Mergers, Acquisitions and Financial Results

Following half year results announcement at the beginning of this week Business Connexion has released an additional note to correct some press reports that inaccurately portray their intentions regarding their involvement in business in the “rest of Africa”:

“Business Connexion has restated its intentions as follows:

- Our Africa Regional Office in South Africa produced disappointing results for the six months under review, and we announced our intention of reduce costs in our Midrand Africa operations.

- We do not intend to downsize, sell or otherwise dispose of our operations in our subsidiaries in Zambia, Tanzania, Mozambique or Namibia.

- We intend to increase the focus on our subsidiaries, and increase the level of support in these countries to ensure their success and continued growth.

- We will also focus on a few countries in Africa where we have a record of success and good business prospects.

- We will reduce our efforts in other African countries where we have not had much success or where our multinational clients are not involved”.

“In the long term, Business Connexion remains committed to increase our business involvement in Africa as a central strategic direction and the current rightsizing of your Midrand Africa operations should be seen as good business practice to ensure our continued ability to engage in Africa”.

This new statement came after Business Connexion announced an increased revenue of 25% to R1,7bn for the first half to November from R1,3bn in the previous first half. Cash generated during the period amounted to R56m. As a result, the group's balance sheet retained cash reserves of R657m. Operating profit grew 12% to R72,6m and earnings a share for the period fell 60%, to 21,5c from 54c.

This was due to the inclusion in the November 2004 results of the R73,8m gain realised from the sale of Mosaic Software Holdings, which represented 30,2c a share. Headline earnings a share fell to 21,6c a share from 23,8c a share, due to the payment of R10,2m in secondary tax on dividends following the declaration of a maiden dividend during the period. On a comparable basis, headline earnings a share growth was 14%.