Business Connexion Group Limited

(Incorporated in the Republic of South Africa)

(Registration number 1988/005282/06)

(ISIN: ZAE000054631)

(Share code: BCX)

(ISIN: ZAE000156154)

(“A” Share code: BCA)

(“BCX” or “the Group”)

ACQUISITION BY BUSINESS CONNEXION GROUP LIMITED OF INTEGR8 IT PROPRIETARY LIMITED AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT

1. Introduction

Further to the cautionary announcement dated 8 October 2012, BCX shareholders are hereby advised that BCX has entered into a sale of shares, repurchase and subscription agreement with, inter alia, Integr8 IT (Proprietary) Limited (“Integr8 IT”), Rola Rola Holdings (Proprietary) Limited, Ideal Trading 620 (Proprietary) Limited, TS Family Holdings (Proprietary) Limited, Eritron (Proprietary) Limited (“the Sellers”) and the trustees for the time being of each of the Alcatraz Trust, the CW Holdings Trust, the Multi Icon Trust, the Triple Eight Trust and the TS Family Trust on 05 November 2012 (“the Sale Agreement”), in terms of which, inter alia, it will become the holder of 100% of the issued share capital of Integr8 IT, on, inter alia, the terms and conditions as set out below (“the Acquisition”). BCX intends to cede and assign all of its rights and obligations as purchaser under the Sale Agreement to its 70% held subsidiary, UCS Solutions (Proprietary) Limited (“UCS Solutions”), which it is entitled to do in terms of the Sale Agreement.

2. The Acquisition

2.1. Rationale

BCX’s current strategy around developing the Connexion Zone is primarily focused at the enterprise market. The Acquisition enhances our competitive advantage in the midmarket corporates, creating a complementary platform of services markets and broadens UCS Solutions’ historic retail focused infrastructure services.

2.2. The business of Integr8 IT

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 Centre, a digital hub of people, technology and process, that regulates, monitors and maintains the technology infrastructure for many leading corporations.

3. Details of the Acquisition

3.1. Terms of the Acquisition and the effective date of the Acquisition

In terms of the Sale Agreement, BCX will acquire 100% of the issued share capital ofIntegr8 IT on the 3rd (third) business day after the date on which the last of the conditions precedent referred to in paragraph 5 is fulfilled or waived, as the case may be, (“Closing Date”) and after Integr8 IT has implemented a share repurchase from the Sellers.

If the last of the conditions precedent is fulfilled or waived, as the case may be, on or prior to the 14th calendar day of the relevant calendar month, the effective date of the Acquisition will be the first calendar day of that calendar month.

If the last of the conditions precedent is fulfilled or waived, as the case may, be on or after the 15th calendar day of the relevant calendar month, the effective date of the Acquisition will be first calendar day of the following calendar month.

3.2. The Purchase Consideration

The consideration payable by BCX to the Sellers in terms of the Sale Agreement is an amount of up to R126,0 million (one hundred and twenty six million rand) in cash (“Purchase Consideration”), and will be settled through an upfront initial payment ofR56,0 million (fifty six million rand) (“Initial Amount”) payable on the Closing Date and three potential earn-out payments of up to a maximum amount of R70,0 million (seventy million rand), portions of which shall be payable on 15 October 2013, 15 October 2014 and 15 October 2015, respectively, and which will be determined and calculated on the achievement of certain profit warrantees. The Purchase Consideration will be funded from the Group’s existing cash resources.

4. Pro forma financial effects of the Acquisition

The table below sets out the unaudited pro forma financial effects (“Financial Effects”) of the Acquisition based on the Group’s published, audited results for the year ended 31 August 2012.

The Financial Effects are the responsibility of the board of directors of BCX and have been prepared for illustrative purposes only to provide information about how the Acquisition may have impacted shareholders on the relevant reporting date and because of their pro forma nature may not give a fair reflection of BCX’s financial position, changes in equity results of operations or cash flows after the Acquisition.

Before the Acquisition (1) After the

Acquisition

(2)

% Change
Headline earnings per share (“HEPS”) (cents) 39,0 39,9 (4) 2,3
Diluted headline earnings per share (“DHEPS”) (cents) 38,8 39,6 (4) 2,1
Basic earnings per share (“EPS”) (cents) 37,5 38,7 (4) 3,2
Diluted earnings per share (“DEPS”) (cents) 37,2 38,6 (4) 3,8
Net asset value per share (“NAV”) (cents) 520,0 518,3 (5) (0,3)
Net tangible asset value per share (“NTAV”) (cents) 339,9 310,9 (5) (8,5)
Number of shares in issue (‘000’s) 404 972 404 972
Weighted average number of shares in issue (‘000’s) 398 550 398 550
Diluted weighted average number of shares (‘000’s) 401 097 401 097

Notes and assumptions:

1)     The financial information in the “Before the Acquisition” column has been based on BCX’s published audited results for the year ended 31 August 2012.

2)     Based on the assumption that

−      the Acquisition took place on 1 September 2011 for statement of comprehensive income purposes and 31 August 2012 for statement of financial position purposes;

−      the Purchase Consideration has been paid and accrued; and

−      UCS Solutions has been nominated as the purchaser.

3)     The financial information relating to Intergr8 IT in calculating the Financial Effects was extracted from Intergr8 IT’s audited financial statements for the year ended 30 June 2012.

4)     HEPS, DHEPS, EPS and DEPS have been adjusted to include the pro forma consolidated net profit after tax of Integr8 IT for the year ended 30 June 2012 of R12,2 million.

5)     NAV and NTAV have been adjusted to include the pro forma consolidated net assets attributable to Integr8 IT as at 30 June 2012 of R21,3 million and the goodwill arising on the Acquisition of R111,1 million.

5. Conditions precedent

The Acquisition has been approved by the board of directors of BCX and Integr8 IT but remains subject to the fulfilment or waiver (where applicable) of inter alia the following conditions precedent:

5.1. the unconditional approval by the Competition Authorities in terms of the Competition Act No. 89 of 1998 or the conditional approval on terms and conditions which each of BCX or Integr8 IT confirms in writing to the other to be acceptable to it;
5.2. the conclusion of an independent expert’s report on the consequences and effect of Integr8 IT’s share repurchase in terms of the Sale Agreement as contemplated in terms of section 114 of the Companies Act, No. 71 of 2008 (“Companies Act”);
5.3. the passing of such resolutions by the shareholders of Integr8 IT as may be required to implement the transactions contemplated in the Sale Agreement including such special resolutions as contemplated in section 48(8) as read with the requirements of sections 114 and 115 of the Companies Act;
5.4. the passing of such resolutions by the board of directors of Integr8 IT before the effective date as may be required in terms of sections 46(1)(c) and 48(2) of the Companies Act in respect of the payment of the Initial Amount to the Sellers in terms of the Sale Agreement;
5.5. the granting of the compliance certificate or the exemption by the Takeover Regulation Panel of the transactions contemplated in the Sale Agreement;

5.6. the declaration of certain dividend in specie and the distribution of loans in respect of Integr8 Fax (Proprietary) Limited and Integr8 Rental (Proprietary) Limited;

5.7. the declaration and distribution in cash or by loan of the excess working capital dividend by Integr8 IT to the Sellers; and 5.8. BCX receiving written proof that on receipt by the Sellers of the Initial Amount, a bank guarantee will be issued in favour of BCX for inter alia the Sellers’ obligations under the Sale Agreement and in the event that there is a degradation in the business of Integr8 IT.

5.8. BCX receiving written proof that on receipt by the Sellers of the Initial Amount, a bank guarantee will be issued in favour of BCX for inter alia the Sellers’ obligations under the Sale Agreement and in the event that there is a degradation in the business of Integr8 IT.

6. Classification of the Acquisition

The Acquisition is classified as a category 2 transaction in terms of the JSE Limited (“JSE’)

Listings Requirements and does not require shareholder approval.

7. Memorandum of Incorporation

BCX undertakes that the memorandum of incorporation of Integr8 IT will conform to Schedule 10 of the JSE Listings Requirements, as required.

8. Further announcement

Shareholders will be notified once the last of the conditions precedent has been fulfilled or waived, as the case may be.

9. Withdrawal of cautionary announcement

As all the transaction information is contained herein, caution is no longer required to be exercised by shareholders when dealing in BCX securities.

Midrand

5 November 2012

Transaction Advisor

Imbewu Capital Partners

Legal Advisor

Edward Nathan Sonnenbergs

Competition Commission Attorneys

Cliffe Dekker Hofmeyr

Sponsor

One Capital