2010 – 2015,
Business Connexion has 20% market share in application
development. The group’s expertise was further recognised
when it was awarded best android application at the MTN
Awards for its Dealer Guide Application.
The mobility phenomenon offers huge benefits for
end users and organisations but requires specialised
management. The division’s cloud-based Mobile Device
Management solution provides comprehensive information
security services and secure content management.
The security division was awarded the Symantec Partner
and the Symantec Commercial Partner of the year for 2012.
Business Connexion provides secure, intelligent
communications solutions for voice, data and video,
facilitating flexible high-performance interactions.
Furthermore, the group has a portfolio of services
which include international, national and metro-
ethernet connectivity services and cloud based web
infrastructure which allows for web applications and
content management and video and acceleration services
bundled with interactive advertising as well as monetisation
solutions. This offering enables our clients to tap into the
power of now-the business can now be mobilised to
collaborate with others in a real-time information exchange,
and to transform collective computing power into business
knowledge.
With the acquisition of Quad Automation, the Services
division has increased its capabilities in industrial solutions
offerings. Business Connexion now has the largest pool of
industrial solutions engineers amongst its competitors and
peer system integrators. This acquisition, together with the
accreditation by Eskom as an Energy Services Company
(ESCO), has positioned the division for future growth in all
sectors by facilitating the reduction in energy consumption.
For further details on the services offered by the Services
division refer to the Corporate profile on pages 4 to 7.
42
Revenue
R1 093,2 mILLION18,8% OF GROUP REVENUE
18,8%
UCSOperational review
division
Effective 11 May 2011 Business Connexion Group acquired
the following subsidiaries from UCS Group Limited
(now Capital Eye Proprietary Limited):
• UCS Solutions Proprietary Limited
• UCS Technology Services Proprietary Limited
• CEB Maintenance Africa Proprietary Limited
These subsidiaries have been successfully integrated into
Business Connexion to maximise synergies that existed
between the divisions and companies resulting in the
creation of the UCS division as a provider of:
• end user devise support services;
• in-store IT maintenance services, specialising in point
of sale (POS) systems for the retail industry;
• ERP, Switching and In-Store application support;
• infrastructure managed services;
• retail business consulting, and
• training.
Business Connexion, through its UCS and Services divisions
is the dominant IT Services player in the retail industry
sector in sub-Saharan Africa.
The division has an extensive services and product
offering with an experienced leadership team within the
South African retail industry. Its established track record
supports 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 Technology Services focuses on the in-store part
of retail, providing all services required to install, operate
and support IT elements required in stores. It is a value
added reseller of point-of-sale software targeted at the fuel,
clothing, pharmaceutical, building supplies, cellular, FMCG
and furniture retail verticals.
UCS Solutions provides managed services and business
consulting services, with a significant portion of its business
focused on the Tier 1 and Tier 2 retailers. UCS Solutions has
historically positioned itself strongly with partners SAP, UCS
Technology Services, HCL-Axon, JDA, Internet Solutions,
IBM and others.
31 August
2012
R’million
31 August
2011*
R’million
Growth
%
% of
total
Revenue R1 093,2 R353,2 >100 18,8Operating profit R116,9 R40,9 >100 42,5Operating margin 10,7% 11,6%
* Results for 4 months
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A sale of shares transaction was entered into transferring
a 30% ownership interest in the business from Business
Connexion to the management of UCS Solutions so as to
secure key talent retention and enhance future profitability
of the business.
CEB Maintenance is South Africa’s largest specialist point
of sale maintenance service provider and is well-positioned
in this competitive market having high service levels and
economical pricing. Its day-to-day point of sale support
service includes certified repair workshops, warehousing,
project management and point of sale equipment research
and development.
Business Connexion Learning Solutions provides
learning consulting services, SAP training material
development and end-user training, utilising various
learning approaches. 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 an SAP education partner.
Globally, the retail industry has been significantly impacted
by the economic slowdown. South African retailers
proved resilient compared to their global counterparts,
however, economic forecast continue to look to reduced
growth. With an increase in retail competition, retailers are
acknowledging the competitive differentiation that stable
technology and mature retail processes bring placing
Business Connexion at an advantage.
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. 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 will focus research into the African
market to enable growth opportunities. In addition, on-
going research will focus on identifying new POS solution
offerings so as to remain “best-of-breed” and retain market
dominance.
44
Revenue
R916,0 mILLION15,7% OF GROUP REVENUE
15,7%
TEChNOLOGYOperational review
division
The Technology division delivers innovative technological
solutions to both private enterprise and the public sector.
The refocus within the Technology division during
the review period has generated positive results with
the division returning to profitability and contributing
R3,3 million to operating profit for the year. The division
achieved an operating profit of R11,0 million for the
six months to 31 August 2012 reflecting the on-going
improvement in earnings.
The refocus of the division was directed at three core
responsibilities:
• Sourcing
• Solutioning
• Financing
Sourcing is the ability to establish relationships with the
principals of leading technologies at 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, EMC, 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.
The division is aligning itself 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 Technology 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 move increasingly
towards a services-based model as software and hardware
products become more commoditised and services provide
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 and Financing 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 August
2012
R’million
31 August
2011
R’million
Growth
%
% of
total
Revenue R916,0 R1 230,9 (25,6) 15,7Operating profit R3,3 (R9,0) >100 1,2Operating margin 0,4% (0,7%)
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Revenue
R860,5 mILLION14,8% OF GROUP REVENUE
14,8%
CANOA Operational review
division
Business Connexion’s acquisition of the Canoa Group
helped the group to fulfil its strategy on establishing it as
a convergence player with capabilities in the previously
distinct areas of content, printing, telecommunications and
information technology.
The division operates in a highly competitive price sensitive
environment. Traditionally the division’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.
The South African landscape continues to show growth
opportunities, however, 80% of this market opportunity is
very price sensitive.
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 in South Africa. These services
are predominately performed over a 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 Canoa Group 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.
31 August
2012
R’million
31 August
2011*
R’million
Growth
%
% of
total
Revenue R860,5 R136,1 >100 14,8Operating profit R106,5 R18,0 >100 38,7Operating margin 12,4% 13,2%
* Results for 3 months only
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Revenue
R496,5 mILLION8,5% OF GROUP REVENUE
8,5%
INNOVATIONOperational review
division
With business and ICT together developing at a lightning pace, the Innovation division focuses on taking the group and its solutions into the future. The primary activities of the Innovation division are centered on software or packaged intellectual property.
The Innovation division comprises six business units:• Accsys• LARA• Nanoteq• Persal• Q Data DynamiQue• Q LINK
The Innovation division increased revenue by 19,0% to R496,5 million following the restructure previously reported in Q Data Dynamique (QDD) and the inclusion of Accsys, the payroll business that formed part of the acquired UCS subsidiaries. All business units within the division performed according to expectations.
Q LINK continues to perform despite tough market conditions. The team successfully diversified its industry presence to offset the downward market trends in the insurance industry, and thus maintain growth.
Nanoteq’s improved performance is attributable to its international expansion. Furthermore, the group sold a 25% share of its equity holding in Nanoteq, effective 1 March 2012, to management in an effort to secure key skills within the business and enhance future business profitability.
During the previous reporting period QDD acquired the external payroll division from First National Bank (FNB). Immediately, Business Connexion became a reputable payroll outsource service provider with over 400 clients. The “Payroll as a Service” offering is now available in the market with FNB actively promoting a white labelled version of the solution as part of its electronic business banking suite.
Accsys, in recognition of the role it is playing in the development of women has been awarded the Top Gender Empowered Companies: Business, Education and Training Award, from Topco Media.
LARA remains the largest player in local government with a total market share of 27% with offerings in financial management and related systems. The roll out of SOLAR is a key initiative and is being well received in the market. Debt collection from the municipalities has improved significantly which has contributed positively to the group’s accounts receivable profile with a drop in group collection days to 54,6 days at 31 August 2012 (2011: 65,5 days).
Persal remains entrenched in 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 solution offerings.
The Innovation division’s strategy is clearly defined and the division is well positioned to take full advantage of revenue opportunities as government departments free up allocated budgets and the International division opens new opportunities as it expands the group’s African footprint.
31 August
2012
R’million
31 August
2011
R’million
Growth
%
% of
total
Revenue R496,5 R417,1 19,0 8,5Operating profit R67,6 R20,0 >100 24,6Operating margin 13,6% 4,8%
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Revenue
R13,6 mILLION0,0% OF GROUP REVENUE
0,0%
INVESTmENTOperational review
division
By way of the Investment division, Business Connexion
continues to make itself relevant in the market place
through its investment in emerging technologies and its
investment in entities that will complement its existing
service offerings.
The Investment division currently houses Business
Connexion Content Distribution Solutions Proprietary
Limited (CDS). CDS was established to deliver the group’s
local and international connectivity requirements,
as well as enable the delivery of Limelight Networks
content services in sub-Saharan Africa, the primary market
being South Africa. Although the financial results for the
period under review are not what were expected, CDS
remains an important enabler of the group’s cloud services
strategy.
31 August
2012
R’million
31 August
2011
R’million
Growth
%
% of
total
Revenue R13,6 R1,5 >100,0 0,2Operating profit (R28,3) R0,2 >100,0 <0,0Operating margin <0,0% 13,3%
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Revenue
R467,2 mILLION8,0% OF GROUP REVENUE
8,0%
INTERNATIONALOperational review
division
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*
# Nigeria
* 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 the African countries where it does not have a
presence.
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
in Nigeria has grown from R66,2 million to R126,8 million
(91,5%) with corresponding operating profit growth
from a loss of R2,2 million to a profit of R9,7 million.
The appointment of a new managing director with a keen
focus on existing client engagements, building opportunity
pipelines and instilling discipline within the company’s
operations have enabled the company to capitalise on
opportunities the Nigerian market offers. In addition, the
company has retained its Cisco Gold Certification.
Business Connexion Namibia and Business Connexion
United Kingdom (UK) are both stable entities.
A deputy managing director has been appointed
in Namibia to add depth to the management team.
Namibia continues to be profitable in a saturated ICT
market. The UK business, however, has been set back
significantly by the European economic crisis. Significant
steps have been taken to continually identify cost saving
opportunities for the UK market and the business has taken
steps to make itself more visible to the market by relocating
its sales force to London’s central business district.
Business Connexion Zambia experienced a challenging
business environment in 2012 due to national elections and
a change of government in the first half of the year.
31 August
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R’million
31 August
2011
R’million
Growth
%
% of
total
Revenue R467,2 R368,5 26,8 8,0Operating profit R11,7 (R7,8) >100 4,3Operating margin 2,5% (2,1%)
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Despite these challenges the company remains a strong
participant in the market with good contracts in the public,
mining and private sector. Following the national elections
the political risk profile has reduced. The business is now
focusing on growing its service revenue base using the
group’s own intellectual property housed in the Innovation
division.
Business Connexion Tanzania has positioned itself as
the only Payment System Infrastructure Service Provider
in Tanzania with a secure and growing annuity revenue
base. The Umoja ATM switch now has 23 banks with
161 ATMs registered. Business Connexion Tanzania’s data
centre services are also 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 Economic
Community where local governments are encouraging
foreign investment through government incentive policies.
BCX Kenya, although not showing revenue returns yet,
has invested in building client relationships and conducting
feasibility studies in support of the group’s data centre
investment in the East Africa region.
A key focus for Business Connexion Mozambique
has been to stabilise 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 investment in skills and increased footprint in response
to economic growth continue to be key focus areas.
Although the African penetration has been considered slow,
the past two years have shown a significant turnaround
in the International division from returning operating losses
to making a profit in the current year. The International
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.
50
GOVERNANCECorporate
reportINTRODUCTIONAs an ethical values-based, listed and proudly South African
black empowered ICT company, Business Connexion
group’s compliance and governance initiatives are driven by
more than mere minimum requirement, but rather the firm
belief that out operations depend on being a responsible
corporate citizen.
Governance in Business Connexion extends beyond
legislative and regulatory compliance. Management
strives to engender an enterprise-wide culture of good
governance linked to the group’s business philosophy
which incorporates its vision and values. The group’s
values and philosophies are the framework against which
it measures behaviour and practices so as to assess the
characteristics of good governance. 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. Sound corporate governance is implicit in the values,
culture, processes, functions and organisational structure.
Business Connexion is driven by its desire to always operate
as a responsible corporate citizen and recognises that an
ethical culture underpins corporate governance. Business
Connexion 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 Business Connexion vision
of becoming a major international player.
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 South Africa, 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 the group and its
operations and therefore the board, each business division
and every employee is responsible for acting in accordance
with sound corporate governance practices and to act in
the best interest of the group. The introduction of the King
III report emphasised the need for the board of directors to
lead the enterprise with integrity and according to generally
accepted best practices 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 to encourage an ethical trading environment.
In its governance approach, 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 also seeks to ensure
that good governance is practised at all levels in the group
and that it is an integral part of Business Connexion’s daily
operations. Corporate governance requires effective and
responsible leadership to ensure that the company is run
ethically, in a transparent and accountable manner and that
it is the expression of the group’s values and standards.
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 are 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.
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The group went through a King III assessment in
conjunction with PWC, the group’s internal auditors, during
November 2009, and continually conducts detailed self-
assessments by using the Institure of Directors Governance
Assessment Instrument. This process enables the group to
identify the gaps and the mechanisms required to address
them.
All the outstanding matters identified in the gap analysis
were allocated to stakeholders within the group and
feedback is provided to the board at each meeting and
remains work in progress. Major progress has been made
in terms of the governance of information technology
through the ICT steering committee with the board being
sufficiently involved in the IT strategy and updated regularly
on governance. All acquisitions and disposals of IT goods
and services are reported to the ICT steering committee.
The board is committed to full compliance with the
Companies Act of South Africa 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 Risk, sustainability, social and ethics committee
ensures compliance with section 76 of the Companies
Act of South Africa and was included for the first time in
the agenda at the meeting held on 14 June 2011.
• At the AGM of 19 January 2012, the required special
resolution was approved by shareholders to enable
Business Connexion to provide financial assistance to
subsidiary companies.
• The group memorandum of incorporation is in the
process of being revised and all South African subsidiary
companies’ memoranda of incorporation will be
amended, aiming to have all harmonised by
April 2013.
GOVERNANCE DEVELOPMENTS FOR THE PERIOD UNDER REVIEWThe governance process is reviewed continually and
enhanced to align with internal developments and to
ensure continual adherence to legislation and best practice.
During the period, the key governance developments were
as follows:
• Felleng Sekha retired at the AGM of 19 January 2012.
• 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 2012 JSE’s SRI
Index.
• Business Connexion was awarded the Nkonki Top
100 Integrated Reporting accolade in the Technology
Sector at a ceremony held in Johannesburg. The Nkonki
Top 100 Integrated Reporting Awards honoured the
best Integrated Reports from the Top 100 JSE-Listed
companies and those listed on the SRI Index between
31 December 2010 and 30 November 2011.
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. In subsidiary companies in the group, the
roles of chairperson and managing director do not vest in
the same person.
The board consists of six non-executive directors and four
executive directors. Four of the non-executive directors
are considered independent in terms of the King definition
whilst Nkenke Kekana is part of Gadlex Holdings Proprietary
Limited, Business Connexion’s empowerment partner and
is therefore not deemed as independent. Dean Sparrow
is also not deemed 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.
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Considerable thought is given to board balance and
composition and collectively the board believes that the
current mix of skill, knowledge and experience meets
the present requirement to lead the company effectively.
However, this is continually reviewed in light of the strategic
objective and the vision of becoming a major international
player. The qualifications and experience of the
independent non-executive directors combined with the
fact that they have no material contractual relationship with
the group ensures that their judgement can be exercised
independently.
None of the non-executive directors has a director’s service
contract. Executive directors are full-time employees and
as such are subject to Business Connexion’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.
The directors bring a balanced mix of attributes to the
board, including:
• domestic and international experience;
• operational experience, including ICT;
• financial, legal and entrepreneurial skills; and
• expertise in risk management and internal financial
control.
The length of tenure of the directors on the Business
Connexion board is reflected in the graph below.
No directors have served for longer than nine years.
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 directors
retire by rotation annually in terms of the company’s
memorandum of incorporation (MOI). They are eligible
for re-election at the annual general meeting (AGM).
In addition, 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 chief executive officer 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.
Ongoing education and new director inductionOngoing board education remains a focus. The 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 is
to be conducted by the board in accordance with the
principles of good corporate governance and sets out
GOVERNANCECorporate
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1
2
3
4
5
LENGTH OF TENTURE
1 – 2
3 – 4
5 – 6
6+
Number of directors
Year
s
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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 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 directors’ fees and
process;
• orientation of new directors;
• formal evaluation of directors performance; and
• board meetings and procedures.
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 board meets with the Executive committee annually
to agree on the proposed group strategy and to assess
progress to the set strategy as well as to consider long-
term issues facing Business Connexion. The 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.
Strategy planningAs a key performance area of the board, group strategy is
mapped by the board in consultation with the Executive
committee of the group. 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. Financial performance is
monitored through quarterly management reports.
Board meetingsThe board meets regularly, 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 on page 54 of
this report. Where directors are unable to attend a meeting
personally, video- and teleconferencing facilities are made
available to include them in the proceedings and allow
them to participate in the decision-making process.
The board meets at least four times per annum to
consider business philosophy and strategic issues, to
approve financial results and budgets, and monitor the
implementation of delegated responsibilities. At each
meeting, feedback from its committees is provided.
The board is supplied with all relevant information and
information needs are well defined and non-executive
directors have full access to management and the company
secretary. Specific issues which arise between board
meetings are dealt with via electronic communication and
where decisions are taken these are recorded by written
resolution requiring signature by all directors to be valid.
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Directors are afforded the opportunity to propose additional matters for discussion at board meetings. Board meetings are
scheduled well in advance. Board documentation is provided to directors in a timely manner. The board agenda and meeting
structure is focused on strategy and performance monitoring, governance and related matters. This ensures that the board’s
time and energy is appropriately applied.
Non-executive directors have access to management and may meet separately with management without the attendance
of executive directors. Directors are kept appropriately informed of key developments affecting the group between board
meetings.
Meeting attendance including board sub-committees
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 5/6 6/6 – 4/4NN Kekana 3/6 – – 4/4M Lehobye 6/6 2/6 5/5 –LB Mophatlane 6/6 – – –V Olver 6/6 – – –JM Poluta 6/6 5/6 – –AC Ruiters 6/6 – 5/5 4/4FL Sekha* 1/1 – 1/2 –D Sparrow 6/6 – 5/5 –J Jenkins 6/6 – – –LN Weitzman 6/6 – – –
* Retired at AGM held on 19 January 2012
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 board meeting
and these minutes are available for inspection to the
external auditors. The chairman of the board also has a
one-on-one discussion with each non-executive 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.
The board evaluation process inter alia covers the following
key areas:
• board structure and composition;
• board processes and accountabilities;
• board committees;
• performance by the chairman of the board;
• performance by the company secretary;
• strategy and financial matters (performance against
strategic objectives set);
• relationship with stakeholders; and
• group structure, succession planning, management and
remuneration.
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 page 162.
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The board/individual director performance evaluation
assesses the following:
• 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;
• review of key risk areas and key performance indicators;
• monitoring of the group’s compliance with all relevant
legislation and codes of business practice;
• monitoring of the procedures to ensure the group
maintains an effective system of internal control and risk
management; and
• reviews the group’s communications with its key
stakeholders.
Individual director performance is assessed against the
following criteria:
• time and availability;
• competence and commitment to performing the
function of a Business Connexion director;
• strategic thought and specific skills, knowledge and
experience brought to the board;
• the director’s views on key issues and challenges facing
the group;
• the director’s views on his/her own performance as a
board member;
• attendance over the past year; and
• 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 2013/2014 financial year are reflected in
the notice of the AGM on page 164.
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 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 164 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 committee meetings are
submitted to the group board for noting. In addition,
written summaries of key issues and decisions taken at
committee meetings are tabled at each board meeting, and
committee chairmen also provide the board with a verbal
report on recent committee activities. Board committees
are free to take independent outside professional advice
as and when deemed necessary. The office of the group
secretary provides secretarial services for each of the board-
appointed committees.
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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.
AUDIT AND COMPLIANCE COMMITTEE Members: Jenitha John (chairperson), Mamoroke Lehobye
and John Poluta. 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
chairman, attends meetings on occasion. The board resolved
that Dean Sparrow attend the committee meetings due to his
knowledge and expertise. He is not a committee member as
he does not fulfil the defined independence requirements.
Composition and meeting procedures: The chairperson
and the members of the committee are all independent
directors. The appointment of the members of the
committee are also submitted to shareholders for approval
and forms part of the notice and proxy for AGM purposes
as contained on page 161 of this report. Meetings are
held at least four times per year and are attended by the
external and internal auditors, the chief executive officer,
deputy chief executive officer, chief financial officer, group
chief audit executive and, on invitation, members of
executive management. 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 committee,
which ensures that their independence is in
no way impaired. Internal and external audit have met with the committee without management being present during the financial year.
Oversight function of the Audit and compliance committee: The committee 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.
The competence, suitability, skills and independence 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 are the group’s three lines of control defence overlaid by the group’s corporate governance framework. The three lines of defence model seek to separate the relevant duties and ensure independent reporting lines to underpin effective internal control and risk management.
Internal financial controls are in place to ensure the integrity of the group’s qualitative and quantitative financial information, which is used by a variety of stakeholders. 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.
The group annually submits all non-audit fees to the committee for review and approval. This is done to ensure
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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 committee reviews financial information to be
published by the group. In addition, the content of the
integrated report was reviewed by the committee and
recommended to the board. The committee receives
assurance on material issues from the external auditors.
The committee has also been mandated, in accordance
with King III, 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.
REMUNERATION AND NOMINATIONS COMMITTEE (RENCO)Members: Mamoroke Lehobye (chairperson), Tony Ruiters
and Dean Sparrow.
Composition and meeting procedures: The ReNCo
comprises non-executive directors of Business Connexion
and is chaired by an independent director. The chief
executive officer, the executive responsible for human
resources, and the chief financial officer attend the meetings
by invitation, but recuse themselves from discussions and
decisions regarding their remuneration and benefits. Four
meetings are held annually.
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 87 to 95.
RISK, SUSTAINABILITY, SOCIAL AND ETHICS COMMITTEEMembers: Nkenke Kekana (chairman), Jenitha John and
Tony Ruiters.
Composition and meeting procedures: Meetings are held
at least four times per year and are attended by the chief
executive officer, chief financial officer, chief audit executive
and, on invitation, members of executive management.
Oversight function the Risk, sustainability, social and
ethics committe: The board is ultimately responsible
for risk and capital management. The main purpose of
the Risk, sustainability, social and ethics committee 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 management
report on pages 63 to 66. During the year a Board Risk
Assessment workshop was held where the board identified
risk pertaining to the group from a board perspective. These
identified risks will be aligned with the risks as identified by
group Executive committee and business units.
The Risk, sustainability, social and ethics committee is
constituted as a sub-committee of the board of directors of
Business Connexion. The committee comprises of at least
three non-executive directors. Members of this committee
and its chairman are nominated by the board. At least one
member of the Audit and compliance committee 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
management report on pages 63 to 66.
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• Sustainability and 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 summary 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 67 to 79.
• Health, Safety, Environmental and Community
matters – To ensure the effectiveness of Business
Connexion’s policies and systems for identifying and
managing material health, safety, environmental and
community matters. The committee will review the
effectiveness of 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 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 of the group as
it relates to South African legislative requirements, and
to ensure that the group complies with any legislative
requirements in the countries in which it operates in
terms of indigenisation targets.
• IT governance – To ensure that the group’s ICT 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 Audit and compliance
committee.
• 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 to 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 –
(a) 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 -
(aa) promotion of equality, prevention of unfair
discrimination and reduction of corruption;
(bb) contribution to development of the
communities in which its activities are
predominately conducted or within which
its products or services are predominately
marketed; and
(cc) record of sponsorship, 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.
(v) Labour and employment including
(aa) the group’s standing in terms of the
International Labour Organisation Protocol
on decent work and working conditions; and
(bb) the group’s employment relationships, and
its contribution towards the educational
development of its employees;
(b) To draw matters within its mandate to the attention
of the board as occasion requires.
(c) To report, through one of its members, to the
shareholders at the group’s AGM on the matters
within its mandate.
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EXECUTIVE DIRECTORS AND THE GROUP EXECUTIVE COMMITTEEThere 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. Refer to the Remuneration report
on pages 87 to 95.
The board appoints executive management, taking into
account the recommendations of the chief executive officer
and the ReNCo. In addition, the ReNCo determines the
remuneration and benefits of executive management.
The Executive committee, chaired by the chief executive
officer, comprises the group’s four executive directors and
eight members of the executive management. 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. The committee held 9 meetings during
the year, as well as a two-day strategic planning meeting
with the board.
The board has delegated specific authorities to the chief
executive officer. The Executive committee members are
responsible for specific areas related to the business model
of Business Connexion.
As a general rule, members of the Executive committee 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 chief
executive officer 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 chief executive officer in determining the board and
board sub-committee agendas, as well as formulating
governance and board-related issues.
At a board meeting held on 30 August 2012, 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 Johan 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.
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:
• the period from the end of the interim and annual
reporting periods to the announcement of the interim
and annual results; or
• any period when they are aware of any negotiations or
details which may affect the share price; or
• 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.
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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 chief executive offider, deputy chief executive
officer and chief financial officer are designated investor
spokespersons and meet regularly with shareholders and
analysts.
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
make meaningful assessments and informed investment
decisions about the group. In addition, management
regularly meet with major institutional investors and
analysts. The board acknowledges that the integrated
annual report should disclose the nature and outcome
of dealing 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 comprehensible 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 need for full, equal and timely
disclosure to all shareholders, as prescribed by the Listings
Requirements and guidelines of the JSE. Apart from annual
and interim reports, it uses a broad range
of communication channels, including SENS, the print,
radio and television media and the Business Connexion
website, www.bcx.co.za, to achieve this.
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 meeting. Chairmen of the board
committees and the lead audit partner of the external
auditors of the company are required to attend annual
and general meetings of the company to answer questions
raised by shareholders. Explanatory notes setting out the
effects of all proposed resolutions accompany the notice of
meeting. Shareholders’ meetings are conducted on the basis
of a poll. The group proposes a separate resolution on each
substantially separate issue and does not bundle resolutions
together inappropriately. All resolutions are determined
on a poll. The results of shareholders’ meetings are posted
on SENS. Shareholders have access to the minutes of
such meetings in accordance with the stipulations of the
Companies Act.
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 annual reports and other
relevant information are posted on the group’s website at
www.bcx.co.za.
GOVERNANCECorporate
reportcontinued
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COmPLIANCEAudit and
reportThe audit and compliance committee has the pleasure
of presenting its report for the group for the year ended
31 August 2012.
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 with its terms of reference. The members act
independently and are listed below:
• Jenitha John (chairperson)
• John Poluta
• Mamoroke Lehobye
• Dean Sparrow (attendee)
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 2012 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
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COmPLIANCEAudit and
reportaccordingly 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 to the chief financial officer.
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 63 to 66 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
5 years) in accordance with the relevant legal and regulatory
requirements. The auditors, as well as the individual
designated auditor, are re-appointed annually for the
forthcoming year at the annual general meeting.
Fees paid to the auditors are disclosed in note 23 on
page 127.
APPROPRIATENESS AND EXPERTISE OF THE CHIEF FINANCIAL OFFICER AND FINANCE FUNCTIONThe Audit and compliance committee, at a meeting held
on 13 August 2012, 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
continued
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mANAGEmENTRisk
BUSINESS CONNEXION IS COMMITTED TO CONDUCTING BUSINESS EMPLOYING 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 has adopted an integrated risk management framework which includes the following areas:• Corporate governance and business ethics• Business process management• Environmental risk management• 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 50 to 60, the Audit and compliance report on pages 61 to 62, this Risk management report and Sustainability report on pages 67 to 79.
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 deployed within Business
Connexion are based on the following guides and standards
as best practices:
• 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’s codes of good
practice.
• The Committee of the Sponsoring Organisations of the
Treadway Commission (COSO) and its Enterprise Risk
Management Framework.
• AS/NZS 4360 Risk Management Standard.
• ISO 31000:2009 Risk Management – Principles and
guidelines.
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Defining the risksRisks are defined within each business unit and at a strategic level. These are done through the conduct ofrisks assessments and as a result of internal audits.
1
Risks are based on their potential impact on the business (strategic, financial, market, political, country, environmental, operational, client relations, human resources, supplier relations and corporate governance). A classification of 1 is seen as insignificant and 5 as very significant.
2 Assessing the impact of the risks on the company should they occur
Risks are assessed based on their potential likelihood of occurring. A classification of 1 is seen as insignificant and 5 as very significant.
3 Assessing the likelihood of the risks occurring
The classification of risks is completed by logging the risks and the impact and likelihood values into Barnowl (the group’s risk management tool).
4 Classifying the risks
Once the risks have been logged and the required risk owners identified the monitoring process commences by the inclusion of the mitigation plan and the required actions associated to the plan. The reporting of the risks are completed quarterly to the board through the Risk, sustainability, social and ethics committee.
5Monitoring andreporting on risks
The risk management process is based on a 5 step approach:
mANAGEmENTRisk
continued
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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 quarterly 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 to identify
risk. Firstly, risks that impact on the group (strategic or
group risks) are identified and secondly, risks that impact on
divisions (operational level) or project risks are identified.
These risks are then consolidated into a total list which is
categorised into eleven risk categories:
• Strategic
• Financial
• Market
• Political
• Country
• Environmental
• Operational
• Client relations
• Human resources
• Supplier relations
• Corporate governance
Each category has been assigned a risk owner (group
Executive committee member) who is responsible for
reviewing the risks and implementing action plans to
address the risks.
RISK APPETITE The group takes on a level of risk in line with its risk appetite
and risk tolerance levels as determined by the board.
All risks that fall outside the risk appetite or risk tolerance
levels are addressed immediately or escalated by the
Risk, sustainability, social and ethics committee to 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,
analyse and evaluate strategic risks. The same process is
used to identify operational risks within the divisions.
The risk assessment workshops involve the identification
of risks followed by their ranking, evaluation, formulation
of mitigation strategies and action plans.
RISK REPORTING Risk reports to the various stakeholders are prepared and
distributed as follows:
• BarnOwl Risk reports published monthly on the Business
Connexion workzone;
• quarterly report to the Risk, sustainability, social and
ethics committee; and
• a quarterly report to the Audit and compliance
committee.
Objectives Process/Management Action
Risks
Controls
Residual risk – after the assessment of controls
Inherent risk – before the assessment of controls
Inherent Residual
Risk management evaluation process
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INTERNAL AUDITThe group acknowledges the importance of an independent
strategically aligned internal audit function to assist the
Audit and compliance committee in discharging its
responsibilities. The internal audit function is independent
of all other organisational functions, reports directly to
the committee 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 Audit and compliance committee.
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 effect 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 has been appointed as 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 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
• 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.
mANAGEmENTRisk
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SUSTAINAbILITYreport
INTRODUCTIONThe group continues to be committed to conducting
its business in a manner that ensures the long-
term sustainability of the business for the benefit of
its employees, its suppliers, its 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
our environmental impact and generating good returns to
shareholders. Good governance, sound risk management,
stakeholder engagement and the group’s corporate social
investment all form part of Business Connexion’s vision to
be a leading ICT player.
The group’s sustainability objectives remain unchanged and
it is on track to meet these objectives. Business Connexion
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’s 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.
Business Connexion embarked on 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 initiatives 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.
ENVIRONMENTAL IMPACTAs an ICT services group, the group’s impact on the
environment is minimal. It contributes positively to a
cleaner environment and seeks new opportunities to
preserve the environment. The group contributes towards
environmental protection through the installation of
movement sensors located throughout its offices which
detect movement and turn the lights on when an area is
used. This drastically reduces overall electricity consumption
which ultimately contributes towards resource conservation
which forms a large part of environmental protection.
A risk management process is utilised in conjunction with its
health and safety system to determine the impact of risk to
the environment based on waste management, paper and
ASSURANCE THROUGH LONG-TERM SUSTAINABLE BUSINESS PRACTICE
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paper product usage (including recycled paper for printing
wherever possible), energy and water usage management.
It is a King III requirement for all companies to measure,
plan and reduce their carbon footprints and the
group is proud to be part of an initiative that believes
in a sustainable and environmentally sound e-waste
management system for the country.
EN 3 – Direct energy consumption by primary energy sourceIn 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.
The common definition for e-waste is anything that runs on
electricity. Therefore e-waste includes:
• ICT equipment (computers and peripherals).
• consumer electronics (mobile phones and
entertainment electronics);
• small and large household appliances; and
• less obvious items such as spent fluorescent tubes,
batteries and discarded battery-operated toys.
The group has identified its impact in relation to the ICT
environmental carbon footprint and has initiated plans to
manage and control its footprint.
The total national kW/h for the current financial year
that could be sourced from the information at hand was
24 393 924 kWh (2011:10 826 461) which, according
to the Heritage Eco Calculator represents, an equivalent
CO2 footprint or greenhouse gas impact of 24 393 924 kg
(2011:10 826 461 kg). These measures are not comparable
with the prior financial year due to the acquisition of the
UCS subsidiaries and Canoa Group.
The Energy Efficiency Journey
Active energyefficiencyaudits
Measure• MetersUse energy moreintelligently
BUSINESS CONNEXIONINDUSTRIALSOLUTIONS
Monitor• Maintain• Improve
• Electrical bill monitoring• Fix the basics • Use energy efficient lights• Add Insulation
Passive energyefficiencyaudits
Business Connexion
SUSTAINAbILITYreport continued
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EN5 – Energy saved due to conservation and efficiency improvementsThe diagram below reflects Business Connexion’s journey to
improve efficiency and thus save energy.
EN 22 – Total weight of waste by type and disposal methodData for the current reporting period shows that 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
380 407 kg (2011: 309 430 kg). This negative footprint is
offset by the waste disposed through composting, recycling
and reuse which amounts to a positive 103 288 kg
(2011: 110 649 kg). The resultant net emissions amount
to 277 119 kg (2011: 198 781 kg) for the current
reporting period.
Business Connexion remains an Eskom-approved Energy
Services Company (ESCO) with strong operational
principals, methodologies and processes and through
the group’s industrial solutions entity, Quad Automation,
it holds strategic relationships with some of the strongest
global brands.
ORGANISATIONAL INTEGRITY AND ETHICSBusiness 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
• finders’ fees within the legal governance framework.
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 35 calls were made to the tip-off line of which 33 were either the wrong number or dropped calls. Of the two calls recorded, 1 incident was investigated and no irregularities could be found.
An employee, client, supplier, manager or shareholder can report dishonesty, fraud and inappropriate activities in Business Connexion in a safe, confidential and secure manner to Tip-offs Anonymous at the following.• www.bcxto.co.za• email – [email protected]• free call – 0800 003 316• free fax – 0800 007 788• free post – KZN 138, Umhlanga Rocks, 4320
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 GROWTHIn order to grow business profitability and sustainability, the group has to focus not only on maintaining margins but improving on them at the operating profit level. Margin growth will be achieved through on-going 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 the acquisition of the UCS subsidiaries, Canoa Group and, most recently, Integr8 IT.
The group continues to focus on its statement of financial position to increase return on equity. Business Connexion is considering the potential of a share buy back in an effort to improve the group’s return on equity.
Refer to the Chief financial officer’s report on pages 30 to 35 for further details on the group’s financial performance and focus on achieving improved profit margins in the medium term.
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SUSTAINAbILITYreport continued
BUSINESS PROCESS MANAGEMENTThe purpose of business process management in support of
the enterprise objectives is to be the enabler of excellence.
This is achieved through:
• policy and process design;
• policy and process implementation;
• policy and process sustainability;
• policy and process improvement; and
• change management.
Through the implementation, monitoring and
improvements of Business Connexion’s business process,
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 the evolution of technology are
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
adopted internal standards 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.
HUMAN CAPITALBusiness Connexion has a total of 6548 (2011:6453) employees of which 6271 (96%) 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 its key differentiator in maintaining its 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.
RecruitmentThe 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. Where possible suitable recruitment suppliers within the various African countries were utilised.
E-recruitment, recruitment automation and strategic resourcing are the key strategic initiatives which Human Resources will be focusing on in the future.
Training and development2012 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.
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In excess of R21 million (2011: R12,4 million) was spent
on training for the reporting period. Training interventions
include end-user computer 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 650
information technology interns. For the period under
review the group trained 143 interns and placed 72% in
permanent positions. Of these interns 80% are black and
38% 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 or
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 relationsAn 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;
• 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 safetyAll 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
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.
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SUSTAINAbILITYreport continued
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.
Business Connexion implements a health and safety system
in compliance with the requirements of the Occupational
Health and Safety Assessment Series (OHSAS) 18001
standard which refers to the requirements of a behavioural
based safety management system to ensure that employee
behaviour drives improvement and the risk identification
of hazards.
The group has successfully maintained its International
Register of Certified Auditors (IRCA) rating for health
and safety management on two of its client sites and is
implementing this management system throughout
the group.
21 (2011: 20) injuries were reported for the period
September 2011 to August 2012. 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 R 96 346.33.
The Average Recordable Case Rate (RCR) for the period
is 0.4624.
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Health and Safety Incident Statistics for period 01 September 2011 – 31 August 2012:
Injury types Breakdown Causes for incidents Near misses
Total Total Total Total
Amputation 0 Number of fatalities 0 Unsafe acts 15 Near hit incidents 17Concussion/internal
injuries
2 Number of lost work
days
55 Unsafe conditions 6 Damage 0
Fractures 1 Number of
recordable cases
21
Laceration or open
wounds
9
Sprain/strain 9Burns 0
Total 21
Recordable Case Rate per month for the period
Month
Average number
of hours
per month
Number of
Incidents Constant
RCR calculation
for period
September 11 200 3 200 000 0.7909October 11 200 1 200 000 0.2636November 11 200 1 200 000 0.2642December 11 200 0 200 000 0.0000January 12 200 3 200 000 0.7934February 12 200 2 200 000 0.5290March 12 200 2 200 000 0.5290April 12 200 3 200 000 0.7928May 12 200 1 200 000 0.2643June 12 200 2 200 000 0.5285July 12 200 2 200 000 0.5285August 12 200 1 200 000 0.2643
Total 21
Constant man-hour rate 200 000Average total employees 6 548Average man-hours worked per year 2 400
A health and safety management system, in compliance to 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.
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SUSTAINAbILITYreport continued
Human rightsThe 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 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 workplaceThe 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;
• 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.
TRANSFORMATION: SOCIO-ECONOMIC SUSTAINABILITYBusiness 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 Executive committee 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, and
• Communicate to employees on transformation
processes and progress.
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The National transformation committee comprises of
members appointed by the chief executive officer from time
to time. The chief executive officer appoints the chairman
of the National transformation committee. Pillar owners
are members of the National transformation committee
responsible for driving pillar programs and strategies. Any
other member may be co-opted from time to time.
B-BBEE scorecardAs reflected in the scorecard alongside, Business Connexion
retained a level 3 B-BBEE rating following an external rating
and verification process conducted in December 2011.
The Business Connexion scorecard improved in 2012,
scoring 19.08 and 9.50 in the ownership and management
control elements respectively. This improvement is
attributable to Business Connexion’s commitment to
diversity and transformation.
Available
Externally
verified
Externally
verifiedpoints BCG BCG
DTI
Targets
Score –
2012
Score –
2011
Equity ownership 20 19,08 17,74Management control 11 9,50 7,71Employment equity 18 4,18 5,84Skills development 18 4,92 4,1Preferential
procurement 20 18,36 19,71Enterprise
development 15 15 15Socio-economic
development 5 5 5
Total score 107 76,03 75,1
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SUSTAINAbILITYreport continued
Seven-point frameworkIn line with the generic B-BBEE scorecard, the transformation programme of the group is based on a seven-point framework
structured as follows:
1. Equity ownershipBusiness Connexion recognises the importance of all
the elements of B-BBEE, especially equity ownership.
In line with legislation the board considers equity
ownership 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% and 45% of the board and Executive committee
respectively.
3. Employment equityBusiness Connexion embraces diversity as reflected by
a 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 organisation 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 company-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, and
• 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
The Energy Efficiency Journey
Active energyefficiencyaudits
Measure• MetersUse energy moreintelligently
BUSINESS CONNEXIONINDUSTRIALSOLUTIONS
Monitor• Maintain• Improve
• Electrical bill monitoring• Fix the basics • Use energy efficient lights• Add Insulation
Passive energyefficiencyaudits
Business Connexion
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Employment equity statistical profile
ACI W F
Occupational Levels
2012
%
2011
%
2012
%
2011
%
2012
%
2011
%
Top management 45,45 55,56 54,55 44,44 20,00 22,22Senior management 17,32 22,12 82,68 77,88 19,68 18,58Middle management/
professionals 17,46 16,64 82,54 83,36 24,76 25,14Junior management/associate
professionals 43,11 40,65 56,89 59,35 32,92 32,29Semi-skilled 76,68 78,29 23,32 21,71 41,71 40,00
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 on-going
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 the group’s learning
and developing strategy include diversity training,
management development, ICT technical skills
development, and internship and learnership
programs.
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.
The Group achieved 18.36 (91,8%) of the 20 available
points on the DTI procurement scorecard during the
2011 external B-BBEE audit.
6. Enterprise developmentIt is the policy of the group and its 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.
Business Connexion acknowledges that enterprise
development plays a vital role in the transformation of
the South African economy and can contribute to the
market share of Black Economic Empowerment (BEE)
companies. SMMEs are considered big contributors
towards economic growth and job creation.
The group’s enterprise development strategy as
summarised below, seeks to enhance the support
it gives 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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SUSTAINAbILITYreport continued
PILLAR 1 PILLAR 2 PILLAR 3
SMME
Connect Program
Supplier
Connect Program
Entrepreneur
Connect Program
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.
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7. Corporate Social ResponsibilityDuring the period under review, Business Connexion
continued with its Corporate Social Responsibility
(CSR) vision to be an innovative and inspirational
corporate citizen on the African continent where
the group. The group significantly exceeded the
minimum legislative requirements on CSR spending
by contributing more than R 4,9 million
(2011: R4,1 million) during the reporting period.
In line with the ICT Charter, Business Connexion’s
CSR mission is to empower young people to be able
to change their lives and those of their communities
through technology. The group’s CSR strategy is
therefore focused on technology within education
as technology is an important and powerful tool for
social connectivity and upliftment thus influencing the
African Web of Life.
Business Connexion is proud to have been, awarded
the national Gold Community Contributor status
for the second consecutive year by the National CSI
Registrar on behalf of the South African Department
of Social Development.
Under the Business Connexion initiative, letmelearn™
our Corporate Social Investment (CSI) and
Socioeconomic Development (SED) programmes
focus on driving positive social connectivity through
technology.
Business Connexion continued to focus on the
following national CSR programmes running under
letmelearn™ during the reporting period. These are:
• School development programme
• Soweto canoe and recreation club
• Rally to read
• IT Internship/learning programme
In addition to the above letmelearn™ programmes,
Business Connexion also contributed to a few
charitable organisations as part of its philanthropic
giving initiatives.
The main focus of Business Connexion’s letmelearn™
initiatives remains the school development
programme which involves providing support to these
schools and its educators on the technology used and
through the maintenance of the technology, software
and monthly internet access.
Business Connexion introduced an employee
volunteering programme called letmegive.
The letmegive programme is an opportunity for
employees to give either their time through volunteer
work and/or give money through payroll deductions.
These programmes are directed at supporting
developmental organisations.
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CONTENTSTable of
The reports and statements set out below comprise the consolidated and separate financial statements presented to shareholders:
Page
Directors’ responsibility statement 82
Certificate by company secretary 82
Responsibility for financial statement preparation 82
Directors’ report 83
Independent auditor’s report 86
Remuneration report 87
Statements of financial position 96
Statements of comprehensive income 97
Statements of changes in equity 98
Statements of cash flows 100
Accounting policies 101
Notes to the financial statements 114
Annexure AInvestment in subsidiaries 150
Level of assuranceThese financial statements have been audited in compliance with Section 30 of the Companies Act.
Published2 November 2012
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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 statements of financial position at 31 August 2012, 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 group and its subsidiaries to continue as a going concern 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 annual financial statements are fairly presented in accordance with the applicable financial reporting framework.
APProvAL of grouP 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 2 November 2012 and are signed by:
AC ruiters LB Mophatlane Ln WeitzmanChairman Chief executive officer Chief financial officer
statement preparationfINaNCIaL
Responsibility for
Mr Lawrence Weitzman CA(SA), the chief financial officer, is responsible for the financial statements and has supervised the preparation
thereof in conjunction with Mr Jan van den Handel CA(SA), the group financal manager.
COmPaNY SECRETaRYCertificate by
In terms of section 88(2) (e) 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 all such returns are true, correct and up to date.
J de Koker
Company secretary
2 November 2012
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reportDIRECTORS’
nATure of BusIness Business 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 33 years as a leading
ICT company.
The group 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 governAnCe Business 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 50 to 60.
oPerATIng resuLTs A review of operations of the group is provided in the Chief executive officer’s report and the Chief financial officer’s report on pages 26 to 29
and 30 to 35 respectively.
CAPITAL exPendITureCapital expenditure is closely monitored by the board. A total of R205,6 million (2011: R252,5 million) was spent on capital expenditure
with R129,0 million (2011: R179,7 million) related to income generating acquisitions. Of the R205,6 million spent, R147,7 million had been
committed as at 31 August 2011.
shAre CAPITAL Authorised share capital The 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 capital The 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 shAres On 31 August 2012, the directors beneficially held in aggregate 1 655 381 (2011: 1 647 381) ordinary shares and 388 305 (2011: 388 305)
“A” shares in the company. The directors have an interest in 149 334 options (2011: 200 000 options) relating to Business Connexion shares.
The executive directors have 13 644 000 (2011: 6 822 000) “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 87 to 95.
shAre InCenTIve sCheMes The 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 JM Poluta, LC Marran and RS Hislop. The trustees have not changed during the year under review.
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 2012, the trust held 1 701 630 shares (2011: 2 597 604 shares).
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Share options related to this 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.
The 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 93 to 95 of the Remuneration report.
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 (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 91:
dIvIdends The board declared normal dividend number 8 of 20 cents per share on 2 November 2012. Dividend number 7 of 14 cents per share
and the special dividend of 40 cents per share were paid on 16 January 2012.
sPeCIAL resoLuTIons Business 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 grant the company, or a subsidiary of the company, a general authority
to acquire ordinary shares in the issued share capital of the company;
• a special resolution was passed at a general meeting of the company to sanction the giving of financial assistance by the company in terms
of Section 45 of the Companies Act of South Africa;
• a special resolution was passed at the annual general meeting to approve non-executive remuneration for 2010/2011;
• a special resolution was passed at the annual general meeting to approve non-executive remuneration for 2012 and 2013; and
• a special resolution was passed at a general meeting of the company to amend the MOI to provide for electronic payments.
suBsIdIArIes Annexure 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 ACTIvITy Effective 1 March 2012, the group sold 25% of its equity holding in Nanoteq Proprietary Limited to a management consortium. The purpose
of the transaction was to secure the scarce skills required for the success of this business, promote economic empowerment and drive growth
and profitability in this sector of the market.
Effective 1 April 2012, the group acquired 100% of the issued share capital of Quad Automation Proprietary Limited (Quad) for a total cash
consideration of R20,8 million which was settled through an initial cash payment of R10,8 million and the remaining balance of R10,0 million
is payable contingent on Quad achieving its profit warranties for its 2013 financial year. Quad is an automation systems integration company
offering clients a single-source solution for fully integrated and advanced computer-based control systems in many industrial sectors.
Effective 1 April 2012 the group concluded a transaction to sell its Avaya business to ATIO Proprietary Limited (ATIO). Following the
transaction, ATIO is the exclusive partner to Business Connexion for all Avaya business in Africa.
report continuedDIRECTORS’
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dIreCTorATe And seCreTAry The board of directors in office at the date of this report is set out on pages 14 to 17. 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 82.
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 evenTs Business Connexion entered into a sale of shares, repurchase and subscription agreement with Integr8 IT Proprietary Limited (“Integr8 IT”)
in November 2012, in terms of which it will purchase 100% of the issued share capital of Integr8 IT.
The consideration payable by Business Connexion is up to R126,0 million in cash, and will be settled through an initial payment of
R56,0 million payable on the closing date and three potential earn-out payments of up to a maximum of R70,0 million payable on
15 October 2013, 15 October 2014 and 15 October 2015.
86
reportaUDITOR’SIndependent
To The shArehoLders of BusIness ConnexIon grouP LIMITed We have audited the consolidated and separate annual financial statements of Business Connexion Group Limited, which comprise
the statements of financial position at 31 August 2012, 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 as set out on pages 87 to 151.
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 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 2012, 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 2012, we have read the Directors’ report, the Audit and
compliance committee report and the Certificate by the company secretary for the purposes 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
2 November 2012
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reportREmUNERaTION
In preparing this report, Business Connexion conducted an analysis of the extent to which the group’s remuneration policies comply 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 six other countries on the African continent and an office 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 policies are 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, placing a significant portion of the remuneration ‘at risk’ measured at group, business unit and individual performance levels,
while not encouraging behaviour contrary to the group’s approach to risk management. The policies support 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:
• market competitive in its respective labour markets;
• aligned in terms of performance in respect of remuneration relating to fixed and performance based remuneration, incentives
and recognition;
• objective in the quantification and weighting of the value-add of critical and scarce skills within job clusters.
The realisation of these remuneration principles supports the group’s strategic human resources imperatives. These are:
• the attraction, retention and engagement of the right calibre of talent;
• positioning the group as an investor in people and an employer of choice;
• equitably rewarding individual and team performance;
• 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 policies, 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. This is to be done without introducing additional risks.
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.
88
The ReNco has had a year with continued focus on ensuring alignment of the remuneration policies and stakeholder interests. Key
achievements include:
• the review and renewal of the group incentive scheme to ensure retention of key employees;
• the introduction of a key talent retention scheme;
• heightened focus on performance when determining remuneration structures to ensure consistency with sound risk management;
• embracing reasonable differentiation in remuneration for purposes of rewarding superior individual performance, attracting and retaining
scarce skills and promoting diversity; and
• approving a total rewards strategy and related future strategy.
roLe, PurPose And PrInCIPAL funCTIons The terms of reference were reviewed to ensure alignment with all corporate governance requirements, including the Companies Act of South
Africa, King III Code and JSE Listings Requirements.
The role, purpose and principal functions of the ReNco include:
• approving the group’s remuneration philosophy, principles and policies;
• annual review of executive and senior management remuneration ensuring that an appropriate balance exists between fixed
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 fringe benefits 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.
The chief executive officer, deputy chief executive officer, chief financial officer and the group executive responsible for human resources
attend meetings by invitation of the committee, when deemed appropriate. No invitees or members of management, irrespective of their
position, are allowed to take part in discussions regarding their own remuneration nor are they present in the meetings when such decisions
are taken.
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.
The committee considered remuneration policies and packages of the executive directors, persons discharging managerial responsibilities, a
number of other senior employees. Talent management, retention and succession of executives and senior management 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 Annual increases are determined in relation to market movements, inflation indicators, group performance and affordability. These are then
translated into individual increases taking into account the scope and nature of the employee’s role, market benchmarks for similar positions
and the employee’s personal performance and competence. The group applies a variable performance reward model which is closely linked
to business performance against pre-determined targets.
The committee is confident that the remuneration policies align executive and senior management’s interests with those of shareholders by
promoting and measuring performance that drives long-term growth thereby creating sustainable shareholder value.
report continuedREmUNERaTION
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The persons responsible for alignment of all stakeholder interests are the various group executives whose rewards are not only linked to
specific performance, but also on the overall performance of the group taking into consideration financial performance and compliance with
the desired culture and values.
The committee 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 total remuneration) 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 balance 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.
• Performance measures
Financial and non-financial measures are used in the short-term incentive and long-term incentive schemes to ensure that performance-
related rewards are conditional upon achievement of a diverse mix of targets protecting shareholder interests over the short and long term.
• 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.
reMunerATIon 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 right calibre of people
to achieve the group’s strategic business objectives. Executive remuneration is benchmarked to data provided in national executive
remuneration surveys.
The components of remuneration are designed to support and enable Business Connexion’s business strategy. These take account
of market realities and talent requirements in different geographic locations. Remuneration consists of:
• Base salary and benefits (referred to as total guaranteed package)
• Sales commission
• Short-term incentives
• Long-term incentives
The ratios within remuneration differ depending on different levels within the organisation and on geographic location. In order
to remain competitive, all elements of total remuneration, are subject to regular benchmarking exercises.
There is strong alignment between the types of benefits that are offered to all permanent employees. Defensible 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 skills and individual performance.
90
Total guaranteed package Total guaranteed packages, on average, are aligned with the median of the market as a general principle. Where scarce skills and key
employees are at risk, management can differentiate and has discretion to pay up to the 75th percentile of the market. There is a focused
endeavour to manage total guaranteed packages between specified market ranges. These market ranges are obtained from both national and
international salary survey houses on a bi-annual basis and applied as per current best reward practice.
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. Annual increases for most employees take effect from 1 September
and, in the case of executive directors and the chief executive officer, are approved on an individual basis by the board.
Contributions towards retirement, group life and disability and medical benefits are included in the total guaranteed package.
International employees are remunerated on a structure of basic salary plus benefits.
All legal entities within the 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 total guaranteed package. Normal retirement age
is 60 years for executive directors, other executives and employees.
Business Connexion offers participation in a nominated medical aid scheme. Membership of the scheme is a condition of service for all
permanent employees in South Africa unless they are covered by the medical aid scheme of their partner.
Business Connexion does not offer post-retirement medical benefits. A small group of employees acquired through acquisitions have a
post-retirement medical aid benefit.
short-term incentives The group’s annual short-term incentive scheme intends to recognise the achievement of a combination of group, business unit and individual
performance objectives against agreed targets. Short-term incentives are delivery specific and are considered to drive competitiveness
and performance.
ReNco has the final discretion in determining the individual amounts paid out under the group short-term incentive scheme considering
overall performance in relation to predetermined targets.
Long-term incentives Long-term incentives are intended to reward improved sustainable group business performance and to create alignment with shareholder
interests over the longer term. The long-term incentive provides management and 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 the share option
trust and an executive share option scheme whose objectives are to incentivise the employees of the group by enabling them to acquire
group shares as well as the BCG Management “A” Share Trust which incentivises executive and senior management.
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 2012, 1 067 794 (2011: 2 170 401) options were in issue in this trust.
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.
report continuedREmUNERaTION
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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
• 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 (the 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.
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. 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 million qualified for 3 411 000 units
(0,9% shareholding);
• executive committee members with a division that generates revenue less than R500 million qualified for 1 895 000 units
(0,5% shareholding); and
• the allocation to management in the E-upper grade with salaries in excess of R1,25 million was based on their level of contribution
to the business as a whole and ranged between 490 942 and 1 097 004 units (0,13% to 0,29%).
Participating employees cannot hold options in the Business Connexion (2009) Executive Share Option Scheme.
The “A” shares were issued with 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.
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 schemes. No arrangement exists for emoluments
in respect of loss of office.
92
The annual fees payable to non-executive directors for the year commencing 1 September 2011 were approved by shareholders on
19 January 2012.
The board recommends the fees payable to the chairman and non-executive directors for approval by the shareholders. Proposals for fees are
prepared with the support of internal and external human resource experts for consideration by ReNco and the board. 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 for The yeArremuneration paid to non-executive directors for the 12 months ended 31 August 2012
directors’
fees
Chairman’s
fees
Additional
fees
Chairman
of
committee
Member of
committee
Total
2012
Total
2011
name Period r’000 r’000 r’000 r’000 r’000 r’000 R’000
AC Ruiters#& Sept 2011 – Aug 2012 481,5 398,8 92,5 972,8 936,0
JF Buchanan 172,5
FL Sekha#& Sept 2011 – 19 Jan 2012 55,9 35,8 91,7 336,4
JM Poluta* Sept 2011 – Aug 2012 144,5 132,5 85,6 362,6 427,4
NN Kekana& Sept 2011 – Aug 2012 144,5 62,5 100,0 307,0 188,8
M Lehobye*# Sept 2011 – Aug 2012 144,5 87,5 85,0 68,5 385,5 339,5
J John*& Sept 2011 – Aug 2012 144,5 115,0 220,0 50,0 529,5 292,2
DC Sparrow# Sept 2011 – Aug 2012 144,5 97,5 42,5 284,5 41,1
778,4 481,5 893,8 405,0 374,9 2 933,6 2 733,9
* Member of the Audit and compliance committee# Member of the Remuneration and nominations committee& Member of the Risk, sustainability, social and ethics committee
remuneration paid to executive directors for the 12 months ended 31 August 2012 Basic
salary
Performance
bonuses
Allowances
and benefits
Pension
contributions
Total
2012
Total
2011
name Period r’000 r’000 r’000 r’000 r’000 R’000
LB Mophatlane Sept 2011 – Aug 2012 4 682,1 2 281,1 77,7 7 040,9 5 001,5
V Olver Sept 2011 – Aug 2012 2 757,9 1 216,5 40,0 243,3 4 257,7 3 200,9
LN Weitzman Sept 2011 – Aug 2012 2 215,1 1 125,8 103,5 122,0 3 566,4
JR Jenkins Sept 2011 – Aug 2012 2 728,1 1 335,6 89,6 147,3 4 300,6
12 383,2 5 959,0 310,8 512,6 19 165,6 8 202,4
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 in the group’s short-term and long-term incentive schemes.
report continuedREmUNERaTION
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remuneration paid to prescribed officers for the 12 months ended 31 August 2012 Basic
salary
Performance
bonuses
Allowances
and benefits
Pension
contributions
Total
2012
Total
2011
name Period r’000 r’000 r’000 r’000 r’000 R’000
Prescribed officers Sept 2011 – Aug 2012 13 273,8 5 922,6 257,2 518,3 19 971,9 18 007,6
In line with the Companies Act of South Africa remuneration paid to prescribed officers are 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 18 to 21. The number of prescribed officers at 21 August 2012: 8 (2011: 7).
details of directors’ interests in securities at 31 August 2012 and as at 31 August 2011
2012 2011
name
direct
beneficial
Indirect
beneficial
held by
associates Total
% of
issued
shares
Direct
beneficial
Indirect
beneficial
Held by
associates Total
% of
issued
shares
Ordinary shares
JM Poluta 45 000 45 000 0,01 45 000 45 000 0,01
DC Sparrow 171 575 1 398 806 1 570 381 0,39 171 575 1 398 806 1 570 381 0,39
V Olver 32 000 32 000 0,01 32 000 32 000 0,01
LN Weitzman 8 000 8 000 0,00
211 575 1 398 806 45 000 1 655 381 0,41 203 575 1 398 806 45 000 1 647 381 0,41
“A” Ordinary
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” ordinary shares.
details of executive directors share options at 31 August 2012 and as at 31 August 2011
name scheme
31 August
2011
options
exercised “A” shares
31 August
2012
LB Mophatlane Business Connexion Group Share Trust 200 000 66 666 133 334
BCG Management “A” Share Trust 3 411 000 3 411 000
3 611 000 66 666 3 544 334
V Olver BCG Management “A” Share Trust 3 411 000 3 411 000
LN Weitzman Business Connexion Group Share Trust 24 000 8 000 16 000
BCG Management “A” Share Trust 3 411 000 3 411 000
24 000 8 000 3 411 000 3 427 000
JR Jenkins BCG Management “A” Share Trust 3 411 000 3 411 000
94
share options in issue at 31 August 2012 and as at 31 August 2011
Issue no
option
price
special
dividend
effective
option
price
offer
date
vesting
dates
expiry
date
options at
31 August
2012
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 2012 511 079 One-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 R0,4 R2,86 1 June 2009 One-third June 2012 Sept 2012 107 992
One-third June 2013 Sept 2013 2 033 538 One-third June 2014 Sept 2014 2 033 538
4 175 068
Issue 2 R4,76 R0,4 R4,36 1 Nov 2009 One-third Nov 2012 Feb 2013 439 480 One-third Nov 2013 Feb 2014 439 481 One-third Nov 2014 Feb 2015 439 481
1 318 442
Issue 3 R5,51 R0,4 R5,11 1 Sept 2010 One-third August 2012 Nov 2012 2 799 105 One-third August 2013 Nov 2013 2 799 105 One-third August 2014 Nov 2014 2 799 105
8 397 315
Issue 4 R4,75 R4,75 8 Feb 2012 One-third Feb 2015 May 2015 2 966 533 One-third Feb 2016 May 2016 2 966 533 One-third Feb 2017 May 2017 2 966 533
8 899 599
Total share options in issue – Business Connexion (2009) Executive Share Option Scheme 22 790 424
Issue no
Option
price
Special
dividend
Effective
option
price
Offer
date
Vesting
dates
Expiry
date
Options at
31 August
2011
Business Connexion Group Share TrustIssue 1 R5,37 R0,6 R4,77 7 Nov 2005 One-third Nov 2008 Nov 2011 686 616
One-third Nov 2009 Nov 2012 686 729 One-third Nov 2010 Nov 2013 797 056
Total share options in issue – Business Connexion Group Share Trust 2 170 401
Business Connexion (2009) Executive Share Option SchemeIssue 1 R3,26 R3,26 1 June 2009 One-third June 2012 Sept 2012 2 586 133
One-third June 2013 Sept 2013 2 586 133 One-third June 2014 Sept 2014 2 586 134
7 758 400
Issue 2 R4,76 R4,76 1 Nov 2009 One-third Nov 2012 Feb 2013 439 480 One-third Nov 2013 Feb 2014 439 481 One-third Nov 2014 Feb 2015 439 481
1 318 442
Issue 3 R5,51 R5,51 1 Sept 2010 One-third August 2012 Nov 2012 3 528 071 One-third August 2013 Nov 2013 3 528 072 One-third August 2014 Nov 2014 3 528 072
10 584 215
Total share options in issue – Business Connexion (2009) Executive Share Option Scheme 19 661 057
report continuedREmUNERaTION
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31 August
2012
31 August
2011
Movement in share optionsBusiness Connexion group share TrustOpening balance of options granted 2 170 401 2 697 768 Options forfeited (139 987) (10 067) Options exercised (962 640) (517 300)
Total options outstanding in Business Connexion Group Share Trust 1 067 774 2 170 401 Shares awaiting transfer 66 666Number of ordinary shares on hand in the trust (1 701 630) (2 597 604)
Surplus of ordinary shares held by the trust (567 190) (427 203)
Business Connexion (2009) executive share option schemeOpening balance of options granted 19 661 057 11 192 142 Options issued 9 374 600 11 904 215 Options replaced (650 000)Options forfeited (4 480 556) (3 435 300) Options exercised (1 114 676)
Total options outstanding in Business Connexion (2009) Executive Share Option Scheme 22 790 425 19 661 057 Number of ordinary shares on hand in Business Connexion Proprietary Limited (3 173 438) (4 228 114)
Shortfall of ordinary shares 19 616 987 15 432 943
uCs zero cost option schemeordinary sharesOpening balance of options granted 394 530Options acquired 394 530Options forfeited 3 492Options exercised 145 049
Total options outstanding in UCS zero cost option scheme 245 989 394 530Number of ordinary shares on hand in Business Connexion Proprietary Limited 249 481 394 530
Surplus of ordinary shares (3 492)
“A” sharesOpening balance of options granted 97 555Options acquired 97 555Options forfeited 863Options exercised 36 053
Total options outstanding in UCS zero cost options scheme 60 639 97 555Number of “A” shares on hand in Business Connexion Proprietary Limited 61 502 97 555
Surplus of “A” shares (863)
Total shortfall of ordinary shares 19 046 305 15 005 740
Total surplus of “A” shares (863)
details of options exercised during the yearBusiness Connexion Group Share Trust 962 640 517 300 Business Connexion (2009) Executive Share Option Scheme 1 114 676
2 077 316 517 300
Closing share price 31 August – ordinary shares 4,85 5,20 Fair value of Business Connexion Group Limited ordinary shares held (2012: 5 124 549, 2011: 7 220 248) 24 854 063 37 545 290
Closing share price 31 August – “A” shares 0,71 0,70Fair value of Business Connexion Group Limited “A” shares held (2012: 61 501, 2011: 97 555) 43 666 68 289
share based payment expense r’000 R’000
Issue 1 - Business Connexion (2009) Executive Share Option Scheme (1 874) 85 Issue 2 - Business Connexion (2009) Executive Share Option Scheme 292 291 Issue 3 - Business Connexion (2009) Executive Share Option Scheme 1 996 3 008 Issue 4 - Business Connexion (2009) Executive Share Option Scheme 928 “A” shares issued to BCG Management “A” Share Trust 12 133 12 100
13 475 15 484
96
FINANCIALStatements of
position at 31 August 2012
grouP CoMPAny
2012 2011 2012 2011
Notes r‘000 R‘000 r‘000 R’000
AsseTsnon-current assetsProperty, plant and equipment 1 390 566 396 949Capitalised leased assets 3 51 422 57 036Goodwill 4 566 925 555 318Intangible assets 5 363 271 378 652Investments in subsidiaries 6 2 674 498 2 662 365Investment in associates 7 5 487Long-term loans receivable 8 32 446 30 157Other investments 9 213 371 215 308 213 371 214 687Deferred tax assets 10 60 183 53 046 1 536
1 678 184 1 661 796 2 918 026 2 878 588
Current assetsAmounts owed by group companies 11 275 773 340 605Inventories 12 197 901 178 939Trade receivables 13 971 334 970 084Other receivables 14 239 034 250 604 15 341 56 684Prepayments 81 602 77 696 77 136Taxation prepaid 3 588 7 423 19Cash and cash equivalents 44 443 930 518 308 2 762 1 746Assets held for sale 15 18 003
1 937 389 2 021 057 293 972 399 171
Total assets 3 615 573 3 682 853 3 211 998 3 277 759
equITy And LIABILITIesCapital and reservesShare capital 16 2 358 2 346 2 389 2 389Share premium 1 126 900 1 126 900 5 416 576 5 416 576Foreign currency translation reserve (21 225) (27 826)Retained earnings/(accumulated loss) 916 157 975 336 (2 486 988) (2 295 066)Share-based payment reserve 81 554 67 793 86 533 74 400
Shareholders’ equity 2 105 744 2 144 549 3 018 510 3 198 299Non-controlling interests 95 841 48 495
Total equity 2 201 585 2 193 044 3 018 510 3 198 299
non-current liabilitiesInterest bearing long-term liabilities 17 179 467 250 679Post-retirement benefit obligations 18 10 614 7 920Deferred tax liabilities 10 47 604 60 927
237 685 319 526
Current liabilitiesAmounts owed to group companies 19 148 287 20 070Short-term liabilities 17 89 191 77 187Trade payables 425 323 457 128Other payables 20 647 565 622 384 45 201 58 196Provisions 21 1 296 892Taxation payable 12 928 12 692 1 194
1 176 303 1 170 283 193 488 79 460
Total liabilities 1 413 988 1 489 809 193 488 79 460
Total equity and liabilities 3 615 573 3 682 853 3 211 998 3 277 759
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Statements of
COmPREHENSIVE income for the year ended 31 August 2012
grouP CoMPAny
2012 2011 2012 2011
Notes r‘000 R‘000 r‘000 R’000
revenue 22 5 829 644 4 314 181
Cost of sales 3 996 112 2 979 118
gross profit 1 833 532 1 335 063
Operating expenses/(income) 1 558 507 1 177 391 (3 273) (80 255)
operating profit 23 275 025 157 672 3 273 80 255
Share of losses from associates 7 495 217
operating profit before investment income 274 530 157 455 3 273 80 255
Investment income 24 34 695 27 329 19 040 29 033
Profit before finance costs 309 225 184 784 22 313 109 288
Finance costs 25 27 484 18 076 3 222 10
Profit before tax 281 741 166 708 19 091 109 278
Taxation 26 85 618 64 400 (7 672) 36 974
Profit for the year 196 123 102 308 26 763 72 304
other comprehensive income:
Translation of foreign operations 5 894 (252)
Total comprehensive income for the year 202 017 102 056 26 763 72 304
Profit attributable to:
Equity holders 149 317 92 587 26 763 72 304
Non-controlling interests 46 806 9 721
Profit for the year 196 123 102 308 26 763 72 304
Total comprehensive income attributable to:
Equity holders 155 211 92 335 26 763 72 304
Non-controlling interests 46 806 9 721
Total comprehensive income for the year 202 017 102 056 26 763 72 304
earnings per share
Basic earnings per share (cents) 27 37,5 27,9
Diluted earnings per share (cents) 27 37,2 27,6
98
in equityfor the year ended 31 August 2012
Statements of
CHaNGES
Share
capital
Share
premium
Total
share capital
Foreign currency
translation reserve
Share-based
payment reserve
Retained
earnings/
(accummulated
loss)
Total
reserves
Shareholders’
equity
Non-controlling
interests
Total
equity
R‘000 R‘000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000
grouPBalance at 31 August 2010 1 774 543 325 545 099 (27 574) 65 587 961 165 999 178 1 544 277 6 366 1 550 643
Profit for the year 92 587 92 587 92 587 9 721 102 308
Movement in foreign currency translation reserve (252) (252) (252) (252)
Non-controlling interests’ share of foreign currency translation reserve (2 198) (2 198) (2 198) 2 198
Movement in treasury shares and related reserves held by share purchase trusts (25) (25) (20 638) (20 638) (20 663) (20 663)
Share-based payments 15 879 15 879 15 879 15 879
Share-based payments reserve transferred to retained earnings (13 673) 13 673
Non-controlling interest in dividends received from subsidiaries (1 775) (1 775)
Issue of new shares for the acquisition of businesses 597 583 575 584 172 584 172 584 172
Sale of stake in business to management 31 985 31 985
Dividends paid (69 253) (69 253) (69 253) (69 253)
Total changes in equity 572 583 575 584 147 (252) 2 206 14 171 16 125 600 272 42 129 642 401
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 46 806 196 123
Movement in foreign currency translation reserve 5 894 5 894 5 894 5 894
Non-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 6 731
Share-based payments 13 761 13 761 13 761 13 761
Non-controlling interest in dividends received from subsidiaries (1 271) (1 271)
Sale of stake in business to management 2 500 2 500
Non-controlling interest effect on loan restructuring 18 18
Dividends 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
Dividend per share (cents) 54,0 (2011: 23,0)
CoMPAnyBalance at 31 August 2010 1 792 4 833 001 4 834 793 62 300 (2 297 512) (2 235 212) 2 599 581 2 599 581
Profit for the year 72 304 72 304 72 304 72 304
Issue of new shares for the acquisition of businesses 597 583 575 584 172 584 172 584 172
Share-based payments 12 100 12 100 12 100 12 100
Dividends paid (69 858) (69 858) (69 858) (69 858)
Total changes in equity 597 583 575 584 172 12 100 2 446 14 546 598 718 598 718
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 26 763
Share-based payments 12 133 12 133 12 133 12 133
Dividends paid (218 685) (218 685) (218 685) (218 685)
Total changes in equity 12 133 (191 922) (179 789) (179 789) (179 789)
Balance at 31 August 2012 2 389 5 416 576 5 418 965 86 533 (2 486 988) (2 400 455) 3 018 510 3 018 510
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Share
capital
Share
premium
Total
share capital
Foreign currency
translation reserve
Share-based
payment reserve
Retained
earnings/
(accummulated
loss)
Total
reserves
Shareholders’
equity
Non-controlling
interests
Total
equity
R‘000 R‘000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000
grouPBalance at 31 August 2010 1 774 543 325 545 099 (27 574) 65 587 961 165 999 178 1 544 277 6 366 1 550 643
Profit for the year 92 587 92 587 92 587 9 721 102 308
Movement in foreign currency translation reserve (252) (252) (252) (252)
Non-controlling interests’ share of foreign currency translation reserve (2 198) (2 198) (2 198) 2 198
Movement in treasury shares and related reserves held by share purchase trusts (25) (25) (20 638) (20 638) (20 663) (20 663)
Share-based payments 15 879 15 879 15 879 15 879
Share-based payments reserve transferred to retained earnings (13 673) 13 673
Non-controlling interest in dividends received from subsidiaries (1 775) (1 775)
Issue of new shares for the acquisition of businesses 597 583 575 584 172 584 172 584 172
Sale of stake in business to management 31 985 31 985
Dividends paid (69 253) (69 253) (69 253) (69 253)
Total changes in equity 572 583 575 584 147 (252) 2 206 14 171 16 125 600 272 42 129 642 401
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 46 806 196 123
Movement in foreign currency translation reserve 5 894 5 894 5 894 5 894
Non-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 6 731
Share-based payments 13 761 13 761 13 761 13 761
Non-controlling interest in dividends received from subsidiaries (1 271) (1 271)
Sale of stake in business to management 2 500 2 500
Non-controlling interest effect on loan restructuring 18 18
Dividends 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
Dividend per share (cents) 54,0 (2011: 23,0)
CoMPAnyBalance at 31 August 2010 1 792 4 833 001 4 834 793 62 300 (2 297 512) (2 235 212) 2 599 581 2 599 581
Profit for the year 72 304 72 304 72 304 72 304
Issue of new shares for the acquisition of businesses 597 583 575 584 172 584 172 584 172
Share-based payments 12 100 12 100 12 100 12 100
Dividends paid (69 858) (69 858) (69 858) (69 858)
Total changes in equity 597 583 575 584 172 12 100 2 446 14 546 598 718 598 718
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 26 763
Share-based payments 12 133 12 133 12 133 12 133
Dividends paid (218 685) (218 685) (218 685) (218 685)
Total changes in equity 12 133 (191 922) (179 789) (179 789) (179 789)
Balance at 31 August 2012 2 389 5 416 576 5 418 965 86 533 (2 486 988) (2 400 455) 3 018 510 3 018 510
100
Statements offlows for the year ended 31 August 2012CaSH
grouP CoMPAny
2012 2011 2012 2011
Notes r’000 R’000 r’000 R’000
Cash flows from operating activities
Cash receipts from clients 5 819 430 4 115 491
Cash paid to suppliers and employees (5 329 152) (3 694 086) (5 428) (19 742)
Cash generated from/(used in) operations 40 490 278 421 405 (5 428) (19 742)
Interest received 16 618 9 002 46 755
Dividends received 17 980 3 034 17 692 12 919
Finance costs (22 322) (6 367) (10)
Dividends paid (215 215) (71 028) (218 685) (69 858)
Taxation (paid)/refunded 41 (101 434) (59 369) 8 033 (37 720)
Net cash inflows/(outflows) from operating activities 185 905 296 677 (198 342) (113 656)
Cash flows from investing activities
Acquisition of subsidiaries and business 42 (10 845) (250 000) (10 000)
Investments in, and advances to associates (542)
Purchase of treasury shares (20 972)
Additions to property, plant and equipment,
capitalised leased assets and intangible assets 43 (205 575) (252 516)
Proceeds from sale of subsidiary and business 45 4 857 192 489 192 489
Increase in other investments (9 797)
Proceeds from the sale of property, plant and equipment,
capitalised leased assets and intangible assets 8 098 5 641
Net cash (outflows)/inflows from investing activities (203 465) (325 900) 172 692
Cash flows from financing activities
Raising of long-term liabilities 23 594 262 036
Repayment of long-term liabilities (18 083)
Repayment of capital element of finance leases (29 275) (808)
Repayment of short-term liabilities (51 387) (54 437) (54 397)
Advances to/(repayments from) group companies 199 358 (4 558)
Proceeds from disposal of interest in subsidiary 250
Net cash (outflows)/inflows from financing activities (56 818) 188 708 199 358 (58 955)
(Decrease)/increase in cash and cash equivalents (74 378) 159 485 1 016 81
Cash and cash equivalents at beginning of year 518 308 358 823 1 746 1 665
Cash and cash equivalents at end of year 44 443 930 518 308 2 762 1 746
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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 consolidated financial statements of the company for the year ended 31 August 2012 comprise Business Connexion
Group Limited and its subsidiaries and the group’s interest in associates (together referred to as the group and individually as group entities).
1. BAsIs of PrePArATIonThe consolidated annual financial statements and separate annual financial statements are prepared under the historic cost convention
as modified by the valuation of certain financial instruments and investment properties 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 AC 500 series issued by the Accounting Practices Board or its successor and the requirements of the Companies
Act of South Africa. The accounting policies have been consistently applied by the group entities.
In the current year, the group adopted amendments to IAS 24 Related Party Disclosures,11 Amendments to 6 Standards: Improvements
to International Financial Reporting Standards 2011 and IFRS 7 Financial Instruments: Disclosures –Transfers of Financial Assets.
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 2015
IAS 19 Employee Benefits: Defined Benefit Plans Amendment 1 January 2013
IAS 27 Separate Financial Statements Amendment 1 January 2013
IAS 28 Investments in Associates and Joint Ventures Amendment 1 January 2013
IFRS 10 Consolidated Financial Statements New Standard 1 January 2013
IFRS 11 Joint Arrangements New Standard 1 January 2013
IFRS 12 Disclosure of Interests in Other Entities New Standard 1 January 2013
IFRS 13 Fair Value Measurement New Standard 1 January 2013
IFRS 7 Financial Instruments: Disclosures – Amendment
Offsetting Financial Assets and Financial Liabilities 1 January 2013
IAS 1 Presentation of Financial Statements Amendment 1 July 2012
Presentation of Items of Other Comprehensive Income
IAS 12 Deferred Tax: Recovery of Underlying Assets Amendment 1 January 2012
IAS 32 Financial Instruments : Presentation Amendment 1 January 2014
Offestting Financial Assets and Financial Liabilities
At 31 August 2012 the directors have not assessed 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 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.
Accounting
POLICIES for the year ended 31 August 2012
102
2. BAsIs of ConsoLIdATIon (continued)subsidiaries (continued)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 or at fair value 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 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 shareholder’s 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 AssoCIATesAssociates 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.
Investments in associates (equity accounted investees) 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 co-incide with the group’s year-end, the
associate’s most recent unaudited results are used.
Accounting
POLICIES for the year ended 31 August 2012 continued
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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 the net investment in a foreign operation, and of borrowings,
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 directly in other comprehensive income. When an equity
instrument is disposed of, all gains or losses in equity are transferred to profit or loss.
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.
104
6. ProPerTy, PLAnT And equIPMenT (continued)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
Land is not depreciated as it is determined to have an indefinite useful life.
7. InvesTMenT ProPerTyInvestment property, which is property held to earn rentals and/or capital appreciation, is recognised at cost on initial recognition.
Cost includes expenditure that is directly attributable to the acquisition of the investment property. Subsequently the investment
property is stated at fair value at the reporting date. Gains or losses arising from changes in the fair value of investment property
are included in profit or loss for the year in which they arise.
8. LeAsed AsseTsLeases 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. When an operating lease is terminated
before the expiry of the lease, any penalty due is recognised immediately in profit or loss.
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 a subsidiary or associate.
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.
Accounting
POLICIES for the year ended 31 August 2012 continued
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9. goodWILL (continued)Goodwill relating to subsidiaries 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. 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 or associate, the attributable amount of goodwill is included in determining profit or loss on disposal.
10. InTAngIBLe AsseTsAn intangible asset is an identifiable, non-monetary asset without physical substance. It includes brands, client relationships, fair value
of contracts, 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, overheard costs that are directly attributable to preparing the
asset for its intended use, and capitalised borrowing costs and is classified as property, plant and equipment or 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
Software 3 to 10 years
Fair value of contracts Life of the contract
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11. IMPAIrMenTs of non-fInAnCIAL AsseTs (exCLudIng goodWILL)At each reporting date, the group reviews the carrying amounts of its non-financial assets, other than investment property, 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 disclosed 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 remeausured 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, employee benefit assets
and investment property, 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.
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.
Accounting
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13. fInAnCIAL InsTruMenTs (continued)financial assets (continued)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 indentified 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 and subsequently measured at amortised cost using the effective interest rate 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 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.
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.
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13. fInAnCIAL InsTruMenTs (continued)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, with interest recognised on the effective yield basis.
Cash and cash equivalentsCash and cash equivalents comprise cash on hand and demand 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 cost.
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.
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.
With the exception of the available-for-sale equity instruments if, 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 directly in
other comprehensive income.
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.
Accounting
POLICIES for the year ended 31 August 2012 continued
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13 fInAnCIAL InsTruMenTs (continued)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 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
recognised in profit or loss incorporates any interest paid on the financial liability.
Trade and other payablesTrade payables are initailly measured at fair value, 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.
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)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 amount.
Provisions 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 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.
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 consolidated 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 and associates 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.
Accounting
POLICIES for the year ended 31 August 2012 continued
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16. deferred TAx AsseTs And LIABILITIes (continued)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 tax assets and liabilities will be realised 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 are 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 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.
18. PosT-reTIreMenT BenefIT oBLIgATIonsretirement 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 will be 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.
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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 re-issued 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.
sales 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.
dividend 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.
Accounting
POLICIES for the year ended 31 August 2012 continued
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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.
secondary Tax on Companies (sTC)STC is 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.
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, and for which discrete financial information is available. 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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statements for the year ended 31 August 2012
Notes to the
fINaNCIaL
Property
Furniture
and fittings Equipment Vehicles
Rental
assets Total
R’000 R’000 R’000 R’000 R’000 R’000
1. ProPerTy, PLAnT And equIPMenTgrouPCost
Cost at 31 August 2010 161 225 57 742 539 514 2 539 5 451 766 471
Additions 46 813 8 982 112 426 2 683 32 170 936
Acquisition of businesses 10 969 14 254 70 677 19 041 114 941
Transfers (453) (5 705) (5 566) (11 724)
Asset re-allocations and scrapping 746 (2 256) (248 914) (12) (250 436)
Disposals (160) (788) (23 132) (1 025) (25 105)
Disposal of business (1 643) (971) (3 330) (2 591) (8 535)
Currency translation differences (189) 58 (1 239) 101 (1 269)
Cost at 31 August 2011 217 308 71 316 440 436 20 748 5 471 755 279
Additions 18 868 2 632 84 601 7 615 1 002 114 718
Acquisition of businesses 257 990 219 1 466
Transfers (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 3527 687 6 079
Cost at 31 August 2012 224 870 73 400 515 055 28 687 4 981 846 993
Accumulated depreciation
Accumulated depreciation
at 31 August 2010 26 626 42 014 382 962 1 391 5 220 458 213
Depreciation 13 259 5 857 82 203 1 355 132 102 806
Acquisition of businesses 6 405 9 346 49 934 8 251 73 936
Transfers 196 (2 187) 1 248 (743)
Asset re-allocations and scrapping 746 (2 256) (248 914) (12) (250 436)
Disposals (67) (765) (19 073) (190) (20 095)
Disposal of business (715) (409) (2 347) (1 359) (4 830)
Currency translation differences (27) 246 (769) 29 (521)
Accumulated depreciation
at 31 August 2011 46 423 51 846 245 244 9 477 5 340 358 330
Depreciation 14 923 6 769 91 795 4 837 219 118 543
Acquisition of businesses 209 894 170 1 273
Transfers (39) 1 015 141 1 117
Disposals (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 4 099 456 427
Carrying value at 31 August 2010 134 599 15 728 156 552 1 148 231 308 258
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
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 R8,0 million
(2011: R7,2 million). Details of assets pledged as security for long-term liabilities are disclosed in note 17.
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2012 2011
r’000 R’000
2. InvesTMenT ProPerTygrouPFair value of investment property at beginning of year 8 200
Increase in fair value during the year 191
Reclassification of investment property as asset held for sale (8 391)
fair value of investment property at end of year
Furniture
and fittings Equipment Total
R’000 R’000 R’000
3. CAPITALIsed LeAsed AsseTsgrouPCost
Cost at 31 August 2010 967 42 464 43 431
Additions 22 090 22 090
Acquisition of businesses 50 580 50 580
Asset scrapping (1 585) (1 585)
Disposals (8 889) (8 889)
Currency translation differences 4 4
Cost at 31 August 2011 971 104 660 105 631
Additions 386 18 169 18 555
Transfers 1 434 (2 079) (645)
Disposals (222) (11 886) (12 108)
Currency translation differences 159 15 174
Cost at 31 August 2012 2 728 108 879 111 607
Accumulated depreciation
Accumulated depreciation at 31 August 2010 516 9 463 9 979
Depreciation 189 16 389 16 578
Acquisition of businesses 29 574 29 574
Asset scrapping (1 585) (1 585)
Reclassification to computer software 782 782
Disposals (6 741) (6 741)
Currency translation reserves 8 8
Accumulated depreciation at 31 August 2011 713 47 882 48 595
Depreciation 514 23 314 23 828
Transfers 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 60 185
Carrying value at 31 August 2010 451 33 001 33 452
Carrying value at 31 August 2011 258 56 778 57 036
Carrying value at 31 August 2012 730 50 692 51 422
Capitalised leased assets are encumbered as reflected in note 17.
116
grouP CoMPAny
2012 2011 2012 2011
r’000 R’000 r’000 R’000
4. goodWILLCarrying value at beginning of year 555 318 145 575
Acquisition of businesses 16 470 520 865
Disposals (111 122)
Impairment (4 863)
Carrying value at end of year 566 925 555 318
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 Limited
Cost at beginning of year 184 399 162 074
Additions 22 325
Accumulated impairment (21 362) (16 499)
Carrying value at end of year 163 037 167 900
uCs subsidiaries
Cost at beginning of year 227 471
Additions 338 593
Disposals (111 122)
Carrying value at end of year 227 471 227 471
Canoa group holdings Proprietary Limited
Cost at beginning of year 159 947
Additions 159 947
Carrying value at end of year 159 947 159 947
quad Automation Properietary Limited
Cost at beginning of year
Additions 16 470
Carrying value at end of year 16 470
Carrying value at end of year 566 925 555 318
The group tests goodwill annually for impairment, or more frequently, if there are indications 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’s 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 16,0% with a 0,5%
sensitivity and a perpetual growth rate of 4,0% with a 0,5% sensitivity. With the exception of the impairment of goodwill on SiloFX no
other impairment was required.
statements for the year ended 31 August 2012 continued
Notes to the
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Client Computer Fair value of
Brands relationships software contracts Total
R’000 R’000 R’000 R’000 R’000
5. InTAngIBLe AsseTsgrouPCost:
Cost at 31 August 2010 231 042 26 607 257 649
Additions 59 490 59 490
Acquisition of businesses 36 860 179 170 106 568 322 598
Transfers 11 724 11 724
Disposal of business (43 867) (43 867)
Disposals (228) (228)
Currency translation differences (592) (592)
Cost 31 August 2011 36 860 179 170 364 137 26 607 606 774
Additions 72 302 72 302
Acquisition of businesses 76 76
Transfers (267) (267)
Disposals (9 657) (9 657)
Currency translation differences 1 299 1 299
Cost at 31 August 2012 36 860 179 170 427 890 26 607 670 527
Accumulated amortisation:
Accumulated amortisation
at 31 August 2010 124 415 25 346 149 761
Amortisation 1 229 13 328 27 751 1 261 43 569
Acquisition of businesses 57 867 57 867
Transfers 743 743
Re-classification from capitalised leased assets (782) (782)
Disposal of business (22 534) (22 534)
Disposals (224) (224)
Currency translation differences (278) (278)
31 August 2011 1 229 13 328 186 958 26 607 228 122
Amortisation 3 686 42 786 38 155 84 627
Acquisition of businesses 76 76
Transfers (637) (637)
Disposals (5 733) (5 733)
Currency translation differences 801 801
Accumulated depreciation
at 31 August 2012 4 915 56 114 219 620 26 607 307 256
Carrying value at 31 August 2010 106 627 1 261 107 888
Carrying value at 31 August 2011 35 631 165 842 177 179 378 652
Carrying value at 31 August 2012 31 945 123 056 208 270 363 271
The intangible assets included above have finite useful lives, which are detailed in the accounting policy, over which the assets are
amortised. Intangible assets relating to the fair value of contracts and client relationships are contracts acquired on acquisition
of businesses and are amortised as and when the contract revenues are expected to be realised.
118
grouP CoMPAny
2012 2011 2012 2011
r’000 R’000 r’000 R’000
6. InvesTMenTs In suBsIdIArIes (Annexure A)Shares at cost 4 637 771 4 637 771
Increase in investment 12 133
Cost at end of year 4 649 904 4 637 771
Impairment of investments in subsidiaries (1 975 406) (1 975 406)
Carrying value at end of year 2 674 498 2 662 365
7. InvesTMenT In AssoCIATesShares at cost 3 674 3 674
Advances to associates 7 475 6 977
Investment in associates 11 149 10 651
Share of post-acquisition losses (3 159) (2 664)
Impairment (7 990) (2 500)
Carrying value at end of year 5 487
The advances to associates are interest-free, unsecured and
repayable on demand.
Hawkstone iSolutions Proprietary Limited:
Revenue 17 226 3 329
Loss 495 536
Total assets 6 613 9 368
Total liabilities (12 591) (14 590)
Managed Print Solutions Proprietary Limited:
Profit 319
The financial information provided represents the group’s share
of the financial position and results of the associates.
The investment in Hawkstone iSolutions Proprietary Limited
has been fully impaired as the entity is being liquidated.
8. Long-TerM LoAns reCeIvABLeUCS Solutions Proprietary Limited management loan 29 663 29 663
This loan is unsecured, bears interest at 80% of the ruling
prime interest rate per annum and is not repayable within the
next 12 months.
BEE “A” share shareholder loans 494 494
These 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 2 289
This loan is unsecured, bears interest at a rate of prime less 2%
per annum and is not repayable within the next 12 months.
32 446 30 157
statements for the year ended 31 August 2012 continued
Notes to the
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grouP CoMPAny
2012 2011 2012 2011
r’000 R’000 r’000 R’000
9. oTher InvesTMenTsheld-to-maturity
Gadlex preference shares
Cost at beginning of year 214 687 204 890 214 687 204 890
“A” preference share (redemption)/dividends capitalised (1 316) 9 797 (1 316) 9 797
Cost at end of year 213 371 214 687 213 371 214 687
Available-for-sale
Capital Eye Investments Limited* ordinary shares 621
Total other investments at end of year 213 371 215 308 213 371 214 687
details of unlisted investments
Gadlex Proprietary Limited – “A” preference shares 120 273 121 589 120 273 121 589
Gadlex Proprietary Limited – “B” preference shares 15 810 15 810 15 810 15 810
Gadlex Holdings Proprietary Limited – “C” preference shares 77 288 77 288 77 288 77 288
Capital Eye Investments Limited* ordinary shares 621
213 371 215 308 213 371 214 687
* Capital Eye Investments Limited previously UCS Group Limited
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 R15,3 million (2011: R15,4 million) have been included in
other receivables.
Capital eye Investments LimitedThe group held 1 149 731 Capital Eye Investments Limited shares at a market price of R0,54 (fifty-four cents). The shares were held for
the benefit of employees of UCS Technology Services Proprietary Limited, UCS Solutions Proprietary Limited, Accsys Proprietary Limited
and CEB Maintenance Africa Proprietary Limited, who had share options in a UCS Group Limited share option scheme. These shares
were sold for R0,55 (fifty-five cents) as part of the de-listing of UCS Group Limited.
120
grouP CoMPAny
2012 2011 2012 2011
r’000 R’000 r’000 R’000
10. deferred TAxDeferred tax assets at beginning of year 53 046 25 861 1 536 1 690 Deferred tax liabilities at beginning of year (60 927) (2 038)
Net deferred tax balance at beginning of year (7 881) 23 823 1 536 1 690 Recognised in profit or loss 19 887 20 841 (1 536) (154)Acquisition of businesses/subsidiaries 272 4 459 Disposal of subsidiary 6 501 Translation of foreign operations 301Recognised against intangible assets on acquisition
of businesses (63 505)
net deferred tax balance at end of year 12 579 (7 881) 1 536
Deferred tax assets at end of year 60 183 53 046 1 536 Deferred tax liabilities at end of year (47 604) (60 927)
12 579 (7 881) 1 536
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 2010
Recognised in
profit or loss
(Acquisition)/
disposal of
businesses
Recognised
against intangible
assets on
acquisition of
businesses
Balance at
31 August 2011R’000 R’000 R’000 R’000 R’000
grouPSTC credits 1 690 (154) 1 536 Intangible assets 4 328 (63 505) (59 177)
Accelarated tax allowances (27 881) 3 357 (3 053) (27 577)Prepayments (3 950) 1 705 (799) (3 044)Capitalised leased assets and liabilities 10 098 (3 953) (255) 5 890Provisions 33 623 6 835 9 472 49 930 Calculated tax losses 5 084 5 084 Income received in advance 13 713 (2 037) 5 570 17 246Net share options balance (3 470) 5 676 25 2 231
Total 23 823 20 841 10 960 (63 505) (7 881)
Balance at
31 August 2011
recognised in
profit or loss
(Acquisition)/
disposal of
businesses
Translation
of foreign
operations
Balance at
31 August 2012r’000 r’000 r’000 r’000 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 55 768 Calculated tax losses 5 084 7 302 294 12 680 Income received in advance 17 246 (760) 16 486 Net share options balance 2 231 (5 524) (3 293)
Total (7 881) 19 887 272 301 12 579
statements for the year ended 31 August 2012 continued
Notes to the
fINaNCIaL
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Balance at Recognised in Balance at31 August 2010 profit or loss 31 August 2011
R’000 R’000 R’000
10. deferred TAx (continued)CoMPAnySTC credits 1 690 (154) 1 536
Balance at recognised in Balance at31 August 2011 profit or loss 31 August 2012
r’000 r’000 R’000
STC credits 1 536 (1 536)
At 31 August 2012 the group had unutilised tax losses of R214,4 million (2011: R138,0 million) available for offset against future taxable
profits. No deferred tax asset has been raised on unutilised tax losses amounting to 178,1 million (2011: R117,8 million) due to the
unpredictability of future taxable profit. If a deferred tax asset was to be raised, an amount of R49,2 million (2011: R33,0 million) would
be recognised in profit or loss.
At reporting date, the group had unutilised capital gains tax losses of R526,7 million (2011: R1 106,5 million). A deferred tax asset has
not been raised on this amount due to the uncertainty of future capital gains.
On 1 April 2012, Secondary Tax on Companies (STC) was replaced with a Dividend Withholding Tax (DWT). Subsequent to
1 April 2012, unutilised STC credits can be carried forward for a period of three years and may be utilised to reduce the liability for DWT
of the beneficial holder of the dividend. The group has not recognised deferred tax assets relating to STC at 31 August 2012.
grouP CoMPAny2012 2011 2012 2011
r’000 R’000 r’000 R’000
11. AMounTs oWed By grouP CoMPAnIesBusiness Connexion Proprietary Limited 240 969 300 903 The loan is unsecured, interest free and has no repayment terms.
Business Connexion Group Share Trust 15 908 15 848 The loan is unsecured, interest free and has no repayment terms.
UCS Technology Services Proprietary Limited 12 468 15 528 The loan is unsecured, interest free and has no repayment terms.
Accsys Proprietary Limited 4 064 4 064 The loan is unsecured, interest free and has no repayment terms.
CEB Maintenance Africa Proprietary Limited 2 263 4 262 The loan is unsecured, interest free and has no repayment terms.
UCS Solutions Proprietary Limited 101 The loan is unsecured, interest free and has no repayment terms.
275 773 340 605
12. InvenTorIesCostMaintenance, components and consumables 200 685 149 288 Merchandise 101 719 117 991 Work in progress 14 620 23 729
317 024 291 008
Write-down of inventoriesMaintenance, components and consumables 109 037 104 262 Merchandise 10 086 7 807
119 123 112 069
Carrying value at end of year 197 901 178 939
122
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2012 2011 2012 2011
r’000 R’000 r’000 R’000
13. TrAde reCeIvABLesTrade receivables 997 555 985 842
Impairment allowance (26 221) (15 758)
Carrying value at end of year 971 334 970 084
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
approximates 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 R513,2 million (2011: R660,0 million) have been ceded to Rand Merchant Bank and R33,5 million
(2011: R15,0 million) to Nedbank. Refer to note 17.
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 37.
Carrying
gross Impairment amount
r’000 r’000 ‘r000
Trade receivables ageing 31 August 2012
Not past due 797 690 797 690
Past due 30 days 83 044 83 044
Past due 60 days 37 390 (559) 36 831
Past due 90 days 20 414 (3 334) 17 080
Past due > 120 days 59 017 (22 328) 36 689
997 555 (26 221) 971 334
Trade receivables ageing 31 August 2011
Not past due 755 325 755 325
Past due 30 days 95 055 95 055
Past due 60 days 52 493 (336) 52 157
Past due 90 days 17 006 (2 004) 15 002
Past due > 120 days 65 963 (13 418) 52 545
985 842 (15 758) 970 084
grouP CoMPAny
2012 2011 2012 2011
r’000 R’000 r’000 R’000
Movement in the impairment of trade receivables
Balance at beginning of year 15 758 8 728
Amounts (utilised)/recovered (1 430) 426
Raised 12 656 8 264
Released (763) (1 660)
Balance at end of year 26 221 15 758
statements for the year ended 31 August 2012 continued
Notes to the
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grouP CoMPAny
2012 2011 2012 2011
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14. oTher reCeIvABLesAccrual for uninvoiced income 114 382 131 185 Asset finance residual values 33 530 19 175 UCS Solutions Proprietary Limited management loan 32 092 32 092 Deposits 2 988 4 797 Employee advances and loans 7 691 4 466 Fair value gain on forward exchange contracts 1 011 1 388 BEE “A” share shareholder loans 463 463 Preference dividend accrual 15 341 15 359 15 341 15 359 Receivable on disposal of properties 18 012 Other 46 079 41 679 8 770
239 034 250 604 15 341 56 684
The carrying amount of other receivables approximates
fair value because of the short period to maturity.
15. AsseTs heLd-for-sALe (refer to note 2)Balance at beginning of year 18 003 9 612 Transfer from investment property 8 391 Disposal of assets-held-for-sale (18 003)
Balance at end of year 18 003
grouP CoMPAnyNumber of
shares R’000
Number of
shares R’000
16. shAre CAPITALAuthorised share capital:ordinary shares31 August 2012 and 31 August 2011 ordinary shares
of 0,59 cent each 847 457 627 5 000 847 457 627 5 000
“A” shares31 August 2012 and 31 August 2011 “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 2 389 404 972 648 2 389 Less: Ordinary shares held at 31 August 2011 7 280 248 43
ordinary shares of 0,59 cent in issue at 31 August 2011 397 692 220 2 346 404 972 468 2 389 Ordinary shares utilised during year 2 155 699 12
ordinary shares of 0,59 cent in issue at 31 August 2012 399 847 919 2 358 404 972 468 2 389
“A” shares“A” shares of 0,59 cent in issue at 31 August 2011 100 133 334 100 133 334 Less: “A” shares held at 31 August 2012 61 502 61 502
“A” shares of 0,59 cent in issue at 31 August 2012 100 071 832 100 071 832
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 at 31 August 2012
were 5 124 549 (2011: 7 280 248), representing 1,3% (2011: 1,8%) of the issued ordinary share capital.
“A” shares held by Business Connexion Proprietary Limited at 31 August 2012 were 61 502 (2011: 97 555) representing 0,04%
(2011: 0,06%) of the issued “A” share capital.
124
Less than Between oneone year and five years 2012 2011
r’000 r’000 r’000 R’000
17. InTeresT BeArIng Long-TerM LIABILITIesgrouPLiabilities under finance leases at 31 August 2012Future minimum lease payments 28 360 19 714 48 074 Lease finance charges (2 499) (1 528) (4 027)
Present value of minimum lease payments 25 861 18 186 44 047
Liabilities under finance leases at 31 August 2011Future minimum lease payments 29 515 33 765 63 280 Lease finance charges (2 043) (4 385) (6 428)
Present value of minimum lease payments 27 472 29 380 56 852
Liabilities under finance leases relate to assets with lease terms ranging from three to five years.
These liabilities bear interest at fixed interest rates ranging between 2% and 10,22%
(2011: 2% 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 the capitalised leased assets with a carrying value of R51,4 million
(2011: R57,0 million) as shown in note 3. 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 approximates their carrying amounts.
LoansStanbic Tanzania 3 740 1 560 The loan bears interest at 8,5%, is secured by a guarantee from Business Connexion
Proprietary Limited, and is repayable over 60 months. The base currency for this loan is USD.
Akiba Tanzania 630 1 367 The loan bears interest at 9,0%, was secured by property, plant and equipment, and is repayable
over 36 months. The base currency for this loan is USD.
Nedbank 3 751 8 938 These loans are secured by a cession of trade receivables amounting to R33,5 million
(2011: R15,0 million) of CEB Maintenance Africa Proprietary Limited and bear interest at 6,5%
(2011: 8,5%). A portion of the loans was repaid on 1 November 2011 and the balance outstanding
at 31 August 2012 is repayable in December 2012. The base currency for these loans is ZAR.
Rand Merchant Bank 210 327 254 410 The loan is secured by a cession of the trade receivables amounting to R513,2 million
(2011: R660,0 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%. At 31 August 2012 Business Connexion
Proprietary Limited has complied with all the Rand Merchant Bank debt covenant requirements.
The base currency for this loan is ZAR.
Barclays Commercial Mortgage 5 195 4 739 The 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, and is repayable over 20 years. The base
currency for this loan is GBP. Refer to note 2 for the carrying value of freehold buildings.
Zambia 968 This loan bears interest at the Zambian prime rate less 1%, is secured by a swift guarantee of
R1,3 million from FNB South Africa. The loan is repayable over 35 months.The base currency
for this loan is USD.
Total interest bearing long-term liabilities 268 658 327 866 Transfer to short-term liabilities (89 191) (77 187)
179 467 250 679
statements for the year ended 31 August 2012 continued
Notes to the
fINaNCIaL
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grouP2012 2011
r’000 R’000
18. PosT-reTIreMenT BenefIT oBLIgATIonsPost-retirement healthcare obligationsBalance at beginning of year 7 920 12 055 Amendment to accruals based on changes in beneficiaries, assumptions and known
increases in medical aid rates 1 703 (3 230)Interest 1 114 1 034 Current year service costs 358 329 Benefits paid (481) (2 268)
Balance at end of year 10 614 7 920
Amounts recognised in profit or lossAmendment to accruals based on changes in benefeciaries, assumptions and known
increases in medical aid rates 1 703 (3 230)Interest 1 114 1 034 Current year service costs 358 329
3 175 (1 867)
It is not the group’s policy to offer post-retirement healthcare benefits. At 31 August 2012,
32 individuals (31 August 2011: 30) 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 7,25Discount rate (%) 7,35 8,50Average retirement age for in-service members 63 63
grouP CoMPAny2012 2011 2012 2011
r’000 R’000 r’000 R’000
19. AMounTs oWed To grouP CoMPAnIesBusiness Connexion International Holdings Proprietary Limited 20 070 20 070 This loan is interest-free, unsecured and has no repayment terms.
Accsys Proprietary Limited 11 832 The loan bears interest at an average deposit rate that is earned
by the group on investment of funds, is unsecured and has no
repayment terms.
CEB Maintenance Africa Proprietary Limited 9 333 The loan bears interest at an average deposit rate that is earned
by the group on investment of funds, is unsecured and has no
repayment terms.
UCS Solutions Proprietary Limited 58 302 The loan bears interest at an average deposit rate that is earned
by the group on investment of funds, is unsecured and has no
repayment terms.
UCS Technology Services Proprietary Limited 48 750 The loan bears interest at an average deposit rate that is earned
by the group on investment of funds, is unsecured and has no
repayment terms.
Balance at end of year 148 287 20 070
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2012 2011 2012 2011
r’000 R’000 r’000 R’000
20. oTher PAyABLesAccruals 144 628 179 099 2 138 80
Vendor payment accrual 49 543 20 000 13 363 20 000
Accrual for leave pay 101 748 93 086
Income received in advance 83 175 91 967
Payroll creditors 160 174 127 319
VAT 51 960 53 166
Liability relating to the executive share option scheme 9 725 16 677
Interest rate swap 6 643 7 301
Other 49 694 50 446 19 975 21 439
647 565 622 384 45 201 58 196
Legal Warranties Total
R’000 R’000 R’000
21. ProvIsIonsgrouPBalance at 31 August 2010 285 1 997 2 282
Recognised in profit or loss (68) (1 322) (1 390)
Balance at 31 August 2011 217 675 892
Recognised in profit or loss (217) 621 404
Balance at 31 August 2012 1 296 1 296
The legal provision relates to possible claims on outstanding legal matters. Warranties relate to possible claims on products sold.
The amount is determined based on past experience.
grouP CoMPAny
2012 2011 2012 2011
r’000 R’000 r’000 R’000
22. revenueFor rendering services 3 822 517 2 593 885
Arising on sale of goods 2 007 127 1 720 296
5 829 644 4 314 181
statements for the year ended 31 August 2012 continued
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grouP CoMPAny
2012 2011 2012 2011
r’000 R’000 r’000 R’000
23. oPerATIng ProfIToperating profit is stated after:
Administration, management and other fees 13 920 21 951
Auditors’ remuneration
Audit fees
– Current year 11 420 7 287
– Prior year under provision 1 600 710
Fees for other services 22 593
13 042 8 590
depreciation and amortisation
Property, plant and equipment
– Property 14 923 13 259
– Furniture and fittings 6 769 5 857
– Equipment 91 795 82 203
– Vehicles 4 837 1 355
– Rental assets 219 132
118 543 102 806
Capitalised leased assets
– Furniture and fittings 514 189
– Equipment 23 314 16 389
23 828 16 578
Intangible assets
– Brands 3 686 1 229
– Client relationships 42 786 13 328
– Computer software 38 155 27 751
– Fair value of contracts 1 261
84 627 43 569
directors’ emoluments
Emoluments for services as directors of the company 22 100 10 936
Less: Paid by subsidiaries (19 166) (8 202)
2 934 2 734
Made up as follows:
– Salaries and other benefits 13 207 8 202
– Bonuses and performance-related payments 5 959
– Remuneration paid to non-executive directors 2 934 2 734
22 100 10 936
128
grouP CoMPAny
2012 2011 2012 2011
r’000 R’000 r’000 R’000
23. oPerATIng ProfIT (continued)operating lease charges
– Land and buildings 97 876 43 920
– Equipment 44 669 23 764
– Vehicles 2 651 2 637
145 196 70 321
foreign exchange losses 7 588 9 348
research and development costs 30 797 16 111
employee costs
– Paid to employees 2 124 067 1 782 749
– Contributions paid on behalf of employees 133 601 189 652
2 257 668 1 972 401
Average number of employees 6 548 6 453
other disclosable items
Fair value of financial liability 433 (5 958) (6 951) (15 400)
(Loss)/profit on sale of subsidiary (144) 68 868 68 272
Impairment of investment in associate (5 985) (2 500)
Fair value adjustment to investment property 191
Share-based payment expenses (13 761) (15 879)
Loss on sale of associate (218)
Loss on sale of property, plant and equipment (720) (1 519)
Profit on sale of business 4 741
Impairment of goodwill (4 863)
Write-down of inventories (7 054) (16 308)
Reversal of loan impairment 1 418
24. InvesTMenT InCoMedividends received
Banks 1 703 3 034
Unlisted investments 15 341 15 359 15 341 15 359
Subsidiaries 2 333 12 919
Other 1 033
18 077 18 393 17 674 28 278
Interest income
Banks 14 707 4 879 76 25
Loans and advances 1 880 1 137 1 268 730
South African Revenue Services 31 2 920 22
16 618 8 936 1 366 755
34 695 27 329 19 040 29 033
25. fInAnCe CosTsInterest on liabilities 23 176 14 085 3 222 10
Interest on finance leases 4 012 3 991
Other 296
27 484 18 076 3 222 10
statements for the year ended 31 August 2012 continued
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grouP CoMPAny
2012 2011 2012 2011
r’000 R’000 r’000 R’000
26. TAxATIonSouth African tax 78 881 57 197 (7 672) 36 974
Foreign tax 6 737 7 203
85 618 64 400 (7 672) 36 974
Comprising:
Normal tax
– current year 111 806 78 061 256 31 524
– prior year over provision (31 550) 3 (31 333)
Secondary Tax on Companies 21 924 5 296 21 869 5 296
Withholding tax 3 325 1 881
Current tax 105 505 85 241 (9 208) 36 820
Deferred tax
– current year (20 259) (19 620) 1 536 154
– prior year under provision 372 (1 221)
deferred tax (19 887) (20 841) 1 536 154
85 618 64 400 (7 672) 36 974
% % % %
reconciliation of effective tax rate
Reconciliation between applicable tax rate and average
effective tax rate:
Effective tax rate 30,4 38,6 (40,2) 33,8
Deferred tax raised on STC credits (0,5) (0,1) (8,0) (0,1)
Withholding tax and dividend withholding tax (1,2) (1,1) (114,5) (4,8)
STC (8,0) (3,2)
Differing tax rate (0,4) (0,7)
Capital gains tax (0,5) (18,8) (28,7)
Prior year adjustment 11,3 0,7 164,1
(Reduction)/increase in taxes due to exempt income,
allowances and estimated tax losses (3,1) 12,6 26,6 27,8
Exempt income (4,1) 25,0 36,3 28,7
Disallowed expenses 0,7 (12,9) (9,7) (0,9)
Calculated tax losses 0,3 0,5
statutory tax rate 28,0 28,0 28,0 28,0
South African income tax is calculated at 28% (2011: 28%) of the estimated taxable income for the period. Taxation in other jurisdictions
is calculated at rates prevailing in those relevant jurisdictions.
130
2012 2011
27. eArnIngs Per shAregrouPreconciliation of treasury shares
Number of treasury shares held by the share purchase trust and subsidiary at end of year 5 124 549 2 975 904
Weighted average number of options exercised during year in the share purchase trust 1 297 912 130 356
Weighted average number of treasury shares 6 422 461 3 106 260
Weighted average number of shares is calculated as follows:
Number of ordinary share in issue at end of year 404 972 468 404 972 468
Weighting of shares issued during year (70 176 737)
Weighted average number of treasury shares (6 422 461) (3 106 260)
Weighted average number of shares 398 550 007 331 689 471
Diluted weighted average number of shares is calculated as follows:
Weighted average number of shares 398 550 007 331 689 471
Potential dilutive options 2 059 028 3 451 349
Options issued and exercised during year that were dilutive for a portion of period 487 933 30 859
diluted weighted average number of shares 401 096 968 335 171 679
Profit attributable to equity holders (R’000) 149 317 92 578
Basic earnings per share (cents) 37,5 27,9
Diluted earnings per share (cents) 37,2 27,6
2012
r’000
2011
R’000
28. heAdLIne eArnIngs Per shAregrouPProfit attributable to equity holders 149 317 92 587
Fair value adjustment to investment property (191)
Loss on sale of property, plant and equipment, capitalised leased assets and other intangible assets 720 1 519
Loss/(profit) on sale of subsidiary 144 (68 868)
Loss on sale of associate 218
Impairment of investment in associate 5 985 2 500
Reversal of loan impairment (1 418)
Profit on sale of business (4 741)
Impairment of goodwill 4 863
Tax effect of headline earnings adjustments 563 29 751
headline earnings attributable to equity holders 155 433 57 516
Weighted average number of shares 398 550 007 331 689 471
Diluted weighted average number of shares 401 096 968 335 171 679
Headline earnings per share (cents) 39,0 17,3
Diluted headline earnings per share (cents) 38,8 17,2
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.
statements for the year ended 31 August 2012 continued
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grouP CoMPAny
2012 2011 2012 2011
r’000 R’000 r’000 R’000
29. CAPITAL CoMMITMenTsAuthorised – contracted 16 393 147 699
Authorised – not contracted 751
17 144 147 699
Capital commitments will be financed out of existing group resources.
The capital commitments relate to capital expenditure on equipment.
<1 year 2 to 5 years > 5 years Total
r’000 r’000 r’000 r’000
30. oPerATIng LeAse CoMMITMenTsgrouPAt 31 August 2012
Land and buildings 74 997 164 008 239 005
Equipment 13 275 29 821 18 115 61 211
Vehicles 119 206 325
Fixtures and fittings 190 190
88 581 194 035 18 115 300 731
At 31 August 2011
Land and buildings 64 456 127 686 33 341 225 483
Equipment 23 331 3 342 26 673
Vehicles 635 1 292 1 927
88 422 132 320 33 341 254 083
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 CoMPAny
2012 2011 2012 2011
r’000 R’000 r’000 R’000
31. guArAnTees– Performance guarantees 91 838 39 609
– Other 34 910 35 493
– Asset finance deals with recourse to Business Connexion
Proprietary Limited 16 011 38 363
142 759 113 465
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.
132
32. ConTIngenT LIABILITIesgrouPContingent consideration:
To the extent that Canoa Group Holdings Proprietary Limited’s profit after tax exceeds the warranted profit, the seller will earn additional
consideration amounting to R26,2 million, payable in the 2013 financial year.
CoMPAny The company has provided the following equal 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 facility:An indirect facility for up to R20 million, which may be availed by means of letters of guarantee
Derivative facility:Forward exchange contracts for up to R6 million, being 10% of the amount of the forward exchange contract
grouP CoMPAny
2012 2011 2012 2011
r’000 R’000 r’000 R’000
33. reLATed PArTIesA related party is an entity or person where the group can
exercise significant influence, or which is controlled by
the group.
The group and company entered into the following transactions
with subsidiaries, associates and other related parties.
dividends receivedGadlex Proprietary Limited and
Gadlex Holdings Proprietary Limited 15 341 15 539 15 341 15 539 distribution receivedCH Share Purchase Trust 12 918
15 341 15 539 15 341 28 457
For transactions with subsidiaries and associates refer to notes 6, 7, 11 and 19.
For transactions with Gadlex Proprietary Limited and Gadlex Holdings Proprietary Limited refer to note 9.
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 12 of the Remuneration report for details of remuneration paid to senior management
34. 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.
statements for the year ended 31 August 2012 continued
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35. reTIreMenT InforMATIonThe group provides retirement benefits for all its employees by means of a number of independent defined contribution pension and
provident funds.
The funds are reviewed annually by actuaries at the funds’ year-end. At the last review dates, the funds were certified financially sound.
The amount recognised as an expense for defined contribution plans is R86,2 million (2011: R66,0 million).
36. segMenTAL AnALysIs Business 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 on-going basis. It includes
professional, cloud services, infrastructure services, workspace services and global service integration management.
• UCS division provides services in the retail IT services sector.
• Technology division provides clients with hardware and network equipment for their computing needs.
• Canoa division provides managed print services to clients.
• International division provides the services of the Services, Technology, UCS, Canoa and Innovation divisions outside the borders of
South Africa.
• Innovation division houses the group’s own intellectual property.
• Investment division houses the group’s investments in associates and other investments.
• 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.
Due to the significant size of the UCS and Canoa divisions they are now managed separately and no longer form part of the Investment
division. The group has restated its segment report in line with the above.
134
2012 2011
r’000 R’000
36. segMenTAL AnALysIs (continued)Total revenue
Services division 1 988 359 1 807 900
UCS division 1 093 148 353 185
Technology division 919 925 1 261 844
Canoa division 860 536 136 106
Innovation division 498 714 418 280
International division 485 199 370 527
Investment division 24 036 1 528
Corporate office
Inter-segmental revenue (40 273) (35 189)
5 829 644 4 314 181
Inter-segmental revenue
Services division (5 770) (974)
UCS division
Technology division (3 909) (30 852)
Canoa division
Innovation division (2 235) (1 339)
International division (17 950) (2 024)
Investment division (10 409)
Corporate office
(40 273) (35 189)
Total external revenue
Services division 1 982 589 1 806 926
UCS division 1 093 148 353 185
Technology division 916 016 1 230 992
Canoa division 860 536 136 106
Innovation division 496 479 416 941
International division 467 249 368 503
Investment division 13 627 1 528
Corporate office
5 829 644 4 314 181
depreciation and amortisation
Services division 83 079 89 068
UCS division 31 153 12 091
Technology division 14 650 6 611
Canoa division 4 002 994
Innovation division 5 718 4 403
International division 8 175 5 703
Investment division 5 778
Corporate office 74 443 44 083
226 998 162 953
statements for the year ended 31 August 2012 continued
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2012 2011
r’000 R’000
36. segMenTAL AnALysIs (continued)operating profit
Services division 219 266 177 198
UCS division 116 854 40 863
Technology division 3 328 (9 031)
Canoa division 106 549 17 972
Innovation division 67 615 19 978
International division 11 695 (7 753)
Investment division (28 301) 181
Corporate office (221 981) (81 736)
275 025 157 672
Capital expenditure
Services division 63 994 121 847
UCS division 30 401 12 243
Technology division 7 453 7 909
Canoa division 2 567
Innovation division 31 276 20 758
International division 16 680 9 243
Investment division 12 371 521 435
Corporate office 40 833 47 200
205 575 740 635
Assets
Services division 671 018 737 977
UCS division 381 652 400 608
Technology division 447 548 641 345
Canoa division 243 925 140 198
Innovation division 201 427 174 733
International division 339 649 219 326
Investment division 62 673 1 214
Corporate office 1 267 681 1 367 452
3 615 573 3 682 853
Liabilities
Services division 338 712 277 346
UCS division 98 424 199 093
Technology division 403 487 387 050
Canoa division 105 059 79 251
Innovation division 69 362 78 147
International division 175 125 228 617
Investment division 103 780 3 130
Corporate office 120 039 237 175
1 413 988 1 489 809
share of losses from associates
Investment division 495 217
136
37. 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’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 receivables, trade
and other receivables, trade and other payables and liabilities, and long and short-term loans and borrowings.
significant accounting policiesDetails 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 managementThe 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.
Market riskMarket 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.
(b) 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.
statements for the year ended 31 August 2012 continued
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original
contract
fair
value
foreign
currency
value
r’000 r’000 r’000
37. fInAnCIAL InsTruMenTs (continued)(b) Currency risk (continued)
grouPUnited States Dollars (USD) 117 488 116 454 13 887
British Pound (GBP) 26 27 2
Euro (EUR) 554 576 54
forward exchange contracts at 31 August 2012 118 068 117 057
United States Dollars (USD) 179 137 180 493 25 371
Botswana Pula (BWP) 16 16 15
Euro (EUR) 2 557 2 589 221
New Zealand Dollar (NZD) 105 105 18
forward exchange contracts at 31 August 2011 181 815 183 203
The group exposure to significant currency risk was as follows:
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 1
Trade 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
138
37. fInAnCIAL InsTruMenTs (continued)(b) Currency risk (continued)
USD TZS BWP MZN EURO NZD GBP NGN ZMK
‘000 ‘000 ‘000 ‘000 ‘000 ‘000 ‘000 ‘000 ‘000
Gross exposure in the statement
of financial position at
31 August 2011 (15 328) 184 671 (15) 63 063 (18) 203 8 376 3 441 791
Cash and cash equivalents 700 184 671 63 063 4 18 8 376 3 441 791
Trade receivables 10 742
Trade payables (15 647) (15) (4) (2)
Open purchase orders (11 123) (18) (219)
Foreign exchange contracts
in place 25 371 15 18 221
net exposure 10 043 184 671 63 063 18 8 376 3 441 791
The following exchange rates have been applied at year-end:
Average rates 2012 2011
ZAR/USD 8,04 8,40 7,02
ZAR/ZMK 0,0015 0,0017 0,0014
ZAR/BWP 1,07 1,08 1,05
ZAR/EURO 10,49 10,56 10,11
ZAR/NZD 6,42 6,74 6,01
ZAR/GBP 12,65 13,32 11,44
ZAR/KES 0,092 0,10 0,075
ZAR/MZN 0,32 0,29 0,27
ZAR/NGN 0,05 0,053 0,045
ZAR/TZS 0,0050 0,0054 0,0043
foreign currency sensitivity analysis
A 10% strengthening of the ZAR against the following currencies at 31 August 2012 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.
2012 2011
r’000 R’000
USD (10 515) (7 048)
KES (6)
MZN (1 094) (1 679)
EURO (593)
NGN 492 (38)
TZS (46) (80)
GBP (1 605) (21)
ZMK (161) (1 482)
(13 528) (10 348)
A 10% weakening in the ZAR against the above currencies at 31 August 2012 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.
statements for the year ended 31 August 2012 continued
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37. fInAnCIAL InsTruMenTs (continued) (c) 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 2012 would increase by R2,1 million (2011: increase by R2,0 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 2011.
grouP CoMPAny
2012 2011 2012 2011
r’000 R’000 r’000 R’000
Long-term loans receivable 32 446 30 157
Other investments 213 371 214 678 213 371 214 687
Cash and cash equivalents 443 930 518 308 2 762 1 746
Interest bearing long-term liabilities (179 467) (250 679)
Short-term liabilities (89 191) (77 187)
421 089 405 120 246 290 216 433
(d) 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 client base. The group monitors the client 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 13.
grouP CoMPAny
2012 2011 2012 2011
r’000 R’000 r’000 R’000
The group’s and company’s total exposure to credit risk
is as follows:
Long-term loans receivable 32 446 30 157
Other investments 213 371 214 687 213 371 214 687
Amounts owed by group companies 275 773 340 605
Trade receivables 971 334 970 084
Other receivables 231 343 250 604 15 341 56 684
Cash and cash equivalents 443 930 518 308 2 762 1 746
1 892 424 1 953 683 537 404 613 722
140
37. fInAnCIAL InsTruMenTs (continued) (e) 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 R196,7 million (2011: R154,8 million).
Maturity profile of financial instruments including finance lease liabilities
<1 year 2 to 5 years 2012
r’000 r’000 r’000
grouPfinancial assets
non-derivative financial assets
Long-term loans receivable 32 446 32 446
Other investments 213 371 213 371
Trade and other receivables 1 201 666 1 201 666
Cash and cash equivalents 443 930 443 930
derivative financial assets
Forward exchange contracts 1 011 1 011
1 646 607 245 817 1 892 424
Carrying
value
Contracted
outflows <1 year 2 to 5 years
Contracted
outflows
2012 2012 2012 2012 2012
r’000 r’000 r’000 r’000 r’000
financial liabilities
non-derivative financial liabilities
Interest bearing long-term and
short-term liabilities 268 658 311 170 107 056 203 934 311 170
Trade and other paybles 1 020 600 1 020 600 1 020 600 1 020 600
derivative financial liabilities
Interest rate swap 6 643 6 643 6 643 6 643
1 295 901 1 338 413 1 134 299 203 934 1 338 413
< 1 year 2 to 5 years 2011
R’000 R’000 R’000
grouPfinancial assets
non-derivative financial assets
Loans to associates 5 487 5 487
Other investments 215 308 215 308
Trade and other receivables 1 219 300 1 219 300
Cash and cash equivalents 518 308 518 308
derivative financial assets
Forward exchange contracts 1 388 1 388
1 738 996 220 795 1 959 791
statements for the year ended 31 August 2012 continued
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37. fInAnCIAL InsTruMenTs (continued)(e) Liquidity risk (continued)
Carrying
value
Contracted
outflows <1 Year 2 to 5 years
Contracted
outflows
2011 2011 2011 2011 2011
R’000 R’000 R’000 R’000 R’000
financial liabilities
non-derivative financial liabilities
Interest bearing long and short term
liabilities 327 866 371 933 80 971 290 962 371 933
Trade and other payables 780 019 780 019 780 019 780 019
derivative financial liabilities
Interest rate swap 7 301 7 301 7 301 7 301
1 115 186 1 159 253 860 990 298 263 1 159 253
<1 year 2 to 5 years 2012
r’000 r’000 r’000
CoMPAnyfinancial assets
non-derivative financial assets
Long-term loans receivable 30 157 30 157
Amounts owed by group companies 275 773 275 773
Other investments 213 371 213 371
Trade and other receivables 15 341 15 341
Cash and cash equivalents 2 762 2 762
293 876 243 528 537 404
Carrying
value
Contracted
outflows <1 year 2 to 5 years
Contracted
outflows
2012 2012 2012 2012 2012
r’000 r’000 r’000 r’000 r’000
financial liabilities
non-derivative financial laibilities
Amounts owed to group companies 148 287 148 287 148 287 148 287
Trade and other payables 35 476 35 476 35 476 35 476
derivative financial liabilities
Derivative relating to group share
scheme 9 725 9 725 9 725 9 725
193 488 193 488 183 763 9 725 193 488
142
37. fInAnCIAL InsTruMenTs (continued)(e) Liquidity risk (continued)
<1 year 2 to 5 years 2011
R’000 R’000 R’000
CoMPAnyfinancial assets
non-derivative financial assets
Amounts owed by group companies 340 605 340 605
Other investments 214 687 214 687
Trade and other receivables 56 684 56 684
Cash and cash equivalents 1 746 1 746
399 035 214 687 613 722
Carrying
amount
Contracted
outflows <1 year 2 to 5 years
Contracted
outflows
2011 2011 2011 2011 2011
R’000 R’000 R’000 R’000 R’000
financial liabilities
non-derivative financial liabilities
Loans owed to group companies 20 070 20 070 20 070 20 070
Trade and other payables 41 519 41 519 41 519 41 519
derivative financial liabilities
Derivative relating to group share
scheme 16 667 16 677 16 677 16 677
78 256 78 266 61 589 16 677 78 266
(f) fair valuesfair value Carrying value Fair value Carrying value
2012 2012 2011 2011
r’000 r’000 R’000 R’000
grouPfinancial assets
non-derivative financial assets
Loans and receivables
Long-term loans receivable 32 446 32 446
Loans to associates 5 487 5 487
Trade receivables 971 334 971 334 970 084 970 084
Other receivables 230 332 230 332 249 216 249 216
Cash and cash equivalents 443 930 443 930 518 308 518 308
held-to-maturity investments
Other investments 213 371 213 371 214 687 214 687
Available-for-sale financial assets
Other investments 621 621
derivative financial assets
Forward exchange contracts 1 011 1 011 1 388 1 388
1 892 424 1 892 424 1 959 791 1 959 791
statements for the year ended 31 August 2012 continued
Notes to the
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37. fInAnCIAL InsTruMenTs (continued)(f) fair values (continued)
fair value Carrying value Fair value Carrying value
2012 2012 2011 2011
r’000 r’000 R’000 R’000
financial liabilities
non-derivatives financial liabilities
other financial liabilities:
Interest bearing long-term and short-term liabilities 268 658 268 658 327 866 327 866
Trade payables 425 323 425 323 457 128 457 128
Other payables 595 277 595 277 322 891 322 891
derivative financial liabilities
Interest rate swap 6 643 6 643 7 301 7 301
1 295 901 1 295 901 1 115 186 1 115 186
CoMPAnyfinancial assets
non-derivative financial assets
Loans and receivables
Long-term loans receivable 30 157 30 157
Amounts owed by group companies 275 773 275 773 340 605 340 605
Other receivables 15 341 15 341 56 684 56 684
Cash and cash equivalents 2 762 2 762 1 746 1 746
Investments held-to-maturity
Other investments 213 371 213 371 214 687 214 687
537 404 537 404 613 722 613 722
financial liabilities
non-derivative financial liabilities
other financial liabilities:
Amounts owed to group companies 148 287 148 287 20 070 20 070
Other payables 45 201 45 201 58 196 58 196
193 488 193 488 78 266 78 266
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.
144
37. fInAnCIAL InsTruMenTs (continued) (f) fair values (continued)
Forward exchange contracts and interest rate swapsThe 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 available-for-sale financial assets is based on the quoted market price. The fair value of held-to-maturity
investments is calculated based on the present value of future principal and dividend cash flows.
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 1
r’000
Level 2
r’000
Level 3
r’000
Total
r’000
grouP31 August 2012Other investments 213 371 213 371 Forward exchange contracts 1 011 1 011
Total assets 1 011 213 371 214 382
Interest rate swap 6 643 6 643
Total liabilities 6 643 6 643
31 August 2011Other investments 215 308 215 308 Foreign exchange contracts 1 388 1 388
Total assets 1 388 215 308 216 696
Interest rate swap 7 301 7 301
Total liabilities 7 301 7 301
CoMPAny31 August 2012Other investments 213 371 213 371
Total assets 213 371 213 371
Derivative relating to group share scheme 9 725 9 725
Total liabilities 9 725 9 725
31 August 2011Other investments 214 687 214 687
Total assets 214 687 214 687
Derivative relating to group share scheme 16 677 16 677
Total liabilities 16 677 16 677
statements for the year ended 31 August 2012 continued
Notes to the
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37. fInAnCIAL InsTruMenTs (continued) (g) 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 17, cash and cash equivalents
and shareholders’ equity, comprising issued capital, reserves and retained earnings.
38. CrITICAL JudgeMenTs In APPLyIng The ACCounTIng PoLICIesIn 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.
39. Key sourCes of esTIMATIon unCerTAInTyThe 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.
146
grouP CoMPAny
2012 2011 2012 2011
r’000 R’000 r’000 R’000
40. reConCILIATIon of ProfIT Before TAx To CAsh generATed froM/(used In) oPerATIonsProfit before tax 281 741 166 708 19 091 109 278
Adjustments for:
Depreciation and amortisation 226 998 162 953
Dividends received (18 077) (17 674) (28 278)
Interest received (16 618) (27 329) (1 366) (755)
Finance costs 27 484 18 076 3 222 10
Loss on sale of associate 218
Movement in provisions 10 867 (8 420)
Loss on disposal of property, plant and equipment
capitalised leased assets and intangible assets 720 1 519
Profit on sale of subsidiary (68 868) (68 272)
Impairment of loans and advances, other investments
and goodwill (1 418) 1 490
Impairment of goodwill 4 863
Impairment of associate 5 985 2 500
Post-retirement obligations movement 2 694 (4 135)
Unrealised foreign exchange gains (12 964) (2 112)
Share-based payment expense 13 761 15 879
Fair value adjustment on investment properties (191)
Fair value of financial liability (433) (6 951) (15 400)
Share of losses from associates 217
Profit on sale of business (4 741)
operating cash flow before working capital changes 520 862 258 505 (3 678) (3 417)
Changes in working capital:
(Increase)/decrease in inventories (17 502) 19 063
Increase in trade receivables (4 453) (7 875)
Decrease/(increase) in other receivables 28 920 12 878 11 187 (22 887)
(Increase)/decrease in prepayments (3 906) 387 58 (29)
(Decrease)/increase in trade payables (32 256) 50 118
(Decrease)/increase in other payables (1 387) 88 329 (12 995) 6 591
Cash generated from/(used in) operations 490 278 421 405 (5 428) (19 742)
41. TAxATIon PAId Is reConCILed To The AMounT shoWn In ProfIT or Loss As foLLoWs:Amounts (unpaid and accrued for)/prepaid at beginning of year (5 269) 20 603 (1 194) 293
Recognised in profit or loss (85 618) (64 400) 7 672 (36 973)
Deferred tax recognised in profit or loss (19 887) (20 841) 1 536 154
Amounts paid/(unpaid and accrued for) at end of year 9 340 5 269 19 (1 194)
Taxation (paid)/refunded (101 434) (59 369) 8 033 (37 720)
statements for the year ended 31 August 2012 continued
Notes to the
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grouP
2012 2011
r’000 R’000
42. ACquIsITIon of suBsIdIArIesProperty, plant and equipment and intangible assets 193 326 742 Goodwill 16 470 498 540 Deferred tax assets 272 4 459 Trade and other receivables 7 275 257 664 Inventories 1 460 65 188 Cash and cash equivalents 5 328 73 723 Intercompany loans 68 723 Deferred tax liabilities (63 505)Interest–bearing long-term liabilities (8 007) (51 028)Taxation payable (280) (16 544)Trade and other payables (1 871) (285 476)Non–controlling interest (5 258)
Net assets acquired 20 840 873 228
– Cash paid 10 845 250 000– Issue of ordinary shares 584 172– Issue of “A” shares and raising of associated liability 19 056– Accrual for vendor payments 20 000– Contingent consideration 9 995
Total consideration 20 840 873 228
Comprising:Canoa Holdings Group Proprietary Limited 240 000 UCS Technology Services Proprietary Limited 180 008 CEB Maintenance Africa Proprietary Limited 152 866 Destiny Electronic Commerce Proprietary Limited 123 390 UCS Solutions Proprietary Limited 125 674 Accsys Proprietary Limited 51 290 Quad Automation Proprietary Limited 20 840
Total consideration 20 840 873 228
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 is payable to the extent that Quad Automation Proprietary Limited profit
after tax exceeds the warranted profits in the 2013 financial year. The financial year-end of Quad Automation Proprietary Limited is
February and it will be changed to 31 August in the 2013 financial year.
On 14 December 2010, Business Connexion Group Limited signed an agreement with UCS Group Limited to acquire a 100% interest in
UCS Technology Services Proprietary Limited, CEB Maintenance Africa Proprietary Limited, Accsys Proprietary Limited and 70% interest
in Destiny Electronic Commerce Proprietary Limited. In addition the group acquired a 100% interest in UCS Solutions Proprietary
Limited and subsequently sold a 30% interest back to management of UCS Solutions Proprietary Limited for a consideration of
R31,4 million.The total purchase consideration was R633,2 million. On 1 May 2011, the suspensive conditions pertaining to the
agreement with UCS Group Limited were fulfilled and the transaction was completed. The consideration was settled with the issuing of
R19,1 million (25 033 334) “A” shares, R584,1 million (101 243 118) ordinary shares and provisions for profit warranties of R30,0 million.
A total cash consideration of R10,0 million was paid against the vendor payment provision.
On 14 June 2011, Business Connexion Proprietary Limited signed an agreement with the trustees of Trawaral Trust, Canoa Group
Holdings Proprietary Limited and Dusty Moon Investments 333 Proprietary Limited, to acquire a 50% plus one share stake in the
trustees of Canoa Group Holdings Proprietary Limited, for a purchase consideration of R240,0 million. On 1 June 2011, the suspensive
conditions pertaining to the agreement with the trustees of the Trawaral Trust, Canoa Group Holdings Proprietary Limited and
Dusty Moon Investments 333 Properiatary Limited were fulfilled and the transaction was completed. A cash consideration
of R240,0 million was paid at that time.
148
grouP CoMPAny
2012 2011 2012 2011
r’000 R’000 r’000 R’000
43. AddITIons To ProPerTy, PLAnT And equIPMenT, CAPITALIsed LeAsed AsseTs And InTAngIBLe AsseTsReplacement 57 596 32 568
Expansion 147 979 219 948
205 575 252 516
44. CAsh And CAsh equIvALenTsCash and cash equivalents consist of:
Bank balances and cash 443 930 518 308 2 762 1 746
The group has the following unutilised bank facilities:
Overdraft facilities: R196,7 million (2011: R154,8 million).
45. dIsPosAL of suBsIdIAry And BusInessCarrying value of assets sold
Property, plant, equipment and intangible assets 45 25 038 25 038
Goodwill at acquisition 111 122 111 122
Trade and other receivables 105 854 105 854
Inventory 71 5 357 5 357
Cash and cash equivalents 24 306 24 306
Interest-bearing long-term liabilities (15 291) (15 291)
Deferred tax liability (6 501) (6 501)
Trade and other payables (111 270) (111 270)
Taxation liability (5 864) (5 864)
Profits after taxation accruing to
Business Connexion Group Limited (3 832) (3 832)
Non–controlling interest (5 258) (5 258)
Total net asset value 116 123 661 123 661
Total net asset value disposed of 116 123 661 123 661
Profit on disposal 4 741 68 868 68 868
Total consideration 4 857 192 489 192 489
The group concluded a transaction to sell its Avaya business to ATIO Proprietary Limited, effective 1 April 2012. The sale of Destiny
Electronic Commerce Proprietary Limited was concluded in July 2011.
statements for the year ended 31 August 2012 continued
Notes to the
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46. suBsequenT evenTs dividends A normal gross dividend of 20,0 cents per ordinary share (2011: 14,0 cents) has been declared from income reserves, payable to
shareholders for the year ended 31 August 2012. There are 4,4 cents STC credits available per share. The accrual regarding the dividend
has been recognised.
Corporate activityBusiness Connexion Group Limited entered into a sale of shares, repurchase and subscription agreement with Integr8 IT Proprietary
Limited (“Integr8 IT”) in November 2012 in terms of which it will purchase 100% of the issued share capital of Integr8 IT.
The consideration payable by Business Connexion Group Limited is up to R126,0 million in cash, and will be settled through an initial
payment of R56,0 million payable on the closing date and three potential earn–out payments of up to a maximum of R70,0 million
payable on 15 October 2013, 15 October 2014 and 15 October 2015.
150
investment in subsidiariesaNNEXURE a
Percentage
holding
number
of shares
Amount
invested
r’000
net amount
advanced
to/(by)
r’000
31 August 2012
direct holdings
south Africa
Business Connexion Proprietary Limited 100 57 836 1 618 330 240 969
Business 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 Limited
Business Connexion Content Distributions Solutions
Proprietary Limited 100 300 208 255
Business Connexion Solutions Holdings Proprietary Limited 100 372 944 107 071
Nanoteq Proprietary Limited 75 75 7 071 20 838
Canoa Group Holdings Proprietary Limited 50,4 61 240 000 1 466
Quad Automation Proprietary Limited 100 1 000 20 840 694
namibia
Business Connexion Namibia Proprietary Limited 75 2 625 7 079 (792)
united Kingdom
Business Connexion Limited 100 2 100 4 062
Tanzania
Business Connexion Tanzania Limited 65 1 650 42 497
Zambia
Business Connexion Zambia Limited 85 4 250 3 10 152
Mozambique
Business Connexion Mozambique Limitada 100 100 14 753 (171)
nigeria
Business Connexion ICT Services Limited* 100 152 177 108 7 683 6 330
Indirect holdings through Business Connexion International
holdings Proprietary Limited
BCX Kenya Limited – ordinary shares 70 700 000 2 075 4 375
BCX Kenya Limited – preference shares 23 000 000
* Previously known as Business Connexion Networks (Nigeria) Limited
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Percentage
holding
Number
of shares
Amount
invested
R’000
Net amount
advanced
to/(by)
R’000
31 August 2011
direct holdings
south Africa
Business Connexion Proprietary Limited 100 57 836 1 594 097 300 903
Business Connexion International Holdings Proprietary Limited 100 100 601 645 (20 070)
UCS Technology Services Proprietary Limited 100 101 164 480 15 528
Accsys Proprietary Limited 100 1 000 47 226 4 064
UCS Solutions Proprietary Limited 70 7 000 126 145
CEB Maintenance Africa Proprietary Limited 100 100 148 603 4 263
Indirect holdings through
Business Connexion Proprietary Limited
Business Connexion Content Distributions Solutions Proprietary Limited 100 300 175 159
Business Connexion Solutions Holdings Proprietary Limited 100 372 944 170 071
Nanoteq Proprietary Limited 100 100 35 509 (1 852)
Canoa Group Holdings Proprietary Limited 50,4 61 240 000
namibia
Business Connexion Namibia Proprietary Limited 75 2 625 7 079 456
united Kingdom
Business Connexion Limited 100 2 100 4 062
Tanzania
Business Connexion Tanzania Limited 65 650 34 26 841
Zambia
Business Connexion Zambia Limited 85 4 520 3
Mozambique
Business Connexion Mozambique Limitada 100 100 14 753 (223)
nigeria
Business Connexion Networks (Nigeria) Limited 100 10 000 000 669 11 711
Indirect holdings through Business Connexion International
holdings Proprietary Limited
BCX Kenya Limited – ordinary shares 70 700 000 2 075
BCX 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.
152
analysis continuedSHaREHOLDER
Company: Business Connexion group Limited
register date: 31 August 2012
Issued share capital: 404 972 468
shArehoLder sPreAdNumber of
shareholdings %
Number of
shares %
1 – 1 000 shares 3 453 64,51 805 191 0,20
1 001 – 10 000 shares 1 208 22,57 4 249 575 1,05
10 001 – 100 000 shares 384 7,17 13 727 447 3,39
100 001 – 1 000 000 shares 227 4,24 76 460 712 18,88
1 000 001 shares and over 81 1,51 309 729 543 76,48
Total 5 353 100,00 404 972 468 100,00
dIsTrIBuTIon of shArehoLders
Banks 42 0,78 12 581 823 3,11
Close corporations 80 1,49 2 897 169 0,72
Endowment funds 24 0,45 1 020 104 0,25
Individuals 4 450 83,12 27 467 919 6,78
Insurance companies 26 0,49 13 352 634 3,30
Investment companies 22 0,41 9 143 203 2,26
Medical schemes 11 0,21 1 700 179 0,42
Mutual funds 117 2,19 158 479 277 39,13
Nominees and trusts 345 6,44 36 116 695 8,92
Other corporations 32 0,60 348 589 0,09
Own holdings 1 0,02 3 422 919 0,85
Private companies 79 1,48 53 260 036 13,15
Public companies 9 0,17 170 698 0,04
Retirement funds 114 2,13 83 309 593 20,57
Share trust 1 0,02 1 701 630 0,42
Total 5 353 100,00 404 972 468 100,00
PuBLIC/non-PuBLIC shArehoLders
non-public shareholders 6 0,11 6 779 930 1,67
Directors and associates 4 0,07 1 655 381 0,41
Share trust 1 0,02 1 701 630 0,42
Own holdings 1 0,02 3 422 919 0,85
Public shareholders 5 347 99,89 398 192 538 98,33
Total 5 353 100,00 404 972 468 100,00
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Company: Business Connexion group Limited
register date: 31 August 2012
Issued share capital: 404 972 468
BenefICIAL shArehoLders hoLdIng 5% or MoreNumber of
shares %
Gadlex Proprietary Limited 38 600 000 9,53
Old Mutual 35 623 212 8,80
Allan Gray 31 962 270 7,89
Government Employees Pension Fund 20 259 965 5,00
Total 126 445 447 31,22
fund MAnAgers hoLdIng 5% or More
Allan Gray Asset Management 58 386 697 14,42
Investec Asset Management 40 370 327 9,97
Old Mutual Investment Group 39 198 630 9,68
Coronation Fund Managers 29 506 978 7,29
Total 167 462 632 41,36
154
Company: Business Connexion group Limited A-class
register date: 31 August 2012
Issued share capital: 100 133 334
shArehoLder sPreAdNumber of
shareholdings %
Number
of shares %
1 – 1 000 shares 626 68,79 188 202 0,19
1 001 – 10 000 shares 167 18,35 468 592 0,47
10 001 – 100 000 shares 69 7,58 2 334 284 2,33
100 001 – 1 000 000 shares 29 3,19 7 704 431 7,69
1 000 001 shares and over 19 2,09 89 437 825 89,32
Totals 910 100,00 100 133 334 100,00
dIsTrIBuTIon of shArehoLdersBanks 8 0,88 419 935 0,42
Close corporations 22 2,42 257 894 0,26
Endowment funds 13 1,43 10 077 265 10,06
Individuals 707 77,68 4 997 764 4,99
Insurance companies 9 0,99 22 130 0,02
Investment companies 3 0,33 1 037 311 1,04
Medical schemes 8 0,88 2 558 0,00
Mutual funds 25 2,75 6 977 631 6,97
Nominees and trusts 61 6,70 7 236 857 7,23
Other corporations 11 1,21 10 523 0,01
Own holdings 1 0,11 61 502 0,06
Private companies 19 2,09 27 646 509 27,61
Public companies 3 0,33 3 420 424 3,42
Retirement funds 19 2,09 65 031 0,06
Share trust 1 0,11 37 900 000 37,85
Totals 910 100,00 100 133 334 100,00
PuBLIC/non-PuBLIC shArehoLdersnon-public shareholders 5 0,55 56 549 807 56,47
Directors and associates 2 0,22 388 305 0,39
Share trust 1 0,11 37 900 000 37,85
Own holdings 1 0,11 61 502 0,06
Strategic holdings (more than 10%) 1 0,11 18 200 000 18,18
Public shareholders 905 99,45 43 583 527 43,53
Totals 910 100,00 100 133 334 100,00
BenefICIAL shArehoLders hoLdIng 3% or MoreBCG Management “A” Share Trust 37 900 000 37,85
Gadlex Holdings Proprietary Limited 18 200 000 18,18
Steyn Capital Management 4 008 072 4,00
Freewheel Trade And Invest 36 Proprietary Limited 3 800 000 3,79
YWCA Dube Charitable Trust 3 800 000 3,79
Totals 67 708 072 67,61
analysis continuedSHaREHOLDER
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shAre PrICe hIsTory And TrAde CoLuMnsYear Month High sale Low sale Number of deals Volume Value
2011 September 590 500 612 9 502 637 50 616 011
2011 October 530 480 526 4 808 404 25 059 299
2011 November 560 499 1 317 37 320 552 201 767 797
2011 December 565 528 758 16 297 602 90 194 240
2012 January 545 455 778 11 211 944 56 378 536
2012 February 480 440 429 4 292 232 19 523 994
2012 March 490 440 570 14 995 040 70 384 910
2012 April 480 456 469 22 214 760 103 273 598
2012 May 472 430 524 3 383 493 15 636 356
2012 June 463 443 579 4 095 006 18 505 178
2012 July 475 445 1 192 19 251 451 87 898 930
2012 August 500 451 2 126 15 913 910 75 783 081
MArKeT deTAILs12 months to 31 August 2012
Traded price (cents per share)
Close 485
High 590
Low 430
Market capitalisation 1 964 116 470
Value of shares traded 815 021 930
Value traded as % of mktcap 41%
Volume of shares traded 163 287 031
Volume traded as % of number in issue 40%
PE ratio 16,38
Dividend yield 2,67
Earnings yield 6,11
Period-end market price/NAV 0,93
Shares in issue net of treasury shares (millions) 399 847 919
Average no of shares in issue (millions) 398 550 007
Shares issued 404 972 468
Number of shareholders 5 353
156
DEfINITIONS
Key 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.
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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.
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.
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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.
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.
DEfINITIONS
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58. 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.
59. Temporary differences The differences between the carrying amount of an asset or
liability and its tax base.
60. Total assets An entity’s non-current assets and current assets.
61. Total equity An entity’s shareholders’ equity.
62. Total liabilities An entity’s non-current liabilities and current liabilities.
63. Treasury shares An entity’s own equity instruments, held by the entity or
other members of the consolidated group.
64. useful life The period over which an asset is expected to be available
for use.
65. value in use The present value of the future cash flows expected to be
derived from an asset.
66. 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.
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general meetingaNNUaLNotice 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 ninth annual
general meeting of the company will be held in the Business Connexion Fundi Auditorium, Business Connexion Park North, 789 Sixteenth
Road, Randjespark, Midrand 1685, on Monday, 14 January 2013 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 who were recorded as such in the Company’s securities register on Friday,
30 November 2012 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, 4 January 2013. 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 Thursday, 27 December 2012.
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 2012 (AFS) as approved by the board on 2 November 2012 is 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.
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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 2013.”
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
independent external auditor. The Audit and compliance committee has recommended the re-appointment of KPMG as auditors.
2. election of independent Audit and compliance committeeordinary resolution numbers 2.1, 2.2 and 2.3To 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 JM Poluta and Ms M Lehobye be appointed, on an individual basis, as members
of the Audit and compliance committee.
ordinary resolution number 2.1Appointment of Mrs J John as a member of the Audit and compliance committee.
“resolved that Mrs J John be and is hereby elected as a member of the Audit and compliance committee of the company”.
ordinary resolution number 2.2Appointment of Mr JM Poluta as a member of the Audit and compliance committee.
“resolved that subject to the passing of ordinary resolution 4.2 Mr JM Poluta be and is hereby elected as a member of the Audit and
compliance committee of the company”.
ordinary resolution number 2.3Appointment of Ms M Lehobye as a member of the Audit and compliance committee.
“resolved that subject to the passing of ordinary resolution 4.1 Ms M Lehobye be and is hereby elected as a member of the Audit and
compliance committee of the company”.
The percentage of voting rights that is required for Ordinary Resolutions Numbers 2.1, 2.2 and 2.3 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 number 2.1, 2.2 and 2.3A brief CV of each of the independent non-executive directors mentioned above appears on pages 14 to 17 of the integrated report of
which this notice forms part. The committee members have the required qualifications and experience to fulfil their duties.
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.
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general meeting continuedaNNUaLNotice of
3. election of group risk, sustianability, social and ethics committee ordinary resolution number 3To appoint a social and ethics committee, as provided in section 72(4) of the Companies Act 71 of 2008, as amended and regulation
43 of the Companies Regulations, 2011 (regulations), and that the members as set out below be and are hereby appointed in terms of
regulation 43(2) of the regulations to hold office until the next annual general meeting and to perform the duties and responsibilities
stipulated in regulation 43(5) of the regulations and to perform such other duties and responsibilities as may from time to time be
delegated by the board of directors of the company and all subsidiary companies. The board has recommended that Mr NN Kekana,
Ms J John and Mr AC Ruiters be appointed as members of the group Risk, sustainability, social and ethics committee.
ordinary resolution number 3.1Appointment of Mr NN Kekana as a member of the Risk, sustainability, social and ethics committee.
“resolved that Mr NN Kekana be and is hereby elected as a member of the Risk, sustainability, social and ethics committee”.
ordinary resolution number 3.2Appointment of Ms J John as a member of the Risk, sustainability, social and ethics committee.
“resolved that Ms J John be and is hereby elected as a member of the Risk, sustainability, social and ethics committee”.
ordinary resolution number 3.3Appointment of Mr AC Ruiters as a member of the Risk, sustainability, social and ethics committee.
“resolved that Mr AC Ruiters be and is hereby elected as a member of the Risk, sustainability, social and ethics committee”.
The minimum percentage of voting rights that is required for this resolution to be adopted is 50% of the voting rights plus one vote to
be cast on the resolution.
Additional information in respect of ordinary resolution number 3A brief CV of each of the independent non-executive directors mentioned above appears on pages 14 to 17 of the integrated report of
which this notice forms part. The committee members have the required qualifications and experience to fulfil their duties.
4. re-election of directors ordinary resolutions number 4.1 and 4.2To 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 4.1“resolved that Ms M Lehobye who is required to retire as a director of the company in terms of article 70 – 72 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 4.2“resolved that Mr JM Poluta who is required to retire as a director of the company in terms of article 70 to 72 of the MOI 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 this ordinary resolutions numbers 4.1 and 4.2 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 number 4.1 and 4.2Articles 70 to 73 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 71 of the MOI. A brief CV of each of the directors mentioned above appears on pages 14 to 17 of the integrated
report of which this notice forms part.
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5. non-binding approval of group remuneration policiesordinary resolution number 5To approve the group’s remuneration policies by way of a non-binding advisory vote.
“resolved that the group’s remuneration policies, as set out in the Remuneration report on pages 87 to 95 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”).
6. general authority to place ordinary shares under control of the directorsordinary resolution number 6“resolved that, 2% (two percent) of the authorised, but unissued ordinary shares (16 949 152) (excluding the 26 263 691 shares
in terms of the Business Connexion (2009) Executive Share Option Scheme as approved by shareholders on 20 April 2009) 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 (excluding the 26 263 691 shares in terms of the Business Connexion (2009) Executive Share Option Scheme
as approved by shareholders on 20 April 2009) 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 6 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 6 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.
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sPeCIAL resoLuTIons7. Approval of non-executive directors’ remuneration – 2013/2014
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.
“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 2014 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
for the
year ending
31 August
2013 Annual fee for the year ending
(approved at 31 August 2014 (proposed)
AgM of Attendance
19 January fixed/ fee per
Meeting 2012) retainer meeting Total
Chairman of the board 515 200 378 000 36 000 630 000
Member of the board 155 000 120 000 11 400 199 800
Chairperson: Audit and compliance committee 235 400 156 000 26 000 260 000
Member: Audit and compliance committee 91 600 60 000 10 000 100 000
Chairperson: Remuneration and nominations committee 91 000 60 000 10 000 100 000
Member: Remuneration and nominations committee 45 500 30 000 5 000 50 000
Chairperson: Risk, sustainability, social and ethics committee 107 000 80 000 10 000 120 000
Member: Risk, sustainability, social and ethics committee 53 500 36 000 6 000 60 000
Rate of R2500 per hour for all special meetings and additional
board mandated work Unchanged Unchanged Unchanged
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 2014. Further
details on the basis of calculation of the remuneration are included in the Remuneration report on pages 91 and 92 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 10% (ten percent) compared to the remuneration in respect of the year
ended 31 August 2013 and is only in respect of remuneration payable to directors of the company in their capacities as such.
general meeting continuedaNNUaLNotice of
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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;
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”.
The percentage of voting rights that is required for this special resolution number 2 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 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.
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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:
• 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 Listings 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 annual general meeting 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 annual general meeting. 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. Approval of new Memorandum of Incorporationspecial resolution number 3“Resolved that the existing MOI of the company be and is hereby substituted with the new MOI in accordance with the provisions of
section 16 (1)(c) of the Companies Act, with effect from the date of approval of this special resolution number 3”.
Explanatory note
The reason for special resolution number 3 is to adopt the new MOI that will be in line with the requirements of the Companies Act, the
JSE Listings Requirements and any applicable legislation which require a substantial number of changes to the existing MOI. Accordingly,
it is considered more appropriate to adopt the proposed new MOI. The new MOI will substitute the company’s existing MOI in its
entirety.
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Additional information in respect of special resolution number 3Copies of the complete new MOI may be obtained from the company secretary at the company’s registered address or by requesting a
copy at the telephone number or e-mail address provided in the corporate information section of the integrated report or an electronic
copy is available on the company’s website at www.bcx.co.za.
The following summary highlights some of the significant changes found in the proposed MOI. The changes listed below are not
exhaustive, shareholders are required to read the whole MOI for a full appreciation thereof:
• The board is authorised to provide financial assistance in terms of the Companies Act.
• In addition to the board being able to call shareholders meetings, the prescribed officers can do so if authorised by the board.
• Meetings of shareholders can now be convened on 15 business days’ notice.
• There is provision for the social and ethics committee to be appointed.
• Shareholders meetings may be conducted by electronic communication.
• The MOI allows written resolutions in terms of section 60 of the Companies Act in certain circumstances.
• The annual rotation of directors in terms of the MOI applies only to non-executive directors.
• The quorum for meetings has increased from two to a majority.
• Non-executive directors’ fees will be paid on the basis of a special resolution.
• Board approval of distribution/dividend payment will be subject to the solvency and liquidity tests.
• The board is authorised to determine record dates for the exercise of shareholders rights in terms of the Act and the JSE Listings
Requirements.
• Electronic participation at shareholders meetings is provided for.
• The making of rules as contemplated in section 15(3) of the Companies Act is prohibited.”
The percentage of voting rights that is required for this special resolution number 3 to be adopted is at least 75% (seventy five percent)
of the voting exercises on the resolution.
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 14 to 21 of the integrated report.
• Major shareholders of the company
See pages 152 to 155 of the integrated report.
• Material changes
There have been material changes in the financial or trading position of the company and its subsidiaries since the date of the statement of
financial position and the date of the notice.
• directors’ interests in securities
See page 93 of the integrated report.
• share capital of the company
See page 123 of the integrated report. This includes the share capital of the company in note 16. 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 152 to 155.
• Litigation statement
In terms of section 11.26 of the JSE Listings Requirements, the directors, whose names appear on pages 14 to 17 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.
168
• directors’ responsibility statement
The directors, whose names appear on pages 14 to 17 of the integrated report, collectively and individually accept full responsibility for
the accuracy of the information pertaining to special resolution numbers 3 and 4 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 annual general meeting.
An ordinary shareholder entitled to attend and vote at the annual general meeting 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 of
the company.
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 annual general meeting.
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 annual general meeting you must contact your CSDP or broker, as the case may be, and obtain the relevant letter
of representation from them; alternatively
• if you are unable to attend the annual general meeting 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 annual general meeting 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 annual general meeting 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 annual general meeting 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 annual general meeting, may authorise any person to act as
its representative at the annual general meeting.
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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 annual general meeting; alternatively
• you may appoint a proxy (who need not also be a shareholder of the company) to represent you at the annual general meeting 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 Thursday, 11:00 on 10 January 2013 (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 annual general meeting 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 annual general meeting and must be so delivered before your proxy may exercise any of your rights as a
shareholder at the annual general meeting.
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 annual general meeting 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 annual general meeting (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 annual general meeting will be held at the Business Connexion Fundi Auditorium, Business Connexion Park North,
789 Sixteenth Road, Randjespark, Midrand 1685, on Monday, 14 January 2013 at 11:00. A map and directions are included on page 170 of
the report.
By order of the board
J de Koker
Group company secretary
5 December 2012
Business Connexion Park North
789 Sixteenth Road
Randjespark, Midrand 1685
Republic of South Africa
170
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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PROXYForm 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, and2. 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 ninth 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 Monday, 14 January 2013 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 Abstain
ordinary resolutions
1.To re-appoint KPMG Inc. as external auditors and Pierre Fourie as the individual designated auditor of the company for the 2012/2013 financial year.
2.Election of independent Audit and compliance committee for the financial year commencing 1 September 2012 the members being:
2.1 J John
2.2 JM Poluta
2.3 M Lehobye
3. Election of group Risk, sustainability, social and ethics committee :
3.1 NN Kekana
3.2 J John
3.3 AC Ruiters
4. Re-election of directors:
4.1 M Lehobye
4.2 JM Poluta
5. Approval of group remuneration policies
6. General authority to place shares under control of the directors
special resolutions
1. Approval of non-executive directors’ remuneration – 2013/2014
2. General authority to repurchase shares
3. Approval of MOI
Signed by me/us this day of 2013
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.
NOTES
1. 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 Thursday, 10 January 2013 (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
Thursday, 10 January 2013 (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 initialed.
informationCORPORaTE
Designed by Published by
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
Postal addressPrivate Bag X48
Halfway House, 1685
Tel: + (27) 11 266 5111
Fax: + (27) 11 266 1088
Email: [email protected]
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
Email: [email protected]
AuditorsKPMG
Business addressKPMG Crescent
85 Empire Road
Parktown, 2193
Postal addressPrivate Bag X9
Parkview, 2122
Tel: + (27) 11 647 5000
Fax: + (27) 11 647 6084