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AnnualReport

Page

Strategic Overview

Definitions and terminology used 1

Integrated Report 2

2017 at a glance 3

Five–year financial review and statistics 4

Directorate 7

Group structure 9

Lines of business 10

Overview 12

Chief Executive Officer’s report 14

Accountability

Corporate governance 18

Social and Ethics Committee report 23

Remuneration Committee report 28

Annual Financial Statements

Directors’ responsibility statement and approval 41

Certificate by Company Secretary 42

Audit and Risk Committee report 43

Directors’ report 47

Report of the independent auditor 51

Statements of financial position 54

Statements of profit or loss and other comprehensive income 55

Statements of changes in equity 56

Statements of cash flows 57

Accounting policies 58

Notes to the annual financial statements 73

Investor Relations

Shareholders’ diary 124

Notice of annual general meeting of shareholders 125

Form of proxy Attached

Corporate information 139

Alviva Annual Report 2017

Contents

AGM Annual General Meeting

Alviva Alviva Holdings Limited (previously Pinnacle Holdings Limited) and its subsidiaries

B-BBEE Broad-Based Black Economic Empowerment

CEO Chief Executive Officer

CFO Chief Financial Officer

GAI Governance Assessment Instrument

GRI or G4 Global Reporting Initiative

IFRS International Financial Reporting Standards

IoDSA Institute of Directors of South Africa

King or King III King Report on Governance for South Africa 2009

MOI Memorandum of Incorporation

the Board The Board of Directors of Alviva Holdings Limited

the Committee The specific committee being covered under the preceding heading

the Companies Act The Companies Act, No 71 of 2008

the Company Alviva Holdings Limited (previously Pinnacle Holdings Limited)

the Group Alviva Holdings Limited and its subsidiaries

1

Definitions and terminology used


www.alvivaholdings.com


2 www.alvivaholdings.com

The Board realises the importance of an integrated report that fully promotes transparency and accountability to

reinforce its role as a responsible corporate citizen. It has therefore approved three separate reports:

� the Annual Report containing financial and other information relevant to the financial year ended 30 June 2017,

which is produced and published annually; [G4-28] [G4–29] [G4-30] and

� separate Corporate Governance and Sustainability Reports (which are located under the “Investor Relations” tab

on Alviva’s website at www.Alvivaholdings.com). These reports contain standing information on the Company’s

corporate citizenship, governance structures, risk profile, sustainability and compliance with the King III code,

and are updated whenever changes occur.

The three reports read together comprise the Integrated Report.

The primary objective of the Reports is to demonstrate the ability of Alviva to create and sustain value. The Reports

address all businesses, which comprise the South African operations, including subsidiary companies, and the African

operations, in the financial reporting elements as well as on sustainability matters, unless specifically indicated

otherwise. The cross-border operations complement the local volumes generated by Alviva, enhance the economies of

scale, expand the geographic footprint and contribute to competitiveness, while providing an entrance to the African

market.

The Board acknowledges its responsibility to ensure the integrity of the Annual Report, the Corporate Governance

Report and the Sustainability Report and has applied its mind accordingly to these reports and to the recommendations

of the King III Code. In the opinion of the Board, the Integrated Report, comprising the three reports, addresses all

material issues, and presents fairly the integrated performance of the organisation and its impacts.

Other than the external audit of the annual financial statements, the 2017 Annual Report, Corporate Governance and

Sustainability Report have not been independently assured. The Board has authorised the release of the Reports.

The Board is pleased to present the Annual Report.

For and on behalf of the Board

AJ Fourie P Spies Non–Executive Chairman Chief Executive Officer

Integrated Report


3www.alvivaholdings.com

2017 at a glance

[G4-EC1]

Other

Financial Services

Services & Solutions

ICT Distribution

14,2%

1,5%

EBITDA Mix FY 2016EBITDA Mix FY 2017

6,1%

14,8%

51,3% 56,6%

25,5%33,0%

Fiscal Year

Rm (unless otherwise stated)

FY 2017

FY 2016

FY 2015

Revenue 12 811 10 969 7 988

2 273 1 663 1 118

17,7 15,2 14,0

824 679 464

734 616 427

5,7 5,6 5,3

444 382 280

243,9 197,8 182,9

256,3 205,1 182,9

166 165 156

752 958 926

1 998 2 086 1 545

25,8 18,8 49,8

19,9 18,8 20,2

Gross Profit

Gross Profit (%)

EBITDA

Operating Income

Operating Income (%)

Net Profit after Tax

Headline Earnings per Share (cents)

Core Earnings per Share (cents)

Weighted Average Shares Outstanding (millions)

Inventories

Total Stockholders Equity

Debt to Equity Ratio (%)

Return on Net Equity (%)



Group

2017

R’000

2016*

R’000

2015

R’000

2014*

R’000

2013*

R’000

INCOME STATEMENTS

Revenue 12 811 498 10 969 132 7 987 636 7 152 444 6 628 299

Cost of sales (10 538 710) (9 305 726) (6 870 002) (6 082 151) (5 566 701)

Gross profit 2 272 788 1 663 406 1 117 634 1 070 293 1 061 598

Operating expenses and other income (1 448 670) (984 244) (653 666) (615 314) (536 277)

EBITDA** 824 118 679 162 463 968 454 979 525 321

Depreciation and amortisation (90 594) (63 284) (31 509) (23 926) (20 753)

Impairment of goodwill and investments – – (5 592) (2 169) –

Operating profit before interest 733 524 615 878 426 867 428 884 504 568

Investment income 39 453 17 617 7 767 11 297 26 481

Finance costs (146 490) (126 311) (99 212) (89 477) (77 106)

Share of profit of equity-accounted investee – 22 702 37 915 20 747 –

Profit before tax 626 487 529 886 373 337 350 704 453 943

Tax (182 494) (148 283) (93 233) (98 394) (128 263)

Net profit for the year 443 993 381 603 280 104 252 310 325 680

Attributable to owners of the company 405 277 341 652 279 849 251 833 324 948

Attributable to non-controlling interests 38 716 39 951 255 477 732

STATEMENTS OF CASH FLOWS

Cash generated by operating activities 1 259 803 745 769 508 740 383 574 157 027

Investment income 39 453 25 787 19 793 11 297 26 481

Finance costs (146 490) (126 311) (99 212) (89 477) (77 106)

Tax paid (202 484) (180 411) (88 822) (104 247) (117 583)

950 282 464 834 340 499 201 147 (11 181)

Cash flows from investing activities (89 294) 19 541 (146 713) (152 265) (463 474)

Cash flows from financing activities (694 894) (280 097) (9 973) (53 318) 368 932

Increase/(decrease) in cash and cash

equivalents 166 094 204 278 183 813 (4 436) (105 723)

Net cash and cash equivalents/(overdraft)

acquired from business combinations– 89 769 – (994) (576)

Net cash movements related to assets classified

as held-for-sale – – (5 102) – –

Effects of exchange rate changes on the balance

of cash held in foreign currencies 758 2 126 – – –

Cash and cash equivalents/(overdraft) at the

beginning of the year 222 908 (73 265) (251 976) (246 546) (140 247)

Cash and cash equivalents/(overdraft) at the

end of the year 389 760 222 908 (73 265) (251 976) (246 546)

* Restated

** Earnings before Interest, Tax, Depreciation and Amortisation

[G4-EC1] [G4-22]

for the year ended 30 June

5-year financial review and statistics


5


5

Group

2017

R’000

2016

R’000

2015

R’000

2014

R’000

2013

R’000

STATEMENTS OF FINANCIAL POSITION

ASSETS

Non-current assets 1 079 064 1 100 391 850 660 913 787 594 636

Property, plant and equipment 104 661 120 011 67 315 176 028 186 637

Intangible assets 114 857 158 817 21 658 18 889 14 177

Goodwill 347 846 347 846 108 166 116 517 114 940

Investment in listed shares - - - - 30 179

Investment in equity-accounted investee - - 314 678 284 144 -

Share purchase scheme loans - - - 28 795 28 689

Deferred tax 77 119 65 697 27 735 31 457 35 232

Finance lease receivable 434 581 408 020 311 108 257 957 184 782

Current assets 3 670 358 3 912 260 2 716 198 2 432 892 2 501 814

Inventory 751 702 957 725 926 355 971 736 1 048 686

Derivative financial asset 3 287

Assets classified as held-for-sale - - 208 613 - -

Finance lease receivables 210 972 178 663 146 452 105 758 65 349

Trade and other receivables 2 304 629 2 524 373 1 375 275 1 328 964 1 125 423

Income tax receivable 10 008 10 006 2 161 1 171 1 154

Share purchase scheme loans - - 21 217 - -

Short-term deposit - - - - 237 272

Cash and cash equivalents 389 760 241 493 36 125 25 263 23 930

Total assets 4 749 422 5 012 651 3 566 858 3 346 679 3 096 450

EQUITY AND LIABILITIES

Capital and reserves 2 020 223 2 409 517 1 545 121 1 234 842 1 088 059

Stated capital 43 359 193 646 1 680 1 680 25 982

Treasury shares (98 492) (72 856) (72 856) (41 766) (41 766)

Non-distributable reserves 36 866 36 107 57 806 8 589 32 588

Cash flow hedge reserve 548 (1 722) (7 407) (12 143) –

Retained earnings 2 015 491 1 931 000 1 565 523 1 274 822 1 066 308

Non-controlling interests 22 451 323 342 375 3 660 4 947

Non-current liabilities and deferred tax 585 642 432 612 20 831 519 138 503 594

Current liabilities 2 143 557 2 170 522 2 000 906 1 592 699 1 504 797

Trade and other payables 1 974 752 2 026 899 1 193 012 1 129 699 1 074 736

Bank overdrafts - 18 585 109 390 277 239 270 476

Short-term loans - - 151 078 151 048 115 543

Derivative financial liability - 16 154 21 958 - -

Interest-bearing liabilities 5 572 154 486 388 17 944 17 203

Deferred revenue 148 818 96 111 5 261 12 412 14 519

Income tax payable 14 415 12 619 7 736 4 357 12 320

Liabilities associated with assets classified as

held-for-sale - - 26 083 - -

Total equity and liabilities 4 749 422 5 012 651 3 566 858 3 346 679 3 096 450

for the year ended 30 June (continued)




Group 2017 2016 2015 2014 2013

Weighted average number of ordinary

shares (’000) 165 944 164 992 155 922 157 638 157 931

Weighted average number of shares in issue

for purposes of dilution (‘000) 166 417 164 992 155 922 157 638 157 931

Performance per share (cents)

Basic earnings 244.2 207.1 179.5 172.9 205.8

Diluted basic earnings 243.5 207.1 179.5 172.9 205.8

Headline earnings 243.9 197.8 182.9 166.5 205.8

Diluted headline earnings 243.2 197.8 182.9 166.5 205.8

Dividend declared 20.0 – – – 41.0

Dividend cover (times) 12.2 – – – 5.0

Net asset value 1 251.2 1 218.4 991.0 792.0 688.6

Net tangible asset value 961.4 922.5 907.7 705.1 606.9

Return on net equity (%) 19.9 18.8 20.0 23.4 34.4

Working capital management

Investment in working capital (R’000) 932 761 1 359 088 1 311 970 1 158 589 1 084 854

Liquidity and solvency (%)

Debt to equity 25.8 18.8 49.8 77.1 81.4

Current ratio 1.74 1.85 1.39 1.55 1.66

Acid test ratio 1.42 1.44 0.96 0.96 0.97

Returns (%)

Gross profit 17.7 15.2 14.0 15.0 16.0

EBITDA * 6.4 6.2 5.8 6.4 7.9

Effective tax rate 29.1 29.2 27.8 28.1 28,3

Net profit 3.5 3.5 3.5 3.8 4,9

Net interest cover (times) 6,9 5.7 4.7 5.5 10.0

* Earnings before Interest, Tax, Depreciation and Amortisation

for the year ended 30 June (continued)




MR AJ FOURIE (55)

Non-Executive Chairman

MSc (Chem Eng)

Date appointed as Chairman: 1 July 2016

Other Directorships:

ABIS Capital (Pty) Ltd

Arnold completed his Masters in Chemical Engineering in 1986 at the University of the Witwatersrand. He founded the Group in 1993 and has

subsequently acquired and integrated several companies into the Group, leading to its consistent growth over the past 24 years.

Alviva Holdings Limited (Previously Pinnacle Holdings Limited) was listed on the JSE Limited in 1998.

He was appointed as Non-Executive Chairman of the Alviva Group on 1 July 2016. He serves on the Remuneration Committee.

MR A TUGENDHAFT (69)

Non-Executive Deputy Chairman

BA (Wits); LLB (Wits)

Appointed: 24 November 1998

Appointed as Deputy Chairman: 1 July 2016

Other Directorships:

Imperial Holdings Limited

Oshy is the senior partner of attorneys Tugendhaft, Wapnick, Banchetti and Partners (TWB). He is an accomplished practitioner in commercial

and corporate law, has more than 40 years’ experience in practice and also serves as a Non-Executive Director and Deputy Chairman of Imperial

Holdings Limited.

He is member of the Remuneration Committee.

MR B SIBIYA (60)

Lead Independent Director

Independent Non–Executive Director

B Admin; MBA

Appointed: 10 March 2015

Other Directorships: Leadership Matters Institute, Win Win Partners (Pty) Ltd, Smartverst (Pty) Ltd, Uhuru

Energy. Non-Executive Director of Famous Brands Limited, Non-Executive Director of SAIL.

Bheki completed an MBA from Western Michigan University after having obtained a B Admin degree at the University of Zululand. He has had

extensive leadership experience in both the private and public sectors. He previously headed up the Chamber of Mines, Wits Business School and

Business Unity South Africa, is the past Chairman of PPC and Deputy Chairman of Tiger Brands and held senior positions at Transnet Limited,

Tongaat-Hulett Sugar South Africa Limited, South African Breweries Limited and the Black Management Forum.

He is a member of the Audit and Risk Committee, Social and Ethics Committee and Remuneration Committee.

Directorate

[G4-38] [G4-LA12]



MS SH CHABA (59) Independent Non-Executive Director

BA (Economics and Industrial Psychology); Post-Graduate Diploma in Human Resources Management (Wits);

Senior Executive Programme (Wits and Harvard Business School)

Appointed: 31 August 2012

Other Directorships: State Information Technology Agency (SITA), Safrican Insurance, Dijalo Mbung (Pty) Ltd,

Amispan, Azonex (Pty) Ltd, Makotulo Investment (Pty) Ltd, Kgosi Neighbourhood Foundation, a non-profit

organisation.

Seadimo has extensive public and private sector at both executive and board level. In the public sector she has

engaged at all three spheres of government as well as with state-owned enterprises. In the private sector, she

has experience in the petrochemical, retail and financial industries.

She is an HR expert and business strategist and works mainly in these areas as a consultant as well as in an advisory capacity as a board member.

She is a member of the Audit and Risk Committee as well as the Remuneration Committee and chairs the Social and Ethics Committee.

MR P SPIES (53)

Executive Director – Chief Executive Officer

B Comm

Appointed: 27 January 2016

Pierre is a B Comm accounting graduate from University of Johannesburg and completed his articles with

PriceWaterhouseCoopers in 1992. He has extensive experience in the ICT industry having served in various roles,

including that of Chief Financial Officer and Chief Executive Officer at Tarsus Technology Group. His experience

includes the successful national expansion of various companies, various mergers and acquisitions, the

establishment of a channel finance business and expansion into Africa. With over 25 years’ experience, Pierre is a

stalwart of the ICT Industry, and is well respected by the group’s customers, vendors, and staff.

MR RD LYON (59)

Executive Director – Chief Financial Officer

BA (Economics and Business Law); CA

Appointed: 1 January 2013

Richard qualified as a CA in Scotland in 1983 and then joined Fisher Hoffman Stride in South Africa shortly

thereafter. He served as a Financial Manager in Metro Cash and Carry for three years before taking on the Finance

Director role in Cashbuild for seven years. He has been with Alviva and Axiz for 20 years and in general commerce

for 31 years. He fulfils the role of Group Risk Officer.

MS N MEDUPE (46)

Independent Non–Executive Director

BAcc (KZN University); Post–Graduate Diploma in Accountancy (KZN University); CA (SA)

Appointed: 29 August 2014

Other Directorships: City Lodge Hotels Limited, Italtile Limited, Future Footwear Limited, Foskor (Pty) Ltd and

Nexia SABT.

Ndumi is the Executive Chairperson of Nexia SABT, a medium-sized Audit and Accounting Firm. Her areas of

expertise include Governance, Risk, Compliance, Audit and Financial Management. She is currently a member

of the South African Institute of Chartered Accountants, the Institute of Directors and the Institute of Internal

Auditors.

She is Chairperson of the Audit and Risk Committee and the Remuneration Committee.

Directorate (continued)

[G4-38] [G4-LA12]



GROUP ADMINISTRATION

GROUP TREASURY

SERVICES &SOLUTIONS

FINANCIALSERVICES CORPORATE

ICTDISTRIBUTION

Group structure

[G4-9] [G4-17]


1 0 www.alvivaholdings.com

Alviva is divided into distinct business segments, and business units within those segments, that each have strong

decentralised management and support teams. The segments are as follows:

Information and Communication Technology (“ICT”) DistributionThe ICT Distribution segment of the business imports and, in some cases, assembles ICT hardware and software and

sells it into the sub-Saharan African markets via reseller channels and national retail chains. [G4–3] [G4–4] [G4–12] The

business units that make up the ICT Distribution segment include the following:

Axiz

Axiz is a leading IT infrastructure and software distributor that provides technology intelligence to its business partners

through the supply of world-class products. Axiz is headquartered in Midrand with regional offices throughout South

Africa including Bloemfontein, Cape Town, Durban, Gaborone, Kenya, Lusaka, Maputo, Mauritius, Port Elizabeth and

Windhoek.

[G4–6] [G4-8]

Axiz was acquired by Alviva in November 2010 and merged in the following months with WorkGroup. Axiz presents the

market with some unique opportunities, both from a vendor and customer perspective, as it is the first distributor to

combine broad-based and value-based distribution under one roof. Its product portfolio is the most comprehensive of

any distributor in the market today and aligns well with new market dynamics such as cloud computing and data centre

expansion. Axiz represents the leading cloud providers in the market today and the combined product portfolio allows

its partner base to architect and provide best of breed solutions with which to address the business requirements of

their customers.

Pinnacle

Pinnacle is focused on the assembly and distribution of ICT hardware and software and was established in 1993. It

distributes via the reseller channel into small to medium corporate and government markets and into the retail markets

through the national retail chains.

It operates through its main operation in Midrand, as well as branches in Bloemfontein, Cape Town, Durban, Gaborone,

Nelspruit, Port Elizabeth and Windhoek. Other sub-Saharan African clients are serviced from Midrand. Pinnacle is in the

process of aligning its African go-to-market strategy to take advantage of the growth apportunities offered throughout

the continent. [G4–6] [G4–8]

The continually expanding product range spans the entire breadth of ICT hardware and related peripherals. This range

includes most of the top international tier one brands, such as Asus, Dell, HP, Huawei, Intel, Lenovo, Lexmark, Microsoft,

Nutanix, Samsung and Sony, as well as its own mainstay brand of Proline personal computers, notebooks, servers,

tablets and mobile phones. Other business lines within the Pinnacle division are shown below:

DataNet focuses on the distribution of high-end server racking, copper, fibre, wireless and related network hardware and

infrastructure. Pinnacle acquired Modrac and JAG Engineering in 2013, both of which manufactured IT infrastructure

equipment. These operations were subsequently amalgamated under Modrac to create a certainty of supply, which was

problematic in prior years, and also to give Pinnacle a large share of the South African manufacturing base for these

products.

PinnSec sells the Bosch and Axis ranges of upmarket security, CCTV, fire detection and prevention and access control

systems and represents Pinnacle’s presence in the physical safety and security market.

Pinnacle Business Solutions (“PBS”)

PBS distributes the Sharp range of multi-functional copiers and printers which is recognised internationally as an

advanced, reliable and well-priced range of office automation.

Lines of business


1 1www.alvivaholdings.com

Solutions and ServicesThis segment includes Datacentrix Holdings Limited (“Datacentrix”) and Solareff (Pty) Ltd (“Solareff”).

Datacentrix

Datacentrix is one of the largest systems integrator and ICT solutions providers in South Africa. It has a pool of experts

that work together to deliver superior business value through technology to its customers. Its revenue is derived from

three operating divisions:

� The Managed Services division is a progressive centre of excellence that delivers end-to-end ICT services.

It provides customers with a constantly measured environment that ensures that what is being done today is

both pertinent to customer needs and supports their relevance into the future.

� The Technology Solutions division is a trusted technology solutions integrator, recognised by all top leading

technology vendors globally. The division leads in visionary technology innovation that delivers real business

value from traditional compute, storage and networking, to a software-defined, data-driven world where the

infrastructure adapts to customer demands.

� The Business Applications division enables organisations to take advantage of the information that is created

and stored in their ICT infrastructures by applying leading EIM, ERP solutions and professional services. The

division enables informed business management and growth through solutions that automate, integrate, and

monitor and control business processes.

The breadth of the portfolio encompasses all the significant enterprise hardware and software vendors.

Solareff

Solareff is a fast-growing solar photovoltaic specialist with more than a decade’s experience in renewable energy

projects. The company has completed and is busy with a number of turnkey projects in southern Africa and rest of Africa

ranging from 20KWp to as large as 5MWp solar power installations. As one of the top three solar photovoltaic specialist

companies in southern Africa, it is recognised as a market leader in its field. It does both rooftop and ground solar

installations for mainly corporate customers. The company partners with Tier 1 technology partners and is managed and

supported by a highly qualified team of engineers.

Financial ServicesAcquired by Alviva in 2010, Centrafin sets out to provide finance solutions to business entities in the SMME and

commercial sector (and, to a limited extent, to government bodies) for mainly office automation and technology-based

equipment. It adheres to responsible credit policies, remaining flexible and nimble and, in so doing, creates sustainable

wealth for its stakeholders.

Today Centrafin collects on a book of just over R660 million, comprising 9 500 separate transactions.

Centrafin has registered with the National Credit Regulator in order to offer financial leases on asset classes outside of

the technology equipment arena.

Alviva HoldingsHoldings provides the strategic direction and shared services (including treasury, human resources and information

technology) that are available to the Group.

Lines of business (continued)



StrategyAlviva’s strategy [G4–1] per business segment is summarised below:

Vision Alviva’s vision [1] is to be the most respected provider of world–leading ICT products, services and solutions. This will

be achieved by delivering the exceptional and by being the best and most successful ICT distributor and provider of

services, solutions and financial services, underscored by unparalleled service commitment. [G4–1]

Sustainability The Group remains committed to meet the needs of all its stakeholders and is committed to the principles of sustainable

development. Through the processes of identification, management and measurement, the Group is committed to

monitoring the relevance and effectiveness of its overall sustainability strategy. It accepts that its future economic

growth and development is linked to the well–being and upliftment of its people and continues to invest in corporate,

social and sustainable initiatives.

Mission Statement Alviva’s mission is to maximise the returns of all its stakeholders through the execution of its vision, which will be

achieved by focusing on:

� growth opportunities;

� being a preferred provider of superior products;

� continued expansion of product and service offerings to promote growth, penetrate new sectors and contribute

to the development of infrastructure;

� continuous innovation and improvement in supply-chain management, services and solutions;

� expansion of its geographical footprint into markets which offer increased growth opportunities;

� being an equal opportunity company and developing staff to their full potential through the implementation of

training and development programmes;

� delivering above average returns to all stakeholders;

� proactive participation in B-BBEE; and

� subscribing to the principles of sustainable development through identification, management and measurement

of integrated economic, social, environmental and business performance.

[1] http://www.Alvivaholdings.com

Overview

Alviva Holdings Strategy

Continued growth of current revenue streams coupled with business through diversification and

expansion of Alviva’s growth in world–leading technology products and services.

ICT DistributionTo deliver the exceptional by being the best and most successful ICT

distributor in our region.

Services and SolutionsTo grow the Services and Solutions vertically in our region, whilst seeking

new growth opportunities in international markets.

Financial Services Enabling complete customer solutions by being the financier of choice.



ValuesThe Group’s values, as contained in the Code of Conduct, are:

� Respect;

� Honour;

� Integrity;

� Honesty;

� Fairness;

� Accountability;

� Responsibility;

� Service excellence;

� Professionalism;

� Enthusiasm;

� Creativity; and

� Trust.

The Board, as the highest governance body, is satisfied that the values, as contained in the Code of Conduct, reflect

their approach to accountability. [G4–56]

Core CompetenciesAlviva’s core competencies are the combination of knowledge and technical capacities that allow the Company to be

competitive in the marketplace. The core competencies in the Group allow it to expand into new markets as well as

provide a significant benefit to customers. Alviva’s core competencies are defined as follows:

Core Competencies Adoption in Alviva

Alignment with technological

developments through product and

technology knowledge

Ensuring the ongoing identification of growth opportunities and

maximising revenue growth on those areas to the benefit of all of

the Company’s stakeholders. Alviva’s industry knowledge remains

unparalleled.

Value–added supplierAlviva boasts a well–rounded end–to–end service thanks to a number

of important value–added services.

AgilityAlviva’s proven ability to rapidly adjust to market and environmental

changes in productive and cost–effective ways.

Ability to executeAlviva has an exceptional ability to execute and deliver on projects,

exceeding all expectations.

Supply-chain excellenceThrough continuous innovation and improvement and Alviva’s

understanding of the supply-chain.

Best people in the industryAlviva’s ‘cherry–picked’ employees are the best in the industry, are

continually trained, developed and empowered to achieve success.

Technical expertise, local assembly

and customised manufacturing

Alviva has unbeatable technical expertise, which includes its ability to

locally assemble and manufacture superior customised products, as

well as its extensive range.

Product breadthAlviva’s continually expanding product range spans the end-to-end

breadth of ICT software, hardware equipment and services.

Overview (continued)



IntroductionThe year was a significant one in the evolution of Alviva with some significant changes during the financial year:

New Chief Executive Officer

After more than 20 years at the helm, Arnold Fourie stepped down as CEO on 1 July 2016 and Pierre Spies took up the

reins. Continuity was assured when Arnold agreed to serve as Non-Executive Chairman.

New Name

The name of the Company was changed from Pinnacle Holdings Limited to Alviva Holdings Limited, as approved by

shareholders at the AGM. The reason for the change of name was well documented and it has helped to change the

perception that the Group was only involved in ICT Distribution.

Datacentrix Holdings Limited (“Datacentrix”)

On 30 January 2017, it was announced on SENS that Alviva had fulfilled all of the conditions precedent to acquire the

balance of the ordinary share capital of Datacentrix. Consequently, Datacentrix has been accounted for as a wholly-

owned subsidiary with effect from February 2017. This, together with the consolidation in the second half of last year of

Datacentrix, and to a lesser extent of Solareff (Proprietary) Limited (“Solareff”), has contributed positively to the Group

in the year ended 30 June 2017. The strategy to diversify the Group’s business from that of predominantly distribution is

bearing fruit with the contribution from the Services and Solutions cluster becoming more significant.

ReportChief Executive Officer’s



Financial ResultsThe Group had a satisfactory financial year in a tough economy. Earnings per share increased by 17.9% to 244.2 cents

(2016: 207.1 cents) and Core earnings per share (“Core EPS”) increased by 24.9% to 256.3 cents (2016: 205.1 cents).

Although Core EPS is a non-IFRS measure, the directors believe that it is a meaningful additional measure of evaluating

the performance of the Group’s operations, particularly when the Group is looking to acquire additional companies

into its operations. It is based on the Headline Earnings Per Share (“HEPS”) measure and adjusted to exclude the

amortisation charges of intangible assets, recognised on business combinations and related transaction costs.

Revenue increased by 16.8% to R12.8 billion and gross profit increased 36.6% to R2.3 billion. The increase in expenses

was largely attributable to the inclusion of Datacentrix for the full year. Interest paid remained static despite paying out

R563 million on the acquisition of the balance of the shares in Datacentrix that Alviva did not previously own.

Shareholders’ equity reduced to R2.0 billion (2016: R2.1 billion) following the buy-out of minorities in Datacentrix, share

repurchase transactions, and treasury shares purchased during the year. These issues offset the addition to equity from

profit for the period. The acquisition of Datacentrix only resulted in R100 million of long-term debt being raised as the

balance of the acquisition was funded through internal resources and great cash generation. This leaves the only other

significant debt being the funding of the Centrafin book which is ‘ring-fenced’ with a securitisation structure.

Divisional PerformanceICT Distribution

The Distribution division delivered in line with expectations and contributed positively to the Group. Revenue did not

grow as the division was unable to replicate two substantial deals that were processed in the second six months of the

previous year. The strategy of diversifying the cluster’s revenue is bearing fruit and this resulted in an increased gross

profit percentage with pleasing growth in the Enterprise and Software revenues.

EBITDA increased by 9.9% and the cash generated, due to excellent working capital management, was such that we were

able to decrease finance costs by R10 million. Margins were improved due to the improved management of inventory

throughout the period. During the period, the division contributed R317 million (2016: R185 million) in dividends to the

Group demonstrating that it remains a valuable supplier of capital for the Group to utilize in its investing activities.

Services and Solutions

This division includes Datacentrix and Solareff. Datacentrix had a great year and executed several big contracts during

the period. The roll-out of the upgrade of the court rooms with the Department of Justice, involving some 3 200 court

rooms throughout the country, has been taxing, both logistically and administratively, but is now close to conclusion.

In addition, it has executed technology upgrades in several countries for Barclays Africa. These projects demonstrate

Datacentrix’s ability to conduct large scale bespoke contracts in multinational locations.

The acquisition of Solareff some 17 months ago has brought the Group into the exciting renewable energy domain. With

the management of this entity as the driving force, we are now looking to add further renewable energy entities into the

cluster and we remain optimistic about the possibilities that this young energetic team can deliver within this segment

in the future.

Financial Services

Centrafin grew its revenue by 15.7% and EBITDA grew by 16.1%. It should be noted that certain additional expenses

have been incurred since implementing the securitisation structure at the beginning of May 2016. This year has been

reasonably tough for Centrafin and the book’s growth has been the lowest in its history (now at R649 million from R607

million a year ago). This has largely been due to economic factors as well as limiting our pricing reaction to competitive

activity. The management of the book remains of the highest order with delinquent debtors remaining well below

industry norms. This can be attributed to the application of strict credit control policies, the specific selection of assets

to fund and a well experienced credit collection team.

Report (continued)

Chief Executive Officer’s



Investment Activities and Financial PositionCash generated by operations came in at R1.3 billion following another year of exceptional working capital improvements.

Management in each segment in the business has focused throughout the year on this area, albeit not at the expense

of revenue generation.

This has allowed us to invest in two of the best businesses we know – Datacentrix and Alviva – without incurring

significant long-term debt. Datacentrix repurchased 6 461 472 shares for R35 million in the first half of the year, and then,

in February 2017, Alviva purchased the balance of shares that it did not hold for R563 million. The only long term debt

taken on from this transaction was a R100 million preference share facility with ABSA. In addition, Alviva repurchased a

total of 8 333 492 of its shares during the year for a total consideration of R150 million. A further 3,220,000 shares were

acquired for the Forfeitable Share Plan (“FSP”), that was approved by shareholders at the AGM in November 2016, for a

total consideration of R59 million. These shares will be treated as treasury shares until they vest.

DirectorateFurther to previously announced succession planning measures, Arnold Fourie, the previous long-standing Chief

Executive Officer and current Non-Executive Chairperson, has announced his intention to step down from this role and

from the Board. He will remain as Chairperson until a suitable candidate to replace him has been found. It is Arnold’s

view that the succession planning has been successfully implemented with a management team and Board that are

capable of taking the Alviva Group to new heights.

Events After the Reporting PeriodShare buy-back

At the last AGM held on 25 November 2016, shareholders gave the Board a general approval in terms of section 46

and 48 of the Companies Act, by way of special resolution, to acquire shares of the Company. In June 2017, the

Board exercised this authority and mandated a buy-back of issued ordinary shares of the Company, to a maximum of

3 840 000 shares. Since the mandate and subsequent to the reporting period, 2 025 696 ordinary shares have been

bought back totalling 1.1% of the total issued share capital (excluding treasury shares).

No other material events, except as specifically mentioned in this report, occurred in the period between the reporting

date and the date of issue of this report.

DividendsThe Company’s policy is to declare a dividend of 10% of HEPS (and since the introduction of dividend tax, a gross

dividend of 10% of HEPS before deducting dividend tax). To this end, the board has declared a final dividend of 25 cents

(2016: 20 cents) per ordinary share for the financial year ended 30 June 2017.

Report (continued)




Human ResourcesHuman Capital is key to the success and long–term sustainability of the Group. Alviva continues to improve our learning

and development capability and delivery to our staff using both internal and external resources. Group companies

have continued with their various skills and internship programmes under which learners and interns attend vocation–

specific formal training courses and receive practical guidance from mentors appointed to monitor and report on their

progress. The skills so transferred are expected to greatly enhance the learners’ and interns’ work experiences and to

create for them opportunities for employment in the ICT industry.

The various training programmes have also been tailored to encourage and promote transformation, including

specifically gender and geographic representation with the aim to transfer skills and open opportunities. The success of

the programme suggests that this will continue to be a material skills development initiative going forward.

TransformationOn 2 August 2016, Alviva announced that it had concluded a B–BBEE transaction whereby the Group undertook a

complete restructure of its corporate holdings so that certain South African entities are now held through a subsidiary,

DCT Holdings (Pty) Ltd. The effect is that the South African entities will thus have improved B–BBEE ownership

Alviva recognises the need to maintain and improve on our B-BBEE and to continue transforming the Group in order to

remain relevant to our business partners in South Africa.

The amended ICT Sector Code became effective on 7 November 2016. Based on the amended code, Alviva achieved a

B-BBEE rating of Level 3 following the rating completed in September 2017.

ProspectsThe overall economy faces increased political uncertainty and potentially challenging times ahead. It is evident that,

following the cabinet re-shuffle in March 2017, households are actively shoring up their balance sheets, reverting to

living more within their means. Businesses too have curtailed investment and seem to be adopting a wait and see

approach. They are not as yet utilising the low interest rate environment to leverage up their balance sheets meaning

that conservatism is dominating economic behaviour currently. There is little confidence to encourage investment. We

believe this to be temporary in nature but anticipate a tougher six to nine months ahead. To some extent, the IT sector

will cushion this effect but much will depend on the elective conference in December 2017.

After a year of strategic alignment, during which a lot of work was performed to contribute to the sustainable financial

well-being of the Group, the Group is keen to rigorously pursue commercial opportunities to take advantage of its

efficient infrastructure and broad offerings in the distribution and services cluster.

With a rejuvenated balance sheet in place, the Group is ready to expand its offering through acquisition opportunities

of suitable targets.

Pierre Spies Chief Executive Officer

Report (continued)




Detailed information on Alviva’s Corporate Governance is no longer included in the Annual Report, but is contained in

the Corporate Governance Report located under “Download Reports” under the Investor Relations tab on the Alviva

Holdings website at www.Alvivaholdings.com.

Information, specific to the financial year under review, is as follows:

Membership of the Board [G4–38] and its Committees and attendance [G4–LA12] at meetings:

PositionDate appointed/

Stepped downAttendance

Board of Directors – 4 meetings held

Non-executive directors

Mr AJ Fourie Non-Executive Chairman 1 July 2016 3/4

Mr A Tugendhaft Non-Executive Deputy Chairman 24 November 1998 4/4

Ms SH Chaba Independent Non-Executive Director 31 August 2012 4/4

Ms N Medupe Independent Non-Executive Director 29 August 2014 4/4

Mr B Sibiya Independent Non-Executive Director 10 March 2015 4/4

Executive directors

Mr P Spies Chief Executive Officer 27 January 2016 4/4

Mr RD Lyon Chief Financial Officer 1 January 2013 4/4

Audit and Risk Committee – 4 meetings held


Ms N MedupeChairperson –

Independent Non-Executive Director29 August 2014 3/4


Ms SH Chaba Independent Non-Executive Director 31 August 2012 4/4

By invitation

Mr A Tugendhaft Non-Executive Director 4/4

Mr AJ Fourie Non-Executive Chairman 3/4

Mr P Spies Chief Executive Officer 4/4

Mr RD Lyon Chief Financial Officer 4/4

Mr A Gerber Internal Audit Executive 4/4

SizweNtsalubaGobodo Inc External Auditors 4/4

Corporate Governance



Corporate Governance (continued)

PositionDate appointed/

Stepped downAttendance

Remuneration Committee – 2 meetings held


Ms N MedupeChairperson –

Independent Non-Executive Director10 March 2015 1/2

Mr A Tugendhaft Non-Executive Director 18 August 2011 2/2

Ms SH Chaba Independent Non-Executive Director 10 March 2015 2/2

Mr AJ Fourie Non-Executive Chairman 1 July 2016 1/2

Mr B Sibiya Independent Non-Executive Director 1 July 2016 2/2

Social and Ethics Committee – 2 meetings held


Ms SH ChabaChairperson –

Independent Non-Executive Director31 August 2012 2/2


Prescribed Officer [G4–39]

Mr RN Nkuna Group HR Executive 31 August 2012 2/2

By invitation

Mr A Gerber Internal Audit Executive 31 August 2012 2/2

The Board has delegated certain functions to well–structured committees without abdicating its own responsibilities.

[G4–34]

Audit and Risk Committee

The Audit and Risk Committee comprises Ms N Medupe (Chairperson) B Acc, Post–Graduate Diploma in Accountancy,

CA(SA); Ms SH Chaba BA (Economics and Industrial Psychology), Diploma in Human Resources Management; and

Mr B Sibiya B Admin, MBA. The purpose of the Committee is outlined on page 43 .

Ms N Medupe has served on the Committee for three years and one month, Ms SH Chaba for five years and one month

and Mr B Sibiya for two years and six months.

Remuneration Committee

The Remuneration Committee comprises Ms N Medupe (Chairperson) B Acc, Post Graduate Diploma in Accountancy,

CA(SA); Mr A Tugendhaft BA (Wits), LLB, and Ms SH Chaba, BA (Economics and Industrial Psychology) Diploma in Human

Resources Management; Mr AJ Fourie MSc (Chem Eng.); and Mr B Sibiya B Admin, MBA.

Mr AJ Fourie and Mr B Sibiya were appointed to the Committee on 1 July 2016.

The Board delegated the responsibility for remuneration matters to the Remuneration Committee. The Committee is

chaired by Ms N Medupe, an independent non-executive director, and establishes overall principles that govern the

remuneration of the Chief Executive Officer, non-executive directors and senior executives. The Committee also reviews




management incentive schemes, share option schemes, retirement and termination entitlements, fringe benefit

policies and professional indemnity policies. The Remuneration Committee comprises only non-executive directors and

although the Chief Executive Officer and Chief Financial Officer are invited to attend meetings, they may not participate

in or attend any discussion on their own remuneration and/or performance discussions.

Due to the size of the Board, a separate Nomination Committee is not deemed necessary. The Board is instead

responsible for receiving, considering and screening Board nominations, whenever vacancies arise.

Social and Ethics Committee

The Social and Ethics Committee is constituted as a sub–committee of the Board in terms of the Companies Act. The Committee is chaired by Ms SH Chaba, BA (Economics and Industrial Psychology); Diploma in Human Resources Management. The other two members of the Committee are Mr B Sibiya BAdmin, MBA, an independent non-executive director and Mr Robert Nkuna, BCom (Hons) Human Resources Management, a prescribed officer and Group HR Executive.

Accountability and AuditGoing Concern Assertion

The Board has formally considered the going concern assertion for Alviva and its subsidiaries and has no reason to believe that the Company and the Group will not be a going concern in the foreseeable future. The Board minutes the facts and assumptions used in the assessment of the going concern status of the Group at the financial year-end.

The Board has applied the solvency and liquidity test defined in section 4 of the Companies Act on a regular basis and whenever required in terms thereof.

King III Governance RegisterKing III recommends international best practices in corporate governance. Compliance with only a small section of King III is mandatory under the JSE Listings Requirements. Over and above the mandatory requirements, Alviva believes that voluntary monitoring of its own levels of adherence to legal and ethical standards improves the levels of governance to the benefit of all of its stakeholders. Leadership, sustainability and being a good corporate citizen remain the key pillars of governance in Alviva.

King III has opted for an ‘apply or explain’ governance framework. The Board accepts the responsibility for good governance and ensures that King’s principles are considered and applied. Whilst recognising that the application levels of the principles can always be improved on, the Board is satisfied with the levels of compliance in that the majority of

the principles have been applied.

King III Compliance – Governance Assessment Instrument

The Company has utilised the Governance Assessment Instrument (GAI), as licensed by the Institute of Directors of South Africa to TGPIP being the service provider, as the due process by which assurance is provided that every recommended practice in King III has been considered. Practices are either applied or not applied, with the latter carrying an explanation of a compensating practice, or alternatively the reason for non–application and corrective

action to be taken. [G4-15]

Ratings confirm the extent to which the 75 Principles are evidenced by the Company’s application of Practices. The ratings are as follows:

AAA Highest application

AA High application

BB Notable application

B Moderate application

C Application to be improved

L Low application




Assurance of the accuracy and validity of these results is provided by the review performed by the Audit and Risk

Committee, Internal Audit and the Board of Directors.

King III governance register at 29 September 2017 [G4–15]

Alviva Holdings Limited

1986/000334/06IoDSA GAI score

Applied/partially applied/

not applied

Chapter 1: Ethical Leadership and Corporate Citizenship AAA Applied

Chapter 2: Boards and Directors AAA Partially not applied

Chapter 3: Audit Committees AAA Applied

Chapter 4: The Governance of Risk AAA Partially not applied

Chapter 5: The Governance of Information Technology AAA Partially not Applied

Chapter 6: Compliance with Laws, Rules, Codes and Standards AAA Partially not Applied

Chapter 7: Internal Audit AAA Applied

Chapter 8: Governing Stakeholder Relationships AAA Partially not Applied

Chapter 9: Integrated Reporting and Disclosure AAA Applied

Overall score AAA Powered by IoDSA GAI

Ratings:

AAA Highest application

AA High application

BB Notable application

B Moderate application

C Application to be improved

L Low application



A Board decision was taken not to apply some of King’s principles, mainly due to the fact that compensating practices

are in place. Detailed below is a summary of the principles, which were not applied as well as the reasons for non–

application. Refer to the website (www.Alvivaholdings.com) for a full list of the King principles, levels of application as

well as how the principles were applied. [G4-15]

Principle Principle Description PracticeApplication

Level

Explanation/ Compensating

Practices

IoDSA GAI

Response

2.17 The Board has

appointed the CEO

and has established

a framework for

the delegation of

authority.

The CEO is not a

member of the

Nomination Committee.

Partially

applied

The Company does not have a

separate Nomination Committee

due to the size of the Board.

The Board, of which the CEO is

a member, fulfils the role of the

Nomination Committee.

Explained

2.19 Directors are

appointed through a

formal process.

The Nomination

Committee identifies

and participates

in selecting Board

members.

Partially

applied

Due to the size of the Board, there

is no Nomination Committee. The

Board handles procedures for

nominations and appointments.

Explained

2.25 The Company

remunerates its

directors and

executives fairly.

High leveraging of

incentive schemes is

avoided.

Partially

applied

The Board is aware of the risks

associated with highly leveraged

incentive schemes and they are

used with care as they may result

in excessive cost or risk for the

Company.

Where applicable, the risk is

appropriately hedged.

Explained

2.25 The Company

remunerates its

directors and

executives fairly.

Non–executive fees

comprise a base fee

and attendance fee per

meeting.

Partially

applied

Non-executive directors are

expected to contribute in many

ways outside of set meetings and

attendance fees do not reward

such efforts. The Company’s MOI

provides for automatic termination

of Board membership of directors

who are absent for two or more

consecutive meetings, unless the

Board is satisfied that such absence

is justifiable.

Explained

4.3 The Risk Committee

and/or Audit

Committee has

assisted the Board in

carrying out its risk

responsibilities.

Membership of

the risk committee

includes executive

and non–executive

directors; members of

senior management

and independent risk

management experts to

be invited, if necessary

Partially

applied

The Audit and Risk Committees

are combined into one committee,

which means that executive

directors and management are

precluded from being members.

Relevant management, including

the CFO, who is also the Chief Risk

Officer, is a permanent invitee to

Audit and Risk Committee meetings.

Explained

9.3 Sustainability

reporting and

disclosure should

be independently

assured

The scope of

independent

assurance over

sustainability report

is disclosed in the

integrated report

Partially

applied

The Company’s internal audit

function performed a limited

assurance review of the HR

and Environmental-related

sustainability data.

Explained




The Social and Ethics Committee (“the Committee”) is constituted in terms of Section 72(4) of the Companies Act.

Composition of the Social and Ethics CommitteeConsiderations for appointments to the Committee are based on the independence, business acumen and experience

of the independent non-executive directors in order to assist the Committee in achieving its role and responsibilities.

As required by Regulation 43 of the Companies Act, the Committee comprises two independent non-executive directors

and a prescribed officer of the Company. The majority of the members of the Committee are therefore independent non-

executive directors.

Ms SH Chaba, an independent non-executive director, is the Chairperson of the Committee and the other two members

are Mr B Sibiya, an independent non-executive and Lead Independent Director, and Mr RN Nkuna, the Group HR

Executive, a prescribed officer. Mr A Gerber attends the meetings by invitation as Alviva’s Internal Audit Executive,

although he is not a member to avoid compromising his independence as an assurance officer of the Group. He does

report to the Committee information which falls within its mandate.

Meetings of the CommitteeThe two scheduled meetings per annum, as required by the Social and Ethics Committee Charter, were held. The focus

of the meetings was on the issues as outlined below.

Role and ResponsibilitiesThe Committee’s role and responsibilities are governed by its Charter as approved by the Board. The Charter is subject

to an annual review by the Board. In line with its mandate, the Committee assists the Board in monitoring and guiding

Alviva’s performance as a responsible corporate citizen. This is achieved by monitoring the sustainable development

practices of the Group.

In broader terms, the Committee focuses on corporate citizenship, corporate ethics, social and economic development,

consumer relationships, environmental issues, occupational health and safety, as well as legal and other compliance

obligations. The Committee’s key duties as contained in its Charter are:

� Ethics and Compliance;

� Social and economic development, including the Group’s standing in terms of the goals and purposes of:

– the 10 United Nations Global Compact Principles covering human rights, labour standards, the

environment and anti-corruption;

– the OECD (Organisation for Economic Co-operation and Development) recommendations on corruption;

– the Employment Equity Act; and

– the Broad-Based Black Economic Empowerment Act.

� Good corporate citizenship, including the Group’s:

– promotion of equality, prevention of unfair discrimination and reduction of corruption;

– contributions made to the development of communities in which its products or services are

predominately marketed;

– sponsorship, donations and charitable giving; and

– impact that its activities and products/services has on the environment, health and public safety.

� Consumer relationships, including the Group’s advertising, public relations and compliance with consumer

protection laws;

Social and Ethics Committee Report



Social and Ethics Committee Report (continued)

� Labour and employment, including:

– monitoring the Group’s standing in terms of international labour laws concerning the International

Labour Organisation and the World Trade Organisation;

– reviewing the Organisation Protocol on decent work and working conditions; and

– monitoring the Group’s employment relationships and its contribution toward the education development

of its employees.

� Reporting, through one of its members, to the Board at Board meetings and to the shareholders at the

Company’s annual general meeting on the matters within its mandate;

� Management of the Group’s environmental impact;

� In addition and complementary to its statutory duties in terms of the Companies Act, the Committee’s mandate

is to assist the Group in discharging its business sustainability with respect to the implementation of practices

that are consistent with good corporate citizenship with particular focus on:

– the King III Code;

– Alviva’s ethics and sustainability commitments; and

– B–BBEE requirements as described in the DTI combined generic scorecard and associated Codes of

Good Practice.

Key Activities Ethics and Compliance

In line with its assigned mandate, the Committee continued to review the adequacy of governance controls, which

oblige the ethical conduct of all of Alviva’s employees. The Committee was satisfied that the necessary processes have

been established to achieve this objective. An ethical tone at the top is in force and executive management continues

to set up and implement the necessary ethics processes.

Key ethics processes, which were operational during the period, included the following: The Alviva Code of Conduct,

staff ethics training, an ethics line to enable the reporting of unethical behaviour, independent ethics surveys, anti-

corruption training, a gifts and benefits policy, as well as independent assurance reviews, which were performed by

Alviva’s internal auditors. All directors and employees are mandated to adhere to these requirements.

In addition to this, Alviva implemented additional refresher training on Governance and Ethics for Senior Management

and the Board. As regards ethics and governance, Alviva continues to interact in a transparent manner with its

stakeholders. It is the contention of the committee that Alviva is well on its way to making an ethical culture a way of

life in the Company.

The Committee is therefore satisfied that it has fulfilled its mandate as assigned to it by the Board.

Social and Economic Development

Corporate Social Investment (“CSI”) is central to realising meaningful transformation in South Africa. Alviva’s CSI strategy

[G4-1] aligns its social investment programme with its core business objectives and imperatives. Alviva seeks to create

partnerships with beneficiaries, government and non–governmental organisations (“NGOs”) to bring about long–term

sustainable development.

Alviva views CSI as an integral part of the commitment to sustainable development and a foundation for branding

and enhancing the Company’s reputation as a responsible corporate citizen and valued partner amongst communities

where it operates. To achieve this goal, its policy and programmes are aimed at:

� contributing to the socio–economic upliftment of the South African populace with particular reference to

educational assistance to the poor, downtrodden and needy;



� endeavouring to partner with communities around its operations and other relevant stakeholders, such as

government and NGOs, in implementing sustainable community development initiatives to ensure that those

communities value its corporate citizenship. The guiding principles of Alviva’s CSI initiatives include:

– encouraging partnerships with reputable institutions capable of generating a mutually beneficial profile

and capacity to building outcomes;

– aligning with national imperatives and government’s socio–economic framework;

– adopting a developmental approach that is intended to build capacity in communities and reduce

dependency;

– having an affirmative approach bias, with women, the disabled, youth and the socially destitute

prioritised; and

– encouraging partnerships with other businesses, government and communities, whilst promoting

Alviva’s identity for its interventions.

In the selection of CSI projects, the Company’s key focus area continues to be the investment in education in South

Africa. The impact of this strategy is far-reaching, touching both individual beneficiaries and the larger community in

which it functions. [G4–EC7]

Employment Equity and Skills Development

Alviva has embraced a philosophy of diversity and equal opportunity.

Alviva has consulted with the respective Skills and Employment Equity forums in the subsidiary companies on the

development of Employment Equity plans, as required by the Employment Equity Act and Skills Development Act. These

plans, aimed at creating diversity in the workplace, are monitored on an ongoing basis.

Alviva is committed to the training and development of all employees and providing equal opportunities in the workplace

by making the best use of human resources with due regard to the need for building on existing strengths and employee

potential. As such, the Group has a robust employment equity strategy [G4–1] and which includes the following:

� Prioritising recruitment practices to employ talented employees from historical disadvantaged groups;

� Training and development programmes that are aimed at enhancing the skills of employees from historically

disadvantaged groups;

� Accelerating the advancement of historically disadvantaged individuals to create a talent pool to promote from;

� Complying with the Employment Equity Act and other relevant legislative changes or requirements to meet

targets;

� Eliminating discrimination from the workplace where it is identified; and

� Advancing of historically disadvantaged employees through employment equity and skills development

programmes.

� Integrating the Performance Management System with the Employment Equity strategy by making Employment

Equity and transformation targets count for 15% of the leadership’s short-term incentives.





Broad–Based Black Economic Empowerment

Alviva recognises the need to maintain and improve on its B-BBEE rating in order to continue transforming the Group

and remaining relevant to doing business in South Africa. Alviva therefore continues to review the sub-elements of its

B-BBEE rating and the effect of any possible changes to the ICT sector code which may have an impact on its rating.

On 2 August 2016, Alviva announced that it had concluded a B–BBEE transaction whereby the Group undertook a

complete restructure of its corporate holdings so that certain South African entities are now held through a subsidiary,

DCT Holdings (Pty) Ltd. The effect is that the South African entities thus have improved B–BBEE ownership.

In September 2017, Alviva was rated under the new ICT Sector Code and achieved a Level 3 Rating. In accordance with

13(G) 2 of the BEE Act, Alviva has provided the BEE Commission with a report on its compliance with broad-based black

economic empowerment.

A summary of the information provided, as verified by the Broad-Based Black Economic Empowerment Verification

Professional as per the ICT Scorecard, is as follows:

B-BBEE ElementsTarget Score

IncludingBonus Points

Actual Score Achieved

Ownership 25 – 24.24

Management Control 23 – 11.14

Skills Development 20 3.37 20.77

Enterprise and Supplier Development 50 3.43 42.75

Socio Economic Development 12 – 12.00

Total Score 130 6.80 110.90

Priority Elements Achieved

Ownership YES

Skills Development YES

Enterprise and Supplier Development YES

Empowering Supplier Status YES

Final B-BBEE Status Level 3



Environmental Impact

The Board is committed to Alviva’s sustainable development and continuous monitoring of its impacts on the

environment. These values are contained in the Alviva Code of Conduct, with one of the Code’s pillars being “Protect

the Environment”.

The Board assigned the responsibility for governance of environmental management and monitoring to the Social and

Ethics Committee. As such, an environmental policy is in force, which is reviewed and updated on a regular basis to

ensure ongoing relevance. In addition, standard operating procedures guide the Group’s adherence to the environmental

policy. These operating procedures cover a wide scope of subjects, including waste management, efficient energy

usage and pollution impacts.

Alviva is committed to meeting the needs of its employees and clients in an environmentally sound and sustainable

manner, through continuous improvement in the environmental performance of all of its activities in accordance with

the Environmental Conservation Act. The Group’s objective is to control and manage any undesirable or superfluous

by–products, emissions and/or residue caused by any process or activity. Alviva aims to provide adequate means for

all waste types to be properly stored, contained and disposed of. It is a further objective to protect employees, visitors,

contractors or the public from exposure to any hazardous waste that the Group may or could accumulate or handle.

The Committee is satisfied with progress that is being made in this area and will continue to identify and monitor areas

for improvement.

Public Reporting The Committee is required to report through one of its members to Alviva’s shareholders on the matters within its

mandate. The Committee’s Chairperson will report on the Committee’s activities at Alviva’s annual general meeting to

be held on Thursday 23 November 2017.

ApprovalI wish to thank the members of the Committee for their contributions during the year in ensuring that the Committee

could fulfil its mandate assigned to it by the Board.

Ms SH Chaba Chairperson of the Social and Ethics Committee




Introduction The intention of the Remuneration Report is to provide an overview and understanding of Alviva’s remuneration

philosophy and to report on executive, senior management and non-executive director remuneration.

The remuneration philosophy focuses on structures that aim to attract and retain talented individuals who can make a

contribution to Alviva’s sustainability. To this end, it aims to empower individuals to make a positive contribution to the

growth of the business.

The Board defines the principles which guide the development of Alviva’s strategy and objectives. When setting

remuneration, an appropriate balance is sought between employee and shareholder interests. The ultimate responsibility

for the remuneration policy vests in the Board.

In line with emerging best practice, we have segregated this report into two parts: Part 1 sets out the forward-looking

Remuneration Policy that is subject to the non-binding shareholder vote, while the implementation of the Policy is dealt

with in Part 2.

The following terms are frequently used in this report and have been defined for ease of reference below:

FSP the Forfeitable Share Plan

KPIs key performance indicators

LTIs long-term incentive plans

LTIS Long-term Incentive Scheme, the previously used share plan

STI the annual short-term incentive

TGP Total guaranteed pay

The Remuneration Committee

PART 1 – Forward-Looking Remuneration Policy

The Remuneration Committee (“Remco”) is constituted as a committee established by the Board. The Committee

operates in terms of its terms of reference approved by the Board. The Board refers certain matters to shareholders for

approval, including any new or amended share-based incentive schemes and non-executive directors’ fees. The Board

has accepted the recommendations made by the Committee during the year.

Remuneration Committee Report



Remuneration Committee Report (continued)

Remuneration Committee Terms Of Reference

The Committee’s role is as an overseer and makes recommendations to the Board for its consideration and final approval.

The role of the Committee is to assist the Board and to ensure that:

� the Company remunerates executive and non-executive directors fairly and responsibly; and

� the disclosure of directors’ remuneration is accurate, complete and transparent.

The duties of the Remco, which have been agreed by the Board, include:

� annually considering, and recommending for approval to the Board, the remuneration of executive directors,

senior management and non-executive directors;

� overseeing the establishment of a Remuneration Policy that will promote the achievement of strategic objectives

and encourage individual performance;

� determining the Company’s general policy on executive directors and executive management remuneration to

ensure fair and responsible remuneration practices, including bonus and incentive schemes;

� reviewing the outcomes of the implementation of the Remuneration Policy to determine whether the set

objectives are being achieved;

� ensuring that the mix of fixed and variable components of pay for executive directors, in cash and share based

incentives, meets the Company’s needs and strategic objectives;

� satisfying itself as to the accuracy of recorded performance measures that govern the vesting of incentives;

� ensuring that all benefits, including retirement benefits and other financial arrangements, are justified and

correctly valued;

� considering the results of the performance evaluations of the CEO and other executive directors when

determining remuneration;

� regularly reviewing incentive schemes to ensure their continued contribution to shareholder value and that they

are administered in terms of their scheme rules;

� advising on the remuneration of non-executive directors; and

� overseeing the preparation of the Remuneration Report to be included in the Annual Report, and recommending

it to the Board, and specifically ensuring that the report:

– is accurate, complete and transparent;

– provides a clear explanation of how the Remuneration Policy has been implemented; and

– provides sufficient information for the shareholders to pass a special resolution on proposed non-

executive director fees in terms of section 66 (9) of the Companies Act, as amended.

The full terms of reference are available on the Company’s website at

www.alvivaholdings.com under the “Investor Relations” link.




Membership of the Remuneration CommitteeThe Committee comprises at least three non-executive directors, of whom a majority is independent. The Board

nominates members of the Committee and its Chairperson.

The Committee comprised: Ms N Medupe (Independent Non-Executive Director – Chairperson of the Committee),

Ms SH Chaba (Independent Non-Executive Director), Mr A Fourie (Non-Executive Chairman), Mr B Sibiya (Independent

Non-Executive Director and Lead Independent Director) and Mr A Tugendhaft (Non-Executive Deputy Chairman).

� Meetings of the Committee are held as frequently as the Committee considers appropriate, but it will normally

meet not less than twice a year. The Board, or any member thereof including members of the Committee, may

call additional meetings;

� The Chairperson, at his or her discretion, may invite other employees to attend and to be heard at the meetings

of the Committee;

� The Chairperson of the Committee may meet with the CEO and/or Company Secretary prior to a Committee

meeting to discuss important issues and/or agree on the agenda;

� All and any attendees by invitation may take part in discussions but do not have any voting rights and may not

vote on any issues raised; and

� Committee members must attend all scheduled meetings including ad-hoc meetings for special matters,

unless a prior apology with reasons has been submitted to the Chairperson or Company Secretary.

The attendance of meetings held during the period 1 July 2016 to 30 June 2017 was as follows:

Nov

2016

Jun

2017

Ms N Medupe (Chairperson) √ X

Ms SH Chaba √ √

Mr AJ Fourie X √

Mr B Sibiya √ √

Mr A Tugendhaft √ √

It is noted that the CEO and the CFO attend the meeting by invitation only. They are excluded from the review of their

own remuneration.

The Committee does not determine their own remuneration, but annually requests that executive management prepares

proposals on the remuneration of the non-executive directors and these are in turn submitted to the Board for approval.

Summary of Remuneration PolicyThe Remuneration Policy, which is summarised below, will be presented to shareholders at the AGM on 23 November

2017 and shareholders will be requested to cast a non-binding advisory vote thereon.

The general objective of this policy is to ensure that the Company can attract, motivate and retain appropriately skilled,

qualified and experienced employees. The remuneration shall be based on conditions that are market competitive and

at the same time aligned with shareholders’ interests.




Remuneration of the executives shall consist of a fixed and variable component, as well as the possibility of participation

in a long-term incentive programme. These components shall create a well-balanced remuneration structure reflecting

individual performance and responsibility, both short-term and long-term, as well as incorporating the overall

performance of the Group and individual subsidiaries.

More specifically, this Policy is aimed at ensuring that the Group and its subsidiaries:

� appropriately compensates employees for the services they provide to the Company;

� provides a flexible and competitive remuneration structure which:

– is referenced to appropriate benchmarks;

– reflects market practice;

– is tailored to the specific circumstances of the Company; and

– attracts, motivates and retains highly skilled directors, executives and staff generally;

� motivates employees to perform in the best interests of the Company and its stakeholders;

� determines remuneration in a way that ensures a level of equity and consistency across the Group; and

� complies with all relevant legal requirements.

Terms of Service

Alviva complies with relevant legislation when determining minimum terms and conditions for the appointment of

executive directors. Unless stated otherwise in the contract of employment, there are no fixed terms of employment,

although where appropriate, Alviva does enter into minimum service term agreements of up to four years, particularly

with executives of recent business acquisitions. None of Alviva’s current executive directors, however, are subject to

such agreements. Employment ceases on the resignation or dismissal of the director upon notice of two months (other

than during the first six months of employment), and the notice period may be waived at the discretion of Alviva. All

recently contracted employment agreements with executive directors, management and sales staff include a restraint

of trade clause to protect Alviva’s proprietary interests and to ensure that the business is not prejudiced in any way

or form. The restraint of trade undertaking is applicable for a period of 12 months from the date that the employment

terminates.

External Appointments

Executive directors are not permitted to hold external directorships or office without the approval of the Board. The

Board will only grant approval if such appointments will not create any conflict of interest and provided they will not

impinge upon the executive director’s ability to maintain the level of performance expected by Alviva from him/her in

the execution of his/her duties as an executive. If such approval is granted, directors may retain the fees payable from

such appointments.

Any fees paid by any of the subsidiaries in the Group to any of the executive directors for their services as directors to

those companies are paid to the Company and not to the individual concerned. The executive directors hold no other

external directorships or office.

Non-Executive Directors

Terms of Service

While shareholders appoint non-executive directors at AGMs, interim Board appointments may be made between AGMs,

in terms of the MOI, by the Board. Such interim appointees may not serve beyond the next AGM, though they may make

themselves available for election by shareholders.




Non-executive directors serve for a period of no more than three consecutive AGMs after the AGM in which they are

re-elected by shareholders. They are required to retire at the close of the third AGM, although they may offer themselves

for re-election for a further three years at that meeting. Besides this, the MOI specifies that at least one-third (rounded

to the nearest integer) of the non-executive directors must offer themselves for election or re-election as the case may

be, and it may be possible that a director is required to offer himself for re-election before the third AGM since his last

election in order to comply with this rule. Executive directors are not required to comply with the election process and

their position on the Board is governed by their employment agreements.

Basis of Remuneration

� Each non-executive Board member receives a fixed fee per year. Ordinary Board members receive a fixed

amount (the base fee) and additional fees are paid for the additional portfolios of the Deputy Chairperson, the

Chairperson of the Board, the Audit and Risk Committee, the Remuneration Committee, the Social and Ethics

Committee and the Lead Independent Director.

� Service on other sub-committees of the Board may entitle members to additional payment, subject to workload

and at the discretion of the Board.

� Individual Board members may take on specific ad hoc tasks outside the normal duties assigned by the Board.

In such cases, the Board determines a fixed fee for the work.

� Expenses, such as travel and accommodation in relation to board-approved activities as well as relevant

training, are not reimbursed.

Non-executive directors’ fees are reviewed annually and determined by the Board, following consultation with the

Committee and having regard to fees paid to non-executive directors of similar companies. The fees are benchmarked

against the fees paid to non-executive directors of companies operating in the same industry as the Company. Where

considered necessary, the Board may seek external advice on the subject. Shareholders will be requested to consider a

special resolution approving the non-executive directors’ fee structure and fee amounts at the AGM.

Executive Directors’ Remuneration

As regards executives and senior management, the objectives of the Remuneration Policy are to:

� apply key short- and long-term performance indicators including financial and non-financial measures of

performance;

� demonstrate a clear relationship between individual performance and remuneration;

� apply an appropriate balance between fixed and variable remuneration, reflecting the short- and long-term

performance objectives appropriate to the Group’s circumstances and goals;

� link rewards to the creation of value to shareholders; and

� ensure their total remuneration is competitive by market standards.

Package Design and Pay Mix

The Company’s current policy relating to the pay mix for the CEO and the CFO is to achieve a fixed versus variable

pay ratio of 50% (fixed), 25% (STI) and 25% (LTI) over time. The pay mix is also in line with the Company’s risk

management policies, and motivates executive directors to deliver on the Company’s short- and long-term strategic

objectives. Due to legacy issues in awarding irregular LTIs, this is a target that will be achieved over time. The balance of

the total remuneration package is weighted towards variable pay, in the form of STIs and LTIs, however, the percentage

of fixed salary is enough to ensure that executives are not overly reliant on variable pay.




Executive Directors’ Remuneration Composition

The Company aims to reward the Group CEO, CFO and other senior executives with a level and mix of remuneration

commensurate with their position and accountability.

Components of Remuneration

Remuneration comprises:

� Fixed pay: (basic salary and benefits), also known as TGP;

� Variable pay: STI (cash bonus – determined on a quarterly and annual basis); and

� Variable pay: LTI (the FSP is now used for this purpose).

The table below summarises at a high level the components of the remuneration, followed by a detailed explanation

below.

Element Component Details Link to Company strategy

Fixed Pay Salary • Benchmarked against the market

annually.

• Takes into account performance,

seniority and increase levels across the

Company.

Appropriate salary levels to attract and

retain the appropriate calibre of individual.

Benefits Includes medical aid, employer retirement

contributions at a selected % and travel

allowances for executive directors.

Offering appropriate benefits are essential in

attracting and retaining key individuals.

Variable Pay STI • Based on a combination of financial and

non-financial performance objectives.

• Failure to achieve non-financial

objectives can affect the portion linked to

financial objectives.

The bonus formula is based on the agreed

bonus amount and, in the case of the CEO

and CFO, this is equal to an annual amount

of one third of TGP. At least 90% of the

target must be met before any payment.

Every % above 100% of target attracts a

multiple of 10% on the bonus amount up to

a maximum of 300% of the targeted STI.

The financial and/or non-financial objectives

are as determined from time to time and

based on the needs of the business.

LTI Consists of one legacy plan, namely the LTIS

(a cash-settled bonus scheme that is linked

to the share price performance over three

years). This has now been replaced by the

FSP that was implemented during the 2017

financial year.

Prospective Company performance

conditions for the FSP measures

performance over a three-year period and

links the interest of executives with that

of shareholders over the long- term. In

addition, through the delivery of real shares,

executives are owners in the Company.




Total Guaranteed Pay

The executives’ TGP is competitive and based on the executive’s responsibilities and role, and is reflective of the

Group and individual’s historic performance. Last year, Alviva conducted a benchmarking exercise against a suitable

comparator group. We applied the benchmarking results when we determined the increases in executive pay. In so

doing, we also compared the average increase levels for executives to those of middle management and general staff.

Alviva remains committed to addressing its internal wage gap by keeping average executive increase levels relatively

modest.

Due to the scarcity of resources, the Committee has a sound working knowledge of the pay scales that are available

within the market. Consequently, the Committee attempts to ensure that the TGP is aligned with the median to upper

quartile of the market for executives in key roles. This assists in ensuring that dissatisfaction with TGP is not the reason

for a performing executive to leave the Group.

Setting Remuneration and Review Procedures

The Group’s remuneration determination and review procedures are as follows:

� The Group reviews remuneration packages annually at the start of the financial year;

� The Board, with the advice and assistance of the Committee, is responsible for making decisions in respect of

the remuneration of directors and, in particular, the Group CEO. In determining the level and composition of the

remuneration of the Group CEO and executives, the Committee is able to obtain independent advice on the

appropriateness of remuneration packages by considering remuneration trends in other companies comparable

in terms of size and market sector; and

� The annual review of remuneration packages for middle management and general staff takes into account

performance evaluation results. Based on these results, the Committee is able to recommend changes to the

TGP that may include annual increases and changes in the composition of remuneration.

The Committee takes into account various factors when reviewing overall TGP increases, including consideration of

CPI, profitability ratios and individual performance against KPIs.

Benefits

� All employees receive a limited range of prescribed and elective fringe benefits such as healthcare, disability,

life insurance and retirement benefits. Members have the option to structure their pensionable income, their

monthly contributions to the Provident Fund and the nature of the fund invested in. Membership is compulsory

for all new members.

– A minimum of 5% of pensionable remuneration is invested in the Provident Fund for all new employees.

– All employees are required to belong to an approved medical aid scheme.

These benefits are funded from the fixed salary component of the package for each employee.

Life and disability benefits, together with funeral insurance, are paid by the Company as a direct benefit.

Certain employees at a senior level who, due to the nature of their job, are required to travel are afforded travel

allowances as part of their fixed salary component.




Variable Pay

Short-Term Incentives

Purpose The short-term incentive programme consists of a cash bonus that is linked to the achievement of predefined operational targets for each executive.

Participation The STI is extended to all employees, however, the participation terms are varied based on the level.

Operation All employees in the organisation have some form of STI as part of their overall remuneration package. Sales and marketing employees are given targets to achieve and their overall remuneration is therefore affected by their ability to achieve and surpass the targets set. Employees in the administrative side of the business have an STI that is partly based on the performance of the Company in which they work and partly on their individual performance. At an executive level, the STI is calculated as a percentage of TGP which, in the case of the CEO and CFO, is set at 50%. The targets set are based on achieving the targets set by the Board of Directors.

On achieving the target, the executive will receive his targeted STI. At 90% of the target, the executive will earn 50% of his/her targeted STI and below 90%, no STI will be payable. For every 1% over the target, the executive will receive an additional 10% of the STI up to a maximum of 300% of the targeted STI. The STI is paid on a quarterly and annual basis.

Performance Conditions

Typically KPIs and assessment criteria include:

• meeting of pre-determined growth in income and other financial performance

indicators;

• meeting strategic, operational and cash flow objectives;

• meeting transformational targets; and

• assessed personal effort and contribution.

The performance conditions were considered appropriate in the context of Alviva’s

business model for growing the business profitability and generating these profits in

the form of cash. The rationale for non-financial performance bonuses is to reward

executives for strategic and sustainability orientated achievements. However,

poor performance in non-financial performance measures could override the good

performance in terms of financial criteria, i.e. unethical or non-compliant behaviour

cannot be compensated for by good financial performance.

Earning Potential The earning potentials for the STI by role are set out below. They are appropriately benchmarked against the market.

Role

On-target STI

(as a % of TGP)

Maximum earning

potential

(as a % of TGP)

Chief Executive Officer 50% 150%

Executive directors 50% 150%




Long-Term Incentive

As explained above, the previously used LTIS has been replaced by the FSP. A summary of the main policy features of

the FSP is provided below.

Forfeitable Share Plan

Purpose The FSP is primarily used as an incentive to participants to deliver the Group’s business strategy over the long-term. The intent of the FSP is to incentivise, motivate and retain executives and senior management through the award of performance shares.

Participation Eligible employees include executive directors, prescribed officers and senior management of any employer company within Alviva. Participation in the FSP is not a condition of employment, and the Committee has the absolute discretion to make an award to any employee in terms of the FSP.

Operation Under the FSP, annual awards of performance shares are awarded to eligible employees. Ad hoc awards of retention shares can be considered, should the Company face serious retention risks. The vesting of the award of performance shares is subject to the satisfaction of performance conditions, in line with the Group’s business strategy.

Performance Conditions

The performance shares under the FSP will be subject to the following performance

conditions:

• Return on Capital Employed;

• Core EPS;

• Total Shareholders Return.

Performance conditions will not be re-tested.

Company Limit For the duration of this scheme, the maximum number of shares which may at any one

time be allocated under the FSP shall not exceed 9 164 802 shares, which represented

approximately 5% of the Company’s total issued share capital as at the date of approval

of the FSP by shareholders. These limitations are in line with market best practice.

In addition, the maximum that may be allocated to any one participant is limited to

1 832 960 shares. This equates to approximately 1% of the Company’s total issued share

capital at the date of adoption of the FSP.

The Committee’s intention is to purchase shares in the market for the FSP, although this

will be subject to its ability to secure the necessary quantum at prices deemed to be

reasonable. It may be that the Company repurchases and cancels shares during the year

and then issues shares of a comparable amount at the time of FSP award.

The Committee is aware of the dilution effects of the FSP.




Legacy LTIs

LTIs

In 2013, Alviva introduced a cash-settled long-term incentive scheme for executives and senior management linked

to the performance of the share price. There have been two issues on this scheme and LTIS 1 was settled at the end of

June 2016. LTIS 2 will terminate on 31 December 2017.

The amount payable in terms of LTIS 2 is based on the excess of the volume weighted average price per share for the

10 business days ending on 31 December 2017 over the offer price of R6.60. In the event that the offer price is equal to

or greater than the volume weighted average price per share on 31 December 2017, no incentive will be payable. The

incentive is conditional on employment at Alviva as at 31 December 2017. Should employment be terminated before

this date, for any reason, no benefit shall accrue to the employee and there will be no entitlement to any pro rata portion

of the incentive.

The intention is that there will be no further offers on this scheme.

Remuneration Policy of General Staff

As regards general staff, the Remuneration Policy is as follows:

� Remuneration of general staff may be subject to regulatory requirements, such as bargaining council

agreements and collective agreements with trade unions.

� In the absence of the above, remuneration will be based on individual and Company performance as well as

market trends.

� Typically, remuneration may comprise elements of fixed remuneration and performance-based (at-risk)

remuneration. The at-risk element of remuneration corresponds with the Company’s risk tolerance.

� Certain general staff employees have an element of their remuneration at-risk. The proportion of an employee’s

total remuneration that is at-risk increases with seniority and with the individual’s ability to impact the

performance of the Company.

An annual performance review process assesses the degree to which each qualifying employee satisfies the

requirements of his/her role and the degree to which established performance objectives have been achieved.

PART 2 – The Implementation of the Remuneration Policy in 2017

Executive Directors’ Remuneration

Totalguaranteed

payR’000

Short-termincentive

R’000

Long-termincentives *

R’000Total

R’000

Executive directors

RD Lyon 2 487 1 659 565 4 711

P Spies 4 770 3 090 968 8 828

7 257 4 749 1 533 13 539

* This represents the calculated value attributable to the current reporting period of the FSP award as more fully disclosed in note 27 to the Annual Financial

Statements




Fixed Salary Increases

During the year under review increases between 5% and 6% were awarded to executives.

2017 STI Outcomes

The STI that was in place during 2017 for the CEO and CFO had set profitability and gearing objectives, together with

the satisfactory finalisation of certain projects that were met or exceeded. Consequently, the STI payments for the year

were equal to 200% of the STI, compared to the maximum of 300%.

The resultant STI payments to the CEO and CFO were as follows:

STI

Rand amount

STI as a

% of TGP

Executive directors

RD Lyon 1 659 000 67%

P Spies 3 090 000 67%

2017 LTIS awarded

No LTIS were awarded during 2017.

LTIS vesting during 2017

LTIS 2 vests on 31 December 2017. The amount payable in terms of the incentive will be based on the excess of the VWAP for the ten business days ending on 31 December 2017 over the offer price of R6.60.

2017 FSP Awards

FSP 1 was awarded on 25 November 2016, following the approval of the scheme by shareholders at the AGM on the same date. 1,700,000 shares were allocated to various senior members of the organization, including the following:

CEO 360 000

CFO 210 000

All of these shares will be forfeited should the threshold performance metrics not be met on vesting on 25 November 2019. The performance criteria, and percentages attributable to each, are based on targets for Return on Equity (30%), Core EPS (40%) and Total Shareholder Return (30%). The threshold targets, attributable to each criteria, are 15% on Return on Equity, R2.49 on the average Core EPS and R21.30 for the 20 day Volume weighted average on 30 September 2019 for the Total Shareholder Return.

FSP 2 was awarded on 15 June 2017, following the Remuneration Committee meeting that had approved the awards. 1 705 000 shares were allocated to various senior members of the organisation, including the following

CEO 300 000

CFO 150 000

All of these shares will be forfeited should the threshold performance metrics not be met on vesting on 30 September 2020. The performance criteria, and percentages attributable to each, are based on targets for Return on Equity (30%), Core EPS (40%) and Total Shareholder Return (30%). The threshold targets, attributable to each criteria, are

15% on Return on Equity, R2.94 on the average Core EPS, and R25.12 for the 20 day Volume weighted average on

30 September 2020 for the Total Shareholder Return.




Non-Executives Directors’ Remuneration

Fees paid to the directors of Alviva during the year are detailed in note 27.2 of the financial statements and details of

the proposed non-executive director fee structure is included in the Notice of AGM under Special Resolution number 4.

The average increase that was proposed and accepted for non-executive directors’ fees for the year ended June 2017

was 6% in line with CPI.

Directors’ fees

R’000

Services to

other

companies in

the Group

R’000

Total

R’000

2017

AJ Fourie * 546 530 1 076

S Chaba 215 – 215

N Medupe 283 – 283

BL Sibiya ** 401 – 401

A Tugendhaft 399 – 399

1 844 530 2 374

2016

BL Sibiya ** 364 – –

N Medupe 264 – –

S Chaba 201 – –

A Tugendhaft 514 – –

E van der Merwe*** 150 – –

1 493 – –

* Mr AJ Fourie was appointed as Non-Executive Chairman on 1 July 2016.

** Mr BL Sibiya joined the Board on 10 March 2015.

*** Mr E van der Merwe resigned from the Board on 30 June 2016.

ApprovalThe Board has approved this Remuneration Committee Report.

Signed on behalf of the Remuneration Committee

Ms N Medupe (Independent Non-Executive Director)

Chairperson of the Remuneration Committee



Contents to the Annual Financial Statements

Page

Directors’ responsibility statement and approval 41

Certificate by Company Secretary 42

Audit and Risk Committee Report 43

Directors’ report 47

Report of the independent auditor 51

Statements of financial position 54

Statements of profit or loss and other comprehensive income 55

Statements of changes in equity 56

Statements of cash flows 57

Accounting policies 58

Notes to the annual financial statements 73

Level of Assurance

The Annual Financial Statements (“AFS”) for the reporting period ended 30 June 2017 have been prepared under the

supervision of the CFO, Mr Richard Doughty Lyon CA. These separate and consolidated annual financial statements

have been audited in compliance with the applicable requirements of the Companies Act.



Directors’ responsibility statement and approval

The directors are required in terms of the Companies Act to maintain adequate accounting records and are responsible

for the content and integrity of the AFS and related financial information included in this report. It is their responsibility

to ensure that the AFS fairly present the state of affairs of the Group as at the end of the financial year and the results

of its operations and cash flows for the period then ended, in conformity with IFRS.

The consolidated and separate AFS have been prepared in accordance with IFRS, the SAICA Financial Reporting Guides

as issued by the Accounting Practices Committee, the Financial Reporting Pronouncements as issued by the Financial

Reporting Standards Council and the Listings Requirements of JSE Limited, in the manner required by the Companies

Act and supported by reasonable and prudent judgements and estimates, which have been used consistently.

The directors acknowledge that they are ultimately responsible for the system of internal financial control established by

the Group and place considerable importance on maintaining a strong internal financial control environment. To enable

the directors to meet these responsibilities, the Board sets standards for internal financial control aimed at reducing the

risk of error or loss in a cost effective manner. These standards include the proper delegation of responsibilities within

a clearly defined framework, effective accounting procedures and adequate segregation of duties in order to ensure

an acceptable level of risk. The internal financial controls are monitored throughout the Group and all employees are

required to maintain the highest ethical standards in ensuring that the Group’s business is conducted in a manner

that in all reasonable circumstances is above reproach. The focus of risk management in the Group is on identifying,

assessing, managing and monitoring all known forms of risk across the Group. While operating risk cannot be fully

eliminated, the Group endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and

ethical behaviour are applied and managed within predetermined procedures and constraints.

The directors are of the opinion, based on the information and explanations given by management that the system of

internal financial control provides reasonable assurance that the financial records may be relied on for the preparation of

the consolidated and separate AFS. However, any system of internal financial control can provide only reasonable, and

not absolute, assurance against material misstatement or loss.

The directors have reviewed the Group’s cash flow forecast for the next 12 months from date of approval of the

consolidated and separate AFS and, in the light of this review and the current financial position, they are satisfied that

the Group and the Company has, or has access to, adequate resources to continue in operational existence for the

foreseeable future.

The external auditors are responsible for independently examining and reporting on the consolidated and separate AFS

and their report is presented on pages 51 to 53.

The consolidated and separate AFS for the year ended 30 June 2017, as set out in pages 54 to 123, were approved by

the Board on 29 September 2017 and are signed on their behalf by:

AJ Fourie P Spies RD Lyon, CA

Chairman Chief Executive Officer Chief Financial Officer

Contents to the Annual Financial Statements



Certificate by Company Secretary

The Company Secretary of Alviva Holdings Limited certifies that in terms of section 88(2) of the Companies Act, the

Company has lodged with the Companies and Intellectual Property Commission of South Africa all such returns and

notices as are required of a public company in terms of this Act and that all such returns are true, correct and up to date

in respect of the financial year ended 30 June 2017.

SL Grobler CA(SA) Postal address: Physical address:

Company Secretary PO Box 483 The Summit

Halfway House 269, 16th Road

29 September 2017 1685 Randjespark

Midrand

1685



Audit and Risk Committee Reportfor the year ended 30 June 2017

The Alviva Audit and Risk Committee (“the Committee”) is constituted as a statutory sub–committee of the Board,

in line with the JSE Listings Requirements, and reports in compliance with section 94(7)(f) of the Companies Act.

Although not a statutory requirement, the Committee also fulfilled its duties in terms of the requirements of King III.

Instances, where King III was not applied, were explained in the corporate governance statement of this Report. The

Committee conducted its work in accordance with the Audit and Risk Committee Terms of Reference, which was

reviewed and updated during the year and approved by the Board.

The quality, integrity and reliability of audit and risk–related issues of the Group are delegated to the Committee to

assist the Board in discharging its duties relating to the safeguarding of assets, the operation of adequate systems,

control processes and the preparation of accurate financial reporting statements in compliance with all applicable legal

requirements and accounting standards. Ensuring good corporate governance in the Group is also a mandate assigned

to it by the Board.

MembershipThe Committee comprises of three independent non- executive directors who are appointed by the shareholders as

determined by the Companies Act. The current Committee members comprise:

� Chairperson: Ms N Medupe (B Acc, CA (SA));

� Ms SH Chaba BA (Economics and Industrial Psychology, Diploma in Human Resources Management); and

� Mr B Sibiya (B Admin, MBA).

The Chairperson of the Board is not eligible to chair the Committee. He does, however, have a standing invitation

to attend all Committee meetings. The CFO (who is also the Chief Risk Officer), the Chief Audit Executive and the

External Audit Partner attend all meetings by permanent invitation. Other attendees comprise the CEO and certain

Alviva employees and consultants who are invited to attend meetings, as and when required.

Duties Assigned by the BoardIn addition to the statutory requirements of the Companies Act and King III, the Board assigned additional functions

for the Committee to perform. Duties were mandated by the Board–approved Audit and Risk Committee Charter and

included the following:

� Ensured that the appointment of the external auditors complied with the provisions of the Companies Act and

any other relevant legislation, including auditor independence, fees payable and the nature and extent of any

non–audit services;

� Examined the reliability and accuracy of the financial information presented to all users of such information,

including the company’s going concern assertion;

� Appointed the Chief Audit Executive, approved and monitored Internal Audit’s work plans, the execution thereof

and the results of work performed;

� Formed an integral component of the risk management process and as such reviewed the risk management

process, resultant risk registers and action plans to mitigate all key risks. Key risks involved strategic risks,

liquidity risks, financial reporting risks, fraud risks, operational risks, risks associated with information technology,

legal and compliance risks and internal financial controls;

� Reported to the Board on the Committee’s activities and made recommendations to the Board concerning the

adequacy and effectiveness of the risk policies, procedures, practices, controls or any other matters arising from

the above responsibilities;

� Oversaw integrated reporting and reviewed all factors and risks that may impact on the integrity of the

Integrated Report;



Audit and Risk Committee Report (continued)

for the year ended 30 June 2017

� Ensured that a combined assurance model is applied to provide a co–ordinated approach to all assurance

activities;

� Monitored relationships between all assurance providers and monitored results and actions taken to address

any deficiencies;

� Satisfied itself of the appropriateness, expertise, resources and experience of Alviva’s finance function, and

specifically the CFO;

� Monitored Alviva’s compliance with recommendations of King III;

� Reviewed IT and fraud risks; and

� In addition to the above duties, the Audit and Risk Committee reviewed the following:

– Annual Reports;

– Integrated Reports;

– Sustainability Reports;

– Interim Reports; and

– Provisional financial results and final profit statements.

External AuditIn terms of section 90(1) of the Companies Act, the Committee nominated SizweNtsalubaGobodo Incorporated

as the independent auditor. Mr Alex Philippou, a registered independent auditor, was appointed in 2015. The Committee

satisfied itself that SizweNtsalubaGobodo Incorporated and Mr Alex Philippou are independent as defined by the

Companies Act and as per the standards stipulated by the auditing profession. The Committee confirms that the auditor

and designated auditor are accredited by the JSE. [G4–LA12]

The Committee, in consultation with executive management, agreed to the engagement letter, terms, nature and scope

of the audit function and audit plan for the 2017 financial year. The budgeted fee was considered for appropriateness

and then approved.

Financial Statements and Internal Financial ControlsThe Committee has reviewed the accounting policies and the financial statements of the Group and is satisfied that they

comply in all material respects with International Financial Reporting Standards and the requirements of the Companies

Act.

The Committee assured itself of the internal financial controls through the integrated reporting model and specifically

reports from both the internal and external auditors. The independent assurance which was received during the year

formed the basis for reporting to the Board on reliability thereof. [G4–33]

Going ConcernManagement presented the results of the Company’s and the Group’s solvency and liquidity tests at each of the

Committee’s meetings. The Committee satisfied itself that the Company and the Group have sufficient assets to carry

on with operations and that the Group was both solvent and liquid. The results were reported at Board meetings.





Risk ManagementThe Board assigned oversight of Alviva’s risk management function to the Audit and Risk Committee. In terms of King III

obligations, the Committee satisfied itself on the effectiveness of the risk management function. Furthermore, Internal

Audit reports annually on the risk maturity assessment and the Committee was pleased with the results in the current

year. IT-related risks received particular Committee attention and were included as a standing agenda item in line with

King III recommendations. Other standing agenda items included risks associated with financial reporting, liquidity risks,

financial and fraud risks, legal and regulatory compliance, litigation, insurance, reputation issues and health and safety

compliance.

Internal AuditThe Committee confirms that Internal Audit work assisted them in fulfilling their mandate. The performance and

independence of the function was monitored whilst also considering the capacity and resources available to Internal

Audit. Internal Audit’s mandate is governed by the Internal Audit Activity Charter, which was reviewed during 2017.

Internal Audit’s execution of duties was guided by the three-year risk-based rolling audit plan as approved by the

Committee. The Committee also oversees the co-operation between Internal Audit and other assurance providers,

particularly the external auditors. [G4–33]

To ensure independence, Internal Audit has direct access to the Audit and Risk Committee, primarily through its

chairperson. The Committee met with the Chief Audit Executive at regular intervals throughout the year without

management being present, where audit results, challenges and possible concerns were discussed.

During the reporting period there had been internal audit coverage in the key risk areas of the Group. The internal

audit process did not highlight any breakdowns in internal control that are known to have a material impact on the

Group’s performance and achievement of objectives during the period under review. Alviva’s overall system of internal

control remains adequate and no significant deficiencies in the design, implementation or execution of internal financial

controls were identified.

Combined AssuranceIn line with King guidance, and to enhance the overall internal control framework in the Company, the Combined

Assurance Framework was successfully adopted. [G4–33] The framework provides for a coordinated approach to all

assurance activities in the Group. The Alviva Board has assigned the Committee the custodianship of the framework.

The purpose of this framework is to promote integrated thinking and the active consideration of the relationships

between its various functional units. The move away from a silo approach to a thinking and working approach has the

objective to ensure that each assurer can assess the organisation from a holistic point of view. Alviva has maintained its

previously adopted Three-Lines-of-Assurance model.

The Committee is mandated to ensure that all risks that emanate from the Framework’s activities are appropriately

mitigated.

The Committee has fulfilled its mandate in terms of its custodianship of the Combined Assurance Framework.

Continuous improvements are made to ensure that maximum benefits are derived to ensure improved operations.

Legal and Regulatory ComplianceThe Committee has been assigned the responsibility for ensuring ongoing legal and regulatory compliance. This

mandate has been fulfilled through regular reviews of exposure levels associated with any key non-compliances.





Fraud PreventionAll reports to the anonymous whistle–blowing hotline (Ethics Line) were reported to the Committee via the Internal

Audit function. The Committee also reviewed summary reports of all defalcations throughout the Group as well as

management actions to mitigate any fraud risks. The Committee is satisfied that management had taken appropriate

actions to address fraud risks, which became evident as a result of these reports. It is confirmed that the Ethics Line

remained operational throughout the year.

Expertise and Experience of the Chief Financial Officer and Finance FunctionThe Committee confirms that it has reviewed and satisfied itself of the appropriateness of the expertise and experience

of the CFO of the Group, Mr Richard D Lyon, CA.

The Audit and Risk Committee, has considered, and has satisfied itself of, the appropriateness of the expertise and

adequacy of resources of the finance function and experience of the senior members of management responsible for

the finance function.

Financial StatementsThe Audit and Risk Committee has considered the JSE Letters dated 15 February 2016 and 14 February 2017(JSE

Proactive Monitoring Process) and taken the appropriate action.

The Committee reports that it is satisfied that the financial statements covering the 2017 financial year are a fair

reflection of the Group’s financial performance.

ApprovalThe Committee has fulfilled its mandate during the year under review and accordingly the financial statements have

been approved for recommendation to the Board. The Board has subsequently approved the financial statements on

29 September 2017 and which will be open for discussion at the annual general meeting of shareholders.

I wish to thank the members of the Committee and management for their contributions during the year to ensure that

the Committee could fulfil its mandate assigned to it by the Board.

Ms N Medupe Chairperson of the Audit and Risk Committee



Directors’ Reportfor the year ended 30 June 2017

The directors take pleasure in presenting their report, which forms part of the audited consolidated and separate

financial statements for the year ended 30 June 2017.

Directors ResponsibilityThe Company’s directors are responsible for the preparation and fair presentation of the consolidated and separate

financial statements in accordance with International Financial Reporting Standards (‘IFRS’) and the requirements of

the Companies Act, and for such internal control as the directors determine is necessary to enable the preparation of

consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error.

Principal Activities of the GroupThe principal activities of the Group are the manufacture, distribution and support of Information and Communication

Technology (“ICT”) hardware, software and infrastructure. This is complemented by the provision of ICT and financial

services. [G4–3]

Review of OperationsThe review of the Group’s operations is detailed in the Chief Executive Officer’s report on pages 14 to 17.

Segment AnalysisA detailed segment analysis of the Group performance is detailed in note 30 of the Annual Financial Statements.

Basis of PresentationThe audited consolidated and separate annual financial statements for the year ended 30 June 2017 have been

prepared by the Group Chief Financial Officer, Richard Lyon, CA, in accordance with the Group’s accounting policies and

complies with IFRS, SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, the Financial

Reporting Pronouncements as issued by the Financial Reporting Standards Council, the Listings Requirements of the

JSE Limited and the requirements of the Companies Act.

The accounting policies and methods of computation applied in the preparation of these audited consolidated and

separate results for the year under review, which are based on reasonable judgments and estimates, are in accordance

with IFRS and are consistent with those applied in the preparation of the Group’s Annual Financial Statements for the

year ended 30 June 2016. All new standards and interpretations that came into effect during the year were assessed

and adopted with no material impact to the Annual Financial Statements.

Trading StatementsThe Company issues trading statements when it is satisfied that a reasonable degree of certainty exists that the financial

results for the period to be reported on, will differ by at least 20% from the preceding corresponding period. The measure

adopted by the Company, in determining the trading statement requirement, is applied only on headline earnings per

share and/or earnings per share.

Financial ReviewThe Group generated net profit after tax of R443.9 million (2016: R381.6 million). The Annual Financial Statements on

pages 54 to 123 detail the Group’s and the Company’s financial performance, position and cash flow for the year under

review.



Directors’ Report (continued)


Borrowing PowersThe MOI imposes no restrictions on the borrowing powers of the Company or the Directors. The Company does however

have in place a formal delegation of authority imposing limitations in terms of transaction value and nature, which is

fully operational and reviewed on an on-going basis by the Board.

Investment in SubsidiariesDuring the year under review, the Board completed a specific restructuring of the organisational structure of the Group.

The restructuring did not meet the definition of a business combination and led to no change in control from a Group perspective.

Details of the restructuring process as well as the interest in subsidiaries held are disclosed in note 4 of the Annual Financial Statements.

Details of non-controlling interests acquired without any change in control are set out in note 24 of the Annual Financial

Statements.

Investment in Equity-Accounted InvesteeDetails of the investment in the equity-accounted investee is disclosed in note 5 of the Annual Financial Statements.

Stated Capital8 333 492 ordinary shares were repurchased during the year under review. The Company also repurchased 5 569 974 ordinary shares from its subsidiary, Pinnacle Treasury Services Proprietary Limited, in terms of the specific authority granted by the shareholders at the AGM held on 25 November 2016.

Following repurchases of the abovementioned shares the issued share capital of the Company at 30 June 2017 was

169 352 570 shares. Details of the authorised and issued share capital are provided in note 11 to the Annual Financial

Statements.

Forfeitable Share Plan (“FSP’)Details of the FSP are disclosed in note 27 to the Annual Financial Statements.

Special ResolutionsAt the annual general meeting of the Company held on 25 November 2016, shareholders approved six special resolutions.

Special Resolution number 1: A general authority to the Company for the repurchase of its own shares.

Special Resolution No 3: A general authority to the Company for a period of two years, or until the next annual general meeting, to provide financial assistance to any of its subsidiaries as contemplated in section 45(2) of the Companies Act.

Special Resolution No 4: A Repurchase of ordinary shares held as treasury shares, from Pinnacle Treasury Services Proprietary Limited, a subsidiary of Alviva Holdings Limited (previously Pinnacle Holdings Limited).

Special Resolution No 5: In accordance with section 16(1) (c) of the Companies Act, the Company’s MOI to be amended to give effect to the change of the Company’s name from Pinnacle Holdings Limited to Alviva Holdings Limited.

Special Resolution No 6: The fee structure to be paid to directors for their services as non–executive directors of the Company.

Special Resolution No 7: In line with local and global best practice, the intention of Alviva to adopt a new share plan,

namely the Alviva Holdings Limited Forfeitable Share Plan (“FSP”) to incentivise, motivate and retain the right calibre

of executives and senior management.



Shareholders voted against Special Resolution No 2: Authority to provide financial assistance in terms of section 44 of the Companies Act. The resolution will again be presented to shareholders at the annual general meeting, together with detailed background explaining the reason for the resolution. (see Special resolutions 2 and 3 below).

At the forthcoming annual general meeting of the Company to be held on 23 November 2017, the following Special Resolutions will be presented to shareholders for approval.

Special Resolution No 1: To issue a general authority to the Company to repurchase its own shares.

Special Resolution No 2: Authority to provide general financial assistance in terms of section 44 of the Companies Act.

Special Resolution No 3: Authority to provide specific financial assistance in terms of section 44 of the Companies Act.

Special Resolution No 4: To approve the fee structure to be paid to directors for their services as non-executive directors

of the Company.

DividendThe Company’s policy was amended last year to be as follows: to distribute, once a year, 10% of HEPS in line with that

of a company that wishes to apply its funds in growing the business. To this end, the Board, after satisfying itself of

the requirements of section 46 of the Companies Act, has declared a final dividend of 25 cents (2016: 20 cents) per

ordinary share for the financial year ended 30 June 2017. Details of the dividend declared is set out in note 21 of the

Annual Financial Statements.

DirectorateDetails of the directorate are disclosed on pages 7 and 8.

Details of shareholding held in the Company by directors are given in note 27.

Mr AJ Fourie assumed the role of Non-Executive Chairman on 1 July 2016.

In terms of the Company’s MOI, one third of the non-executive directors must retire every three years and may be

eligible for re-election. Ms SH Chaba and Mr B Sibiya accordingly retire. Ms SH Chaba offers herself for re-election. Mr B

Sibiya, however, has opted to not make himself available for re-election.

Shareholders will be requested to ratify the appointment at the annual general meeting.

Directors’ Interest in ContractsNo director of the Company had any interest in any contract of significance during the year under review.

Contingent Liabilities and Litigation StatementThe directors are not aware of any contingent liabilities that existed at 30 June 2017, or at the date of this report.

The directors, whose names appear on pages 7 and 8 of the Annual Report, are not aware of any legal or arbitration

proceedings, (including proceedings that are pending or threatened) that may have a material effect on the Group’s

financial position.

Going ConcernFollowing due consideration of the operating budgets, an assessment of group debt covenants and funding requirements,

solvency and liquidity, the major risks, outstanding legal, insurance and taxation issues, and other pertinent matters

presented by management, the directors have recorded that they have reasonable expectation that the Company and

the Group have adequate resources and the ability to continue in operation for the next 12 months. For these reasons,

the consolidated and separate financial statements have been prepared on a going concern basis.





Company SecretaryThe Company Secretary is Ms. SL Grobler whose contact details are as follows:

Postal address: Business Address

PO Box 483 The Summit

Halfway House 269 16th Road

1685 Randjespark, Midrand

1685

Tel: 011 237 7031

e–mail: [email protected] [G4–5] [G4-31]

AuditorsSizweNtsalubaGobodo Incorporated act as auditors of the Group, and have indicated their willingness to continue in

office for the ensuing year. The Audit and Risk Committee has satisfied itself of the independence of the auditors and the

designated auditor, Mr. A Philippou. A resolution to re-appoint SizweNtsalubaGobodo Inc. as auditors will be proposed

at the annual general meeting on 23 November 2017. [G4–LA12]

Events After the Reporting DateEvents after the reporting date are disclosed in note 34 to the annual financial statements.

Related Party TransactionsThe related party transactions entered into in the ordinary course of business are disclosed in note 28 of the Annual

Financial Statements.

InsuranceThe Group has placed cover in the South African traditional insurance markets to ensure that all categories of risk are

covered adequately. Additional cover on a per risk basis has been purchased where appropriate.

No Change StatementThe Integrated Report for the year ended 30 June 2017 does not contain any changes to the reviewed results, which

were published on 6 September 2017.





Report of the independent auditor

TO THE SHAREHOLDERS OF ALVIVA HOLDINGS LIMITED

OpinionWe have audited the consolidated and separate financial statements of Alviva Holdings Limited and its subsidiaries (the

group) set out on pages 54 to 121, which comprise the consolidated and separate statement of financial position as at

30 June 2017, consolidated and separate statements of profit or loss and other comprehensive income, statements

of changes in equity, statements of cash flows for the year then ended, as well as the notes to the consolidated and

separate financial statements, including a summary of significant accounting policies and other explanatory information.

In our opinion, the consolidated and separate financial statements present fairly, in all material respects, the consolidated

and separate financial position of Alviva Holdings Limited and its subsidiaries as at 30 June 2017, and its financial

performance and cash flows for the year then ended in accordance with International Financial Reporting Standards

and the requirements of the Companies Act of South Africa

Basis for opinionWe conducted our audit in accordance with the International Standards on Auditing (ISAs). Our responsibilities under

those standards are further described in the auditor’s responsibilities for the audit of the consolidated and separate

financial statements section of our report.

We are independent of the group in accordance with the Independent Regulatory Board for Auditors’ Code of professional

conduct for registered auditors (IRBA code) and other independence requirements applicable to performing audits of

the financial statements in South Africa. We have fulfilled our other ethical responsibilities in accordance with the

IRBA code and in accordance with other ethical requirements applicable to performing audits in South Africa. The

IRBA code is consistent with the International Ethics Standards Board for Accountants’ Code of ethics for professional

accountants (parts A and B).

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit mattersKey audit matters are those matters that, in our professional judgement, were of most significance in our audit of the

consolidated and separate financial statements of the current period. These matters were addressed in the context

of our audit of the consolidated and separate financial statements as a whole, and in forming our opinion thereon, and

we do not provide a separate opinion on these matters. We have determined that there are no key audit matters to

communicate in our report.

Board of directors’ responsibility for the consolidated and separate financial statementsThe board of directors, which constitutes the accounting authority, is responsible for the preparation and fair presentation

of the consolidated and separate 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 Board of directors

determines is necessary to enable the preparation of consolidated and separate financial statements that are free from

material misstatement, whether due to fraud or error.

In preparing the consolidated and separate financial statements, the board of directors is responsible for assessing the

group’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using

the going concern basis of accounting unless the accounting authority either intends to liquidate the group or to cease

operations, or has no realistic alternative but to do so.



Report of the independent auditor (continued)

Auditor’s responsibility for the consolidated and separate financial statementsOur objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are

free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with

ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are

considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic

decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism

throughout the audit. We also

� Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to

fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is

sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement

resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional

omissions, misrepresentations, or the override of internal control.

� Obtain an understanding of internal control relevant to the audit 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

Group’s internal control.

� Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and

related disclosures made by management.

� Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and based on

the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may

cast significant doubt on the group’s ability to continue as a going concern. If we conclude that a material

uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the

consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions

are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or

conditions may cause the group to cease to continue as a going concern.

� Evaluate the overall presentation, structure and content of the consolidated financial statements, including

the disclosures, and whether the consolidated financial statements represent the underlying transactions and

events in a manner that achieves fair presentation.

� Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business

activities within the group to express an opinion on the consolidated financial statements. We are responsible

for the direction, supervision and performance of the group audit. We remain solely responsible for our audit

opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and

significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding

independence, and to communicate with them all relationships and other matters that may reasonably be thought to

bear on our independence, and where applicable, related safeguards.

From the matters communicated with the directors, we determine those matters that were of most significance in

the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We

describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or

when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because

the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such

communication



Report of the independent auditor (continued)

Other reports required by the Companies ActAs part of our audit of the financial statements for the year ended 30 June 2017, we have read the Directors’ Report,

the Audit and Risk Committee’s Report and the Company Secretary’s Certificate for the purpose of identifying whether

there are material inconsistencies between these reports and the audited financial statements. These reports

are the responsibility of the respective preparers. Based on reading these reports we have not identified material

inconsistencies between these reports and the audited financial statements. However, we have not audited these

reports and accordingly do not express an opinion on these reports.

Report on other legal and regulatory requirementsIn terms of the Independent Regulatory Board for Auditors, Rule published in the Government Gazette Number 39475

dated 4 December 2015, we report that SizweNtsalubaGobodo Inc. has been the auditor of Alviva Holdings Limited for

3 years.

Alex Philippou

Engagement Director

Registered Auditor

SizweNtsalubaGobodo Inc.

29 September 2017

Summit Place Office Park, Building 4, 221 Garsfontein Road, Menlyn 0081

PO Box 2939, Saxonwold, 2132



GROUP COMPANY

Notes

30 Jun2017

R’000

30 Jun

2016

R’000

30 Jun2017

R’000

30 Jun

2016

R’000

ASSETS

Non-current assets 1 079 064 1 100 391 3 505 672 744 115

Property, plant and equipment 1 104 661 120 011 - -

Intangible assets 2 114 857 158 817 - -

Goodwill 3 347 846 347 846 - -

Interests in subsidiaries 4 – – 3 505 672 744 115

Investment in equity-accounted investee 5 - - – –

Finance lease receivables 6 434 581 408 020 - -

Deferred tax 7 77 119 65 697 - -

Current assets 3 670 358 3 912 260 202 158

Inventories 8 751 702 957 725 - -

Derivative financial asset 13 3 287 – - -

Trade and other receivables 9 2 304 629 2 524 373 - -

Finance lease receivables 6 210 972 178 663 - -

Income tax receivable 23 10 008 10 006 68 68

Cash and cash equivalents 10 389 760 241 493 134 90

Total assets 4 749 422 5 012 651 3 505 874 744 273

EQUITY AND LIABILITIES

Capital and reserves 2 020 223 2 409 517 3 504 619 733 390

Stated capital 11 43 359 193 646 43 358 193 646

Treasury shares 12 (98 492) (72 856) - -

Other equity reserves 14 41 436 36 107 - -

Cash flow hedge reserve 13 548 (1 722) - -

Retained earnings 2 010 921 1 931 000 3 461 261 539 744

Non-controlling interests 24 22 451 323 342 - -

Non-current liabilities 585 642 432 612 - -

Interest-bearing liabilities 15 510 145 353 416 - -

Derivative financial liability 13 - 3 444 - -

Deferred revenue 17 39 320 29 213 - -

Deferred tax 7 36 177 46 539 - -

Current liabilities 2 143 557 2 170 522 1 255 10 883

Trade and other payables 16 1 974 752 2 026 899 1 254 10 883

Derivative financial liability 13 – 16 154 - -

Interest-bearing liabilities 15 5 572 154 1 -

Deferred revenue 17 148 818 96 111 - -

Income tax payable 23 14 415 12 619 - -

Bank overdrafts 10 – 18 585 - -

Total equity and liabilities 4 749 422 5 012 651 3 505 874 744 273

Statements of financial positionas at 30 June 2017



GROUP COMPANY

Notes

30 Jun

2017

R’000

Restated

30 Jun

2016

R’000

30 Jun

2017

R’000

30 Jun

2016

R’000

Revenue 18 12 811 498 10 969 132 3 052 846 151 168

Cost of sales (10 538 710) (9 305 726) – -

Gross profit 2 272 788 1 663 406 3 052 846 151 168

Other income 4 560 53 043 2 500 82 500

Gain on discounting of finance lease agreements 3 702 1 619 – –

Gain on foreign exchange – 6 384 – –

Profit on disposal of property, plant and equipment 858 2 072 – –

Share-based payment income – – 2 500 –

Profit on disposal of former subsidiary – 42 968 – 82 500

Operating expenses (1 453 230) (1 037 287) (8) (253)

Selling expenses (103 738) (69 450) - -

Employee benefit expenses (1 156 831) (806 789) - -

Administration expenses (187 361) (143 394) (8) (253)

Loss on foreign exchange (5 300) - - -

Fair value adjustment on acquisition of former equity-

accounted investment - (17 654) - -

Profit on disposal of former subsidiary - - - –

Earnings before interest, tax, depreciation and

amortisation 824 118 679 162 3 055 338 233 415

Depreciation and amortisation 1; 2 (90 594) (63 284) - -

Impairment of investment in subsidiary – – (1 400) –

Operating profit before interest 19 733 524 615 878 3 053 938 233 415

Investment income (Including dividends received) 19 39 453 17 617 142 23 505

Finance costs 19 (146 490) (126 311) - (24 950)

Share of profit of equity-accounted investee - 22 702 - -

Profit before tax 626 487 529 886 3 054 080 231 970

Income tax expense 20 (182 494) (148 283) (2 194) (15 447)

Net profit for the year 443 993 381 603 3 051 886 216 523

Other comprehensive income:

Items that can be reclassified to profit or loss net of tax: 3 028 7 811 - -

Exchange differences from translating foreign operations 758 2 126 - -

Cash flow hedge 2 270 5 685 - -

Total comprehensive income for the year 447 021 389 414 3 051 886 216 523

Net profit for the year attributable to: 443 993 381 603

Owners of the company 405 277 341 652

Non-controlling interests 38 716 39 951

Total comprehensive income attributable to: 447 021 389 414

Owners of the Company 408 305 349 463

Non-controlling interests 38 716 39 951

Earnings per ordinary share (in cents per share) – –

- Basic earnings per ordinary share 21 244.2 207,1

- Diluted basic earnings per ordinary share 21 243.5 207,1

Statements of profit or loss and other comprehensive incomefor the year ended 30 June 2017

[G4-EC1]


56

Notes

Statedcapital

R’000

TreasurysharesR’000

Otherequity

reservesR’000

Cashflow

hedgereserve

R’000

Retainedearnings

R’000

Attribu-table to

owners ofthe

parentR’000

Non-control-

ling interests

R’000

TotalequityR’000

GROUP

Balances at 30 June 2015 1 680 (72 856) 57 806 (7 407) 1 565 523 1 544 746 375 1 545 121

Issue of shares 191 966 – – – – 191 966 – 191 966

Realisation of non-distributable reserve

– – (23 825) – 23 825 - – -

Cash flow hedge reserve – – – 5 685 – 5 685 – 5 685

Net profit for the year – – – – 341 652 341 652 39 951 381 603

Other comprehensive income – – 2 126 – – 2 126 – 2 126

Acquisition of non-controlling interests

– – – – – - 295 479 295 479

Settlement of option liability – – – – – - (12 463) (12 463)

Balance at 30 June 2016 193 646 (72 856) 36 107 (1 722) 1 931 000 2 086 175 323 342 2 409 517

Shares repurchased (150 231) – – – – (150 231) – (150 231)

Treasury shares repurchased and cancelled

(56) 33 566 – – (33 510) - – -

Treasury shares purchased – (59 202) – – – (59 202) – (59 202)

Equity-settled share-based payment

- – 4 570 – – 4 570 – 4 570

Cash flow hedge reserve 13 – – – 2 270 – 2 270 – 2 270

Net profit for the year – – – – 405 277 405 277 38 716 443 993

Acquisition of non-controlling interests

– – – – (258 499) (258 499) (339 607) (598 106)

Other comprehensive income – – 759 – – 759 – 759

Dividends paid – – – – (33 347) (33 347) – (33 347)

Balance at 30 June 2017 43 359 (98 492) 41 436 548 2 010 921 1 997 772 22 451 2 020 223

COMPANY

Balance at 30 June 2015 1 680 – – – 323 221 324 901 – 324 901

Issue of shares 191 965 – – – – 191 965 – 191 965

Net profit for the year – – – – 216 523 216 523 - 216 523

Balance at 30 June 2016 193 645 - - - 539 744 733 389 – 733 389

Shares repurchased (150 231) – – – – (150 231) – (150 231)

Treasury shares repurchased and cancelled

(56) – – – (94 608) (94 664) – (94 664)

Net profit for the year – – – – 3 051 886 3 051 886 - 3 051 886

Dividends paid – – – – (35 761) (35 761) – (35 761)

Balance at 30 June 2017 43 358 - - – 3 461 261 3 504 619 - 3 504 619

Statements of changes in equityfor the year ended 30 June 2017

[G4-EC1]


57

Statements of cash flowsfor the year ended 30 June 2017

GROUP COMPANY

Notes

30 Jun

2017

R’000

30 Jun

2016

R’000

30 Jun

2017

R’000

30 Jun

2016

R’000

Cash generated from operations 22 1 259 803 745 769 (9 637) 3 636

Interest income 39 453 17 617 142 23 505

Finance costs (146 490) (126 311) - (24 950)

Dividends received from equity-accounted investee - 8 170 - -

Tax paid 23 (202 484) (180 411) (2 194) (15 496)

950 282 464 834 (11 689) (13 305)

Cash flows from investing activities

Expenditure to maintain operating capacity

Property, plant and equipment acquired 1 (29 778) (18 222) – –

Proceeds on disposal of property, plant and

equipment 8 398 1 306 – -

Proceeds on disposal of assets classified as held-

for-sale - 226 116 – 82 500

Acquisition of assets classified as held-for-sale - (617) - -

Acquisition of intangible assets 2 (9 044) (9 870) - -

Net investment in finance leases receivable (58 870) (118 973) - -

Acquisition of subsidiaries 24 - (56 521) - (56 521)

Additional costs incurred on equity-accounted

investment - (3 678) - -

Dividends received - - 422 399 151 168

(89 294) 19 541 422 399 177 147

Cash flows from financing activities

Interest-bearing liabilities raised 150 000 350 050 1 -

Interest-bearing liabilities repaid (4 007) (655 439) - (320 136)

Shares issued - - - 191 966

Repurchase of shares (209 433) - (150 231) -

Non-controlling interest acquired (598 107) - - -

Short-term loans repaid - 25 292 - -

Group loans repaid/(raised) - - (224 675) (35 702)

Dividends paid to shareholders (33 347) - (35 761) -

(694 894) (280 097) (410 666) (163 872)

Decrease in net cash, cash equivalents and

overdrafts 166 094 204 278 44 (30)

Net cash and cash equivalents acquired from

business combinations - 89 769 - -

Effects of exchange rate changes on the balance of

cash held in foreign currencies 758 2 126 - -

Net cash and cash equivalents/(overdraft) at

beginning of year 222 908 (73 265) 90 120

Net cash and cash equivalents at end of year 389 760 222 908 134 90

Cash and cash equivalents 389 760 241 493 134 90

Bank overdrafts - (18 585) - -

[G4-EC1]



Accounting policiesfor the year ended 30 June 2017

Reporting EntityAlviva Holdings Limited is a company domiciled in South Africa. The address of the company is The Summit, 269 16th

Road, Randjespark, Midrand, 1685. The consolidated annual financial statements of the Company as at and for the

period ended 30 June 2017 comprise the company and its subsidiaries (together referred to as the Group). The primary

activities of the Group have been disclosed in the Directors’ report in detail.

Statement of ComplianceThe consolidated and separate annual financial statements (“the financial statements”) have been prepared in

accordance with IFRS, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee,

the Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council, the JSE Listings

Requirements and the Companies Act.

The financial statements were authorised for issue by the board of directors on 29 September 2017 and are subject to

the approval of the shareholders at the AGM.

Basis of PreparationThe financial statements are prepared as a going concern on a historical basis except for certain financial instruments,

which are stated at fair value, as applicable. The accounting policies, inclusive of reasonable judgements and

assessments, have been consistently applied for all years presented, are consistent with those applied in the preparation

of the audited annual financial statements for the year ended 30 June 2016, and comply with IFRS.

The financial statements are presented in South African Rand, which is the functional currency of the Group. Amounts

are rounded to the nearest thousand except where another rounding measure has been indicated in the financial

statements.

Significant Estimates and JudgementsIn preparing the financial statements, management is required to make certain estimates and assumptions regarding

the future that affect the amounts represented in the financial statements and related disclosures. Estimates and

judgements are continually evaluated based on historical experience and other factors, including expectations of future

events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from

these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material

adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Significant Judgements:

Revenue recognition

In making its judgement of how to treat the revenue of the various transactions, management considered the detailed

criteria for the recognition of revenue from the sale of goods and services, set out in IAS 18: Revenue, and in particular,

whether the Group had transferred to the buyer the significant risks and rewards of ownership of the goods. Where a

single contract price is negotiated with a customer for both goods and services, the split is determined with reference

to the usual sales prices for these specific goods and services.

Control over investees

Direct or indirect investments held in investees

Management considered various elements of control as defined, on determining whether the reporting entity controls

and should consolidate the interests held investees.



Accounting policies (continued)


Management has made considerations whether the reporting entity:

� has power over the investee;

� is exposed to, or has the rights to, variable returns from its involvement with the investee; and

� has the ability to affect those returns through its power over the investee.

The directors of the company concluded that the reporting entity has the practical ability to direct the relevant activities

of the investees as well as the variable returns of the investees unilaterally and hence the reporting entity has control

of the investees. The various investees have been classified as subsidiaries from a Group perspective in the current

reporting period based on the assessment performed by management.

The Ledibogo Trust and controlled entities (“Ledibogo Group”)

Management has made considerations from strategic points of view, which include the Company being closely involved

in the design and objectives of the trust, as Founder of the trust, which is aimed at the promotion of broad-based black

economic empowerment initiatives and the trust as a vehicle to ensure compliance with the formal B-BBEE codes

by the Group. The Company has the authority to appoint the trustees of the trust. From an operational perspective

the trust receives financial support from Alviva, which also includes the absorption of any potential deficit of the trust

on termination, should this occur, and the fact that the operations of the trust are considered to be contingent to the

purpose of the trust. Based on these indicators the trust is a structured entity and is controlled by Alviva and therefore

consolidated in the Group. This includes Ledibogo (RF) Proprietary Limited, a company controlled by the trust.

Cash flow hedge effectiveness

The effectiveness of the hedge is measured by comparing the effect on the Group cash flow of a change in the share

price to the effect on the hedging instrument cash flow of the same change.

Finance lease receivables

All leases are accounted for as finance lease unless IAS 17 lease indicators have not been met, then the lease is

accounted for as an operating lease.

Redeemable preference shares

Management considered the nature of the financial instrument to determine the classification of the instrument as a

financial liability or as equity. Based on the nature of the preference shares issued, management concluded that the

preference shares issued to the external party meets the definition of a financial liability and have classified the specific

issued preference shares as such.

Estimates and Assumptions:

Determination of impairment of goodwill

The Group determines annually whether goodwill is subject to impairment. This requires an estimation of the value in

use of the cash-generating unit (“CGU”) to which goodwill is allocated. Estimating the value in use requires management

to make an estimate of the expected future cash flows from the CGU and to determine an appropriate discount rate

in order to calculate the present value of those cash flows. Refer to note 3 for the specific parameters used during the

value-in-use calculations.

Determination of impairment of non–financial assets

Management is required to make judgements concerning the cause, timing and amount of impairment of non-financial

assets. In the identification of impairment indicators, management considers the impact of changes in current market

conditions, technological obsolescence, physical damage, the cost of capital and other circumstances that could

indicate that impairment exists. Management’s judgement is also required when assessing whether a previously

recognised impairment loss should be reversed.





Where impairment indicators exist, determination of the recoverable amount requires management to make assumptions

to determine the fair value less costs to sell and value in use. Fair value less costs to sell is based on the best information

available to management that reflects the amount that the Group could obtain, at the reporting date, from the disposal

of the asset in an arm’s length transaction with a market participant in its principal market, after deducting the costs of

disposal. Value in use is based on key assumptions on which management has based its determination, which include

projected revenues, gross margins, capital expenditure, expected customer bases and market share.

Net realisable value of inventories

The net realisable value of inventory represents the estimated selling price in the current market at the reporting period

date. The Group provides for the amount by which the cost of inventory exceeds its net realisable value multiplied by

the units of stock on hand at the end of the reporting period. Due to the nature of the Group’s inventory, it may become

obsolete in a short period of time. Inventories are written down to net realisable value based on the age of the inventory,

the impact of technology and the historical experience of obsolescence rates. Any inventory that is physically identified

as damaged is written off when identified.

Property, plant and equipment

The useful lives of property, plant and equipment are based on management’s estimate. Management considers the

impact of changes in technology and customer service requirements, expected physical wear and tear, expected usage

of the asset and any legal or similar limitations on the use of the asset to determine the period over which an item of

property, plant and equipment is expected to be available for use by the Group. The estimation of residual values of

assets is also based on management’s judgement as to whether the assets will be sold, the costs of such disposal and

what the expected condition of these assets is likely to be at the time of their disposal. Management is of the opinion

that the current estimates are in line with industry norms.

Tax

Judgement is required in determining the recognition of income taxes due to the complexity of legislation. There are

many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of

business. The Group recognises liabilities for anticipated tax issues based on estimates of whether additional taxes will

be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such

differences will impact the income tax and deferred tax amounts recognised in the period in which such determination

is made.

To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Group to

realise the net deferred tax assets recognised at reporting date could be impacted.

Trade receivables and loans and receivables

Management assesses the Group’s trade receivables and loans and receivables for impairment at the end of each

reporting period. In determining whether an impairment loss should be recognised in profit or loss, management makes

judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash

flows from a financial asset. The Group recognises the net future tax benefit related to deferred income tax assets to the

extent that it is probable that the deductible temporary differences will reverse in the foreseeable future. Assessing the

recoverability of deferred income tax assets requires management to make significant estimates related to expectations

of future taxable income. Estimates of future taxable income are based on forecast cash flows from operations and the

application of existing tax laws in each jurisdiction.

The allowance for credit losses relates to possible recoverability and ageing issues regarding specific debtors. These are

analysed on a one-on-one basis first, and then on a portfolio basis. Objective evidence of impairment for a portfolio of

receivables could include management’s past experience of collecting payments, an increase in the number of delayed

payments in the portfolio past the average credit period of 45 days, as well as observable changes in national or local

economic conditions that correlate with default on receivables.





Share-based payment scheme

The value of the share-based payment schemes are determined by management at each reporting date. The valuation

is performed by applying an appropriate valuation model for the share-based payment scheme, as identified at the

inception date of the scheme, and collates the various inputs into the model based on market data and historical trends

as appropriate. Refer to note 27.3 for the respective inputs into the model.

Basis of Consolidation

The financial statements incorporate the annual financial statements of the Company and all investees controlled by

the Company which are classified as subsidiaries, including the Ledibogo Group. The results of subsidiaries acquired or

disposed of during the year are included in the consolidated financial statements from or up to the effective date that

control is acquired or relinquished, as appropriate. Inter-company transactions and balances between Group companies

are eliminated in full. The Company measures, in its separate financial statements, its investments in subsidiaries at

cost less impairment, if any.

Non–controlling interests in the net assets (excluding goodwill) of consolidated subsidiaries are identified separately from

the Group’s equity therein. Non–controlling interests consist of the amount of those interests at the date of the original

business combination and the non–controlling interests’ share of changes in equity since the date of the combination.

Where there is a change in the interest in a subsidiary that does not result in a loss of control, the difference between the

fair value of the consideration transferred or received and the amount by which the non–controlling interest is adjusted,

is recognised as an equity transaction directly in the statement of changes in equity.

Property, Plant and Equipment

All items of property and equipment, except for land, which is measured at cost, are measured at original cost less

accumulated depreciation and any impairment losses. As well as the purchase price, cost includes directly attributable

costs and the estimated present value of any future costs of dismantling and removing items. The corresponding

liability is recognised within provisions.

Freehold land is not depreciated. Depreciation is charged so as to write-off the cost of all other assets over their

estimated useful lives to their residual values, using the straight-line method. Depreciation commences when the

assets are ready for their intended use. Assets held under finance leases are depreciated over their expected useful

lives on the same basis as owned assets or, where shorter, the term of the relevant lease.

The estimated useful lives for current and comparative periods are as follow:

Buildings 25 to 50 years

Motor vehicles * 5 to 6 years

Office equipment * 6 years

Computer equipment * 3 to 4 years

Plant and equipment * 5 years

Furniture, fittings and other equipment * 6 to 10 years

Leasehold improvements Remainder of outstanding lease term

Leased assets 3 to 5 years

* All of these categories are classified under the category “Plant, vehicles and equipment” in note 1.

The residual value, useful life and depreciation method of each asset are reviewed at each reporting date. The

depreciation charge for each period is recognised in profit or loss.

When the recoverable amount of an asset has declined below its carrying amount, the carrying amount is reduced to

reflect the decline in value. In determining the recoverable amount of assets, expected future cash flows are discounted

to their present values.





The carrying amount of any item of property, plant and equipment, will be derecognised on disposal or when no

economic benefits are expected from the disposal of the item. The gain or loss arising from the derecognition of an item

of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the

carrying amount of the item, and is recognised in profit or loss.

Leased Assets

Group as lessee

Where substantially all of the risks and rewards incidental to ownership of a leased asset have been transferred to the

Group (a “finance lease”), the asset is treated as if it had been acquired. The amount initially recognised as an asset

is the fair value or, if lower, the present value of the minimum lease payments payable over the term of the lease. The

corresponding lease commitment is shown as a liability. Lease payments are analysed between capital and finance

cost. The finance cost is allocated to each period during the lease term so as to produce a constant periodic rate of

interest on the remaining balance of the liability. The capital element reduces the balance owed to the lessor. Where

substantially all of the risks and rewards incidental to ownership are retained by the lessor (an “operating lease”), the

total rentals payable under the lease are recognised in profit or loss on a straight–line basis over the lease term. Land

and buildings of property leases are considered separately for the purposes of lease classification.

Group as lessor

The Group enters into lease arrangements with customers over its assets as the lessor. The leases transfer to the lessee

substantially all of the risks and rewards incidental to ownership of the leased assets, and therefore are treated as

finance leases. These leases are mainly for ICT and office equipment financing to customers over the economic life of

the assets leased, subject to minimum periods varying between one and five years. The Group recognises assets held

under a finance lease in the statement of financial position and measures them as a receivable at an amount equal

to the net investment in the lease. Initial indirect costs are included in the initial measurement of the finance lease

receivable and reduce the amount of finance income recognised over the lease term. The lease payment receivable is

treated by the Group as repayment of principal capital and finance income. The recognition of finance income is based

on a pattern reflecting a constant periodic rate of return on the Group’s net investment in the finance lease, and it is

recognised in profit or loss.

Business CombinationsThe consolidated financial statements incorporate the results of business combinations using the acquisition method.

The consideration transferred in a business combination is measured as the aggregate of the fair values (at the date of

exchange) of assets transferred, liabilities incurred or assumed, and equity instruments issued by the Group in exchange

for control of the acquiree. The acquisition related costs are accounted for as an expense in the period in which the

costs are incurred and the services are received. The results of acquired operations are included in the consolidated

financial statements from the date on which control is obtained.

Non-controlling interest that represent present ownership interest and entitle their holders to a proportionate share of

the entity’s net assets in the event of liquidation are initially measured at fair value or at the non-controlling interests’

proportionate share of the recognised amounts of the acquiree’s identifiable net assets. The choice of measurement

basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at fair value

or, when applicable, on the basis specified in other IFRS.

When the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a

contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and

included as part of the consideration transferred in a business combination. Changes in the fair value of the contingent

consideration that qualify as measurement period adjustment are adjusted retrospectively, with corresponding

adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information

obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and

circumstances that existed at the acquisition date.





The subsequent accounting for changes in the fair value of the contingent consideration that do no qualify as

measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration

that is classified as equity is not measured at subsequent reporting dates and its subsequent settlement is accounted

for within equity. Contingent consideration that is classified as an asset or liability is remeasured at subsequent reporting

dates in accordance with IAS 39: Financial Instruments: Recognition and Measurement or, IAS 37 Provisions, Contingent

Liabilities and Contingent Assets, as appropriate, with the corresponding gain or loss being recognised in profit or loss.

When business combination is achieved in stages, the Group’s previously held equity interest in the acquiree is

remeasured to its acquisition-date fair value and the resulting gain or loss, if any, is recognised in profit or loss. Amounts

arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other

comprehensive income, are reclassified to profit or loss where such treatment would be appropriate if that interest were

disposed of.

Transactions with Non-Controlling Interests

Transactions with non–controlling interests are treated as transactions with equity owners of the Group. For purchases

from non–controlling interests, the difference between any consideration paid and the relevant share acquired of the

carrying value of the net assets of the subsidiary is recognised in equity.

GoodwillGoodwill arising on acquisition represents the excess of the cost of a business combination plus non–controlling

interest over the fair value of identifiable assets, liabilities and contingent liabilities acquired. Goodwill is capitalised as

an intangible asset with any impairment in carrying value being charged to profit or loss. For the purpose of impairment

testing, goodwill is allocated to each of the Group’s CGUs expected to benefit from the synergies of the combination.

CGUs to which goodwill has been allocated are tested for impairment annually, or more frequently, when there is an

indication that the unit may be impaired. If the recoverable amount of the CGU is less than the carrying amount of the

unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then

to the other assets of the unit pro rata to the carrying amount of each asset in the unit. An impairment loss recognised

for goodwill is not reversed in a subsequent period. On disposal of a subsidiary, the attributable amount of goodwill is

included in the determination of the profit or loss on disposal.

Intangible AssetsExternally acquired intangible assets are initially recognised at cost and subsequently measured at original cost

less accumulated amortisation and any accumulated impairment losses. These intangible assets are amortised on

a straight–line basis over their useful lives. Software and trademarks are considered to have finite useful lives. The

estimated useful life, residual values and amortisation method are reviewed at each reporting date, with the effect of

any changes in estimate being accounted for on a prospective basis. Intangible assets are recognised on business

combinations if they are separable from the acquired entity or give rise to other contractual/legal rights. The amounts

ascribed to such intangibles are determined by using appropriate valuation techniques.

The cost of the intangible assets is the amount of cash or cash equivalent paid or the fair value of other consideration

given to acquire an asset at the time of its acquisition or construction. The significant intangibles recognised by the

Group and their useful economic lives are as follows:

Contract-based intangible assets The term of the contract

Customer-related intangible assets 3 to 6 years

Mainframe software 5 to 10 years

Operating and desktop-based software 2 to 3 years

Trademarks 10 years





The intangible assets are derecognised on disposal or when no future economic benefits are expected from the

continuing use and the gain or loss arising from derecognition, calculated as the difference between the net disposal

proceeds and the carrying amount of the asset, are recognised in profit or loss on the date of derecognition.

Investments in Equity-Accounted InvesteesInvestment in Associates

An associate is an investee over which the Group can exercise significant influence, through participation in the financial

and operating policy decisions of the investee, but does not have control nor joint control over those policies. The

results and assets and liabilities of associates are incorporated in the financial statements using the equity method

of accounting. An investment in an associate is accounted for using the equity method from the date on which the

investee becomes an associate.

Investment in Joint Venture

A joint venture is a joint arrangement whereby the Group and other parties undertake an economic activity that is

subject to joint control, and the Group has rights to the net assets of the arrangement, rather than the right to its assets

and obligations for its liabilities. The results and assets and liabilities of joint ventures are incorporated in the financial

statements using the equity method of accounting. An investment in a joint venture is accounted for using the equity

method from the date on which the investee becomes a joint venture.

Equity Method

Under the equity method, the investments in equity-accounted investees are initially recognised at cost and thereafter

it is adjusted to recognise the investor’s share of the post–acquisition profits or losses of the investee, distributions

received and any adjustments that are required. The profits or losses are recognised in the statement of profit or loss.

The cumulative post–acquisition movements are adjusted against the carrying amount of the investment. Where a

Group entity transacts with an equity-accounted investee of the Group, profits and losses are eliminated to the extent

of the Group’s interest in the relevant investee.

In the separate financial statements of the Company, equity-accounted investees are accounted for at cost and

adjusted for impairment if applicable.

Share-Based PaymentsThe Group recognises services received in share–based payment transactions when services are performed. The value

of services received is measured by reference to the fair value of such services, or, if the fair value of service cannot

be measured reliably, then the fair value of the equity instruments issued. For equity–settled share–based payment

transactions, the Group recognises the goods or services received, and the corresponding increase in equity, directly, at

the fair value of the goods or services received, unless that fair value cannot be estimated reliably. If the entity cannot

estimate reliably the fair value of the goods or services received, the entity measures their value, and the corresponding

increase in equity, indirectly, by reference to the fair value of the equity instruments granted.

For cash–settled share–based payments, the Group recognises the goods or services acquired and the liability incurred

at the fair value of the liability. Until the liability is settled, the Group re–measures the fair value of the liability at the end

of each reporting period and at the date of settlement, with any changes in fair value recognised in profit or loss for the

period.





InventoriesInventories consist of inventory on hand, goods in transit and work in progress and are initially recognised at cost.

Inventories are subsequently measured at the lower of cost and net realisable value. Net realisable value represents

the estimated selling price less all estimated costs to completion and costs to be incurred in marketing, selling and

distribution. Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the

inventories to their present location and condition. The cost of inventories is assigned using the weighted average cost

formula. The same cost formula is used for all inventories having a similar nature and use to the Group.

When inventories are sold, the carrying amount is recognised as an expense in the period in which the related revenue

is recognised.

Financial InstrumentsFinancial instruments are recognised when the Group becomes a party to the contractual provision of the instrument.

These financial instruments are initially measured at fair value plus transaction costs, except for those financial

instruments that are classified at fair value through profit or loss. Financial assets are derecognised if the Group’s

contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial assets to

another party without retaining control, or transfers substantially all of the risks and rewards of the asset. Financial

liabilities are derecognised if the Group’s obligations specified in the contract expire or are discharged or cancelled.

The subsequent measurement of financial instruments is stated below:

The Group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial

liability or an equity instrument in accordance with the substance of the contractual arrangement.

Trade and Other Receivables

Trade and other receivables are classified as loans and receivables and are measured at amortised cost using the

effective interest method. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss

when there is objective evidence that the asset is impaired.

Cash and Cash Equivalents

Cash and cash equivalents comprise cash on hand, on deposit and other short–term readily realisable liquid instruments.

Cash and cash equivalents classified as loans and receivables are initially recognised at fair value and subsequently

measured at amortised cost.

Trade and Other Payables

Trade and other payables classified as liabilities at amortised cost are measured at amortised cost using the effective

interest method.

Interest-Bearing Liabilities

Interest–bearing liabilities are classified at amortised cost and measured using the effective interest method.

Preference shares which are mandatorily redeemable on a specific date are classified as liabilities. The dividends on

these preference shares are recognised in profit or loss as an interest expense.

Loans to/from Subsidiaries

Loans to/from subsidiary companies are classified and measured at amortised cost using the effective interest method.





Derivative Financial Instruments

These instruments, comprising foreign exchange contracts and call and put options, are measured at fair value. Realised

and unrealised gains or losses arising from changes in fair value of these financial instruments are recognised in profit or

loss in the period in which they arise. The call and put options are designated as hedges. Refer to the hedge accounting

policy note.

Share Purchase Scheme Loans

Share purchase scheme loans are measured at amortised cost using the effective interest method.

Classification as debt or equity

Debt and equity instruments are classified either as financial liabilities or as equity in accordance with the substance of

the contractual arrangement.

Redeemable Preference shares

Redeemable preference shares, classified as debt, are measured at amortised cost using the effective interest method.

Offsetting

Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position

when the Group has a legal right to offset the amounts and intends to settle on a net basis to realise the asset and settle

the liability simultaneously.

Impairment of Non-Financial AssetsAt each reporting date, the Group reviews the carrying amounts of its tangible and intangible assets, other than

goodwill, to determine whether there is any indication that those assets have suffered an impairment loss. If any such

indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment

loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the

recoverable amount of the CGU’s to which the asset belongs. Where a reasonable and consistent basis of allocation

can be identified, corporate assets are also allocated to individual CGU’s, or otherwise they are allocated to the smallest

group of CGU’s for which a reasonable and consistent allocation basis can be identified. Intangible assets with indefinite

useful lives, including goodwill, and intangible assets not yet available for use are tested for impairment annually, and

whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated

future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market

assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows

have not been adjusted. If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount,

the carrying amount of the asset (or CGU) is reduced to its recoverable amount. An impairment loss is recognised

immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment

loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, other than goodwill, the carrying amount of the asset (or CGU) 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 CGU)

in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is

carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.





Impairment of Financial AssetsFinancial assets are assessed for indicators of impairment at the end of each reporting period. 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. Impairment

losses are recognised in profit or loss.

For all other financial assets, including finance lease receivables, 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.

Where an impairment loss subsequently reverses, the carrying amount of the asset 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 in prior years. Reversal of impairment

losses are recognised in profit or loss.

Stated CapitalOrdinary shares are classified as equity. Incremental external costs directly attributable to the issue of ordinary shares

or share options are recognised in equity as a deduction, net of tax from the proceeds.

Treasury SharesConsideration paid/(received) for the purchase/(sale) of treasury shares is recognised directly in equity. The cost of

treasury shares acquired is presented as a separate reserve (the “treasury share reserve”) which is classified under

equity. The gain or loss realised from the disposal of treasury shares, is recognised in equity, with the cost of the treasury

shares credited to the treasury share reserve, and therefore the total proceeds are recognised in equity.

Foreign Currency TranslationTransactions entered into by Group entities in a currency other than the currency of the primary economic environment

in which it operates (the “functional currency”) are recognised at the rates ruling when the transactions occur. Foreign

currency monetary assets and liabilities are translated at the rates ruling at the reporting date. Exchange differences

arising on the translation of unsettled monetary assets and liabilities are recognised immediately in profit or loss.

Foreign currency non–monetary assets and liabilities measured in terms of historical cost in a foreign currency are

translated using the exchange rate at the date of the transaction; and non–monetary assets and liabilities measured at

fair value in a foreign currency are translated using the exchange rates at the date when the fair value was measured.

When a gain or loss on a non–monetary item is recognised in other comprehensive income, any exchange difference

component of that gain or loss is recognised in other comprehensive income. Conversely, when a gain or loss on a non-

monetary item is recognised in profit or loss, any exchange difference component of that gain or loss is recognised in

profit or loss.

On consolidation, the results of foreign operations are translated into South African Rand at rates approximating those

ruling when the transactions took place. All assets and liabilities of foreign operations, including goodwill arising on the

acquisition of those operations, are translated at the rate ruling at the reporting date. Exchange differences arising on

translating the opening net assets at opening rate and the results of foreign operations at actual rate are recognised

in other comprehensive income and accumulated in the foreign exchange translation reserve which is included in the

non-distributable reserve.





Exchange differences recognised in the profit or loss of Group entities’ separate financial statements on the translation

of long–term monetary items forming part of the Group’s net investment in the foreign operation concerned are

reclassified to the foreign exchange reserve if the item is denominated in the functional currency of the Group or the

foreign operation concerned. On disposal of a foreign operation, the cumulative exchange differences recognised in the

foreign exchange translation reserve relating to that operation up to the date of disposal are transferred to profit or loss

as part of the gain or loss on disposal.

Hedge AccountingThe Group has hedged the risk arising in respect of its obligation in terms of the long-term incentive scheme. The

hedged item and hedged risk is the liability in terms of the scheme and the effect of changes in the share price on the

amount of this liability. The Group has entered into put and call options to hedge this risk. These options have been

designated as hedging instruments.

Hedge accounting applies to hedges that are effective in relation to the hedged risk and meet the hedge accounting

requirements of IAS 39: Financial Instruments: Recognition and Measurement. The hedging relationship between the

hedging instrument and the hedged item, as well as the risk management objective and strategy for undertaking the

hedge, are documented at the inception of the hedge. In addition, the effectiveness of the hedge is assessed both at

inception and on an ongoing basis, to ensure that it is highly effective throughout the period for which it was designated.

This hedging relationship has been classified as a cash flow hedge and cash flow hedge accounting has been applied.

The effective part of the change in fair value is recognised in other comprehensive income and accumulated in the cash

flow hedge reserve. The remaining ineffective part is recognised in profit or loss. The cumulative change in fair value is

transferred from equity and recognised in profit or loss in the same period that the hedged cash flows affect profit or

loss.

Should the hedge no longer meet the criteria for hedge accounting, the cumulative change in fair value will remain in

equity until the hedged cash flows affect profit or loss.

Deferred RevenueThe Group has a present and legal obligation to repair or replace goods sold with one, two or three-year carry-in or on-

site warranties in the event that the product should fail to operate under normal operating conditions. That portion of

the revenue earned on the original sale that relates to the provision of warranties is deferred and recognised in profit or

loss over the period of the warranties.

Income Tax Deferred Tax

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the statement of

financial position differs to its tax base, except for differences arising on:

� the initial recognition of goodwill;

� the initial recognition of an asset or liability in a transaction which is not a business combination and at the

time of the transaction affects neither accounting nor taxable profit;

� investments in subsidiaries where the Group is able to control the timing of the reversal of the difference and

it is probable that the difference will not reverse in the foreseeable future.

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available

against which the difference can be utilised. 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; such reductions are reversed when

the probability of future taxable profits improves. Unrecognised deferred tax assets are re-assessed at each reporting

date and recognised to the extent that it has become probable that future taxable profits will be available against which

they can be used.





The amount of the asset or liability is determined using tax rates that have been enacted or substantially enacted by the

end of the reporting period and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered).

Deferred tax balances are not discounted.

Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets

and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on the same

taxable Group Company.

Current Tax

The tax currently payable (or receivable) is based on taxable profit for the year. Taxable profit differs from profit as

reported in the consolidated profit or loss 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 end of the reporting period.

The Group and its subsidiaries offset current tax assets and current tax liabilities if, and only if, the Group has a legally

enforceable right to set off the recognised amounts and intends either to settle on a net basis, or to realise the asset

and settle the liability simultaneously.

Segment ReportingA segment is a distinguishable component of the Group that is engaged in activities from which it may earn revenue

and incur expenses, whose operating results are regularly reviewed by the chief operating decision–maker (which by

delegation by the Board of Directors, is the CEO under advice from his senior executive team) and for which discrete

financial information is available. Operating segments are reported in a manner consistent with internal reporting

provided to the chief operating decision–maker.

Details of the operations and products of each of the business segments are given in note 30.

RevenueRevenue comprises revenue from sales of goods, rendering of services and interest income from financing activities.

Revenue from the sale of goods, comprises the invoiced value of sales, excluding Value–Added Tax, net of discounts,

and is recognised at the fair value of the consideration received or receivable when significant risk and rewards of

ownership have passed to the buyer.

Revenue relating to services is recognised during the period in which the service is performed. Revenue from the sale

of extended warranties is recognised over the period of the warranty. Rental income is recognised on a straight–line

basis over the period of the leases.

Interest income from financing activities is recognised using the effective interest method.

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease and

classified as revenue.

Investment IncomeInterest income on investments is accrued on a time basis, with reference to the principal outstanding and at the

effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts over the

expected life of the financial asset to that asset’s net carrying amount.

Dividend income from investments is recognised when the shareholders’ rights to receive payment have been

established.

Interest and dividend income received in relation to investments held are classified as revenue in profit or loss for the

Company, based on the primary activities of the Company.





Finance CostsAll finance costs are recognised in profit or loss in the period in which they are incurred as the Group has no qualifying

assets as defined in IAS 23: Borrowing Costs.

Employee BenefitsThe cost of all short–term employee benefits is recognised as an expense during the reporting period in which the

employee renders the related service.

Liabilities for employee entitlements to wages, salaries and annual leave represent the amount which the Group has a

present obligation to pay as a result of employee services provided during the reporting period.

Retirement Benefits: Defined Contribution Schemes

Contributions to defined contribution pension schemes are recognised in profit or loss in the year to which they relate.

ProvisionsProvisions are defined as liabilities of uncertain timing or amount.

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it

is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount

of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation

at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a

provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present

value of those cash flows (when the effect of the time value of money is material).

When some or all the economic benefits required to settle a provision are expected to be recovered from a third party, a

receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the

receivable can be measured reliably.

Operating ProfitOperating profit is the result generated from the continuing principal revenue-producing activities of the Group as

well as other income and expenses related to operating activities. Operating profit excludes finance costs, investment

income, share of profit of equity-accounted investees and income taxes.

Fair Value Measurement‘Fair value’ is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction

between market participants at the measurement date in the principal or, in its absence, the most advantageous market

to which the Group has access at that date. The fair value of a liability reflects its non-performance risk.

A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial

and non-financial assets and liabilities (refer to note 26).

When one is available, the Group measures the fair value of an instrument using the quoted price in an active market

for that instrument. A market is regarded as active if transactions for the asset or liability take place with sufficient

frequency and volume to provide pricing information on an ongoing basis.

If there is no quoted price in an active market, then the Group uses valuation techniques that maximise the use of

relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation technique incorporates

all of the factors that market participants would take into account in pricing a transaction.

If an asset or a liability measured at fair value has a bid price and an ask price, then the Group measures assets and long

positions at a bid price and liabilities and short positions at an ask price.





The best evidence of the fair value of a financial instrument on initial recognition is normally the transaction price, i.e.,

the fair value of the consideration given or received. If the Group determined that the fair value on initial recognition

differs from the transaction price and the fair value is evidenced neither by a quoted price in an active market for

an identical asset or liability nor based on a valuation technique for which any unobservable inputs are judges to be

insignificant in relation to the measurement, then the financial instrument is initially measured at fair value, on initial

recognition an the transaction price. Consequently, that difference is recognised in profit or loss on an appropriate basis

over the life of the instrument but no later than when the valuation is wholly supported by observable market data or

the transaction is closed out.

New Standards and InterpretationsNew and Revised Standards and Interpretations issued but not yet effective

At the date of authorisation of the annual financial statements, the following Standards and Interpretations applicable

to the company were in issue, but not yet effective:

Standards and

interpretationsDetail Effective date

IAS 7

Statement of Cash Flows (amendment)

The amendments require entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities; namely (i) changes from financing cash flows, (ii) changes arising from obtaining or losing control of subsidiaries or other businesses, (iii) the effect of changes in foreign exchange rates, (iv) changes in fair values, and (v) other changes.

The amendments will be applied prospectively and will not have a material impact on the Group’s financial statements.

Annual periods beginning on or after 1 January 2017.

IAS 12

Income Taxes (amendment)

The amendments clarify that unrealised losses on debt instruments measured at fair value in the financial statements and at cost for tax purposes give rise to a deductible temporary difference regardless of whether the debt instrument’s holder expects to recover the carrying amount of the debt instrument by sale or by use. It further clarifies that; (i) the carrying amount of an asset does not limit the estimation of probable future taxable profits, (ii) estimates for future taxable profits exclude tax deductions resulting from the reversal of deductible temporary differences, and (iii) an entity assesses a deferred tax asset in combination with other deferred tax assets. Where tax law restricts the utilisation of tax losses, an entity would assess a deferred tax asset in combination with other deferred tax assets of the same type.

The amendments will be applied retrospectively; however an entity may recognise the change in the opening retained earnings of the earliest comparative period presented. The amendment will not have a material impact on the Group’s financial statements.



72



Standards and

interpretationsDetail Effective date

IFRS 9

Financial Instruments (new)

The standard requires financial assets to be measured either at amortised cost or fair value depending on the business model under which they are held and the cash flow characteristics of the instrument.

The standard contains new hedge accounting requirements aimed at better aligning the accounting treatment with the risk management strategy. In addition, the standard replaces the incurred loss impairment model in IAS 39 with an expected loss model. It will no longer be necessary for a credit event to have occurred before credit losses are recognised.

The new standard will be applied retrospectively and could have a material impact on the Group’s financial statements. The Group has not yet fully quantified the potential impact the potential impact of the new standard on the Group.


IFRS 2

Share-based payment

A collection of three distinct narrow-scope amendments dealing with classification and measurement of share-based payments.

The amendments address:

• the effects of vesting conditions on the measurement of a cash-settled share-based payment;

• the accounting requirements for a modification to the terms and conditions of a share-based payment that changes the classification of the transaction from cash-settled to equity-settled; and

• classification of share-based payment transactions with net settlement features.

The new standard will not have any impact on the Group’s financial statements when it becomes effective.


IFRS 15

Revenue From Contracts with Customers (new)

The IFRS replaces IAS 18 Revenue and provides a single, principles-based five-step model to be applied to all contracts with customers. The steps involve identifying the contract, identifying the performance obligations under the contract, determining the transaction price, allocating the transaction price to the performance obligations in the contract, and recognising revenue when the entity satisfies a performance obligation.

The new standard could have a material impact on the Group’s financial statements and may be applied with full retrospective effect or under a modified retrospective approach with an adjustment made to the opening balance of retained income. Early adoption is permitted. The Group has not yet fully quantified the potential impact of the new standard on the Group.


IFRS 16

Leases (new)

The new standard provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. Lessors continue to classify leases as operating or finance leases.

The new standard could have a material impact on the Group’s financial statements and may be applied with full retrospective effect or under a modified retrospective approach with an adjustment made to the opening balance of retained income. Early adoption is permitted. The Group has not yet fully quantified the potential impact of the new standard on the Group.


All Standards and Interpretations will be adopted at the effective date as disclosed. Management assessed all the

Standards and Interpretations and is of the opinion that none of these Standards and Interpretations will have a material

impact on the results of the company in future periods.


7 3

Notes to theannual financial statementsfor the year ended 30 June 2017

GROUP

Land andbuildings

R’000

Leaseholdimprove-

mentsR’000

Plant,vehicles

andequipment

R’000

RentalassetsR’000

TotalR’000

1. PROPERTY, PLANT AND EQUIPMENT

Carrying amount at 1 July 2015 – 1 790 40 077 25 448 67 315

Valuation/cost – 3 835 115 647 41 250 160 732

Accumulated depreciation – (2 045) (75 570) (15 802) (93 417)

Movement for the year 2016

Additions at cost – – 18 222 – 18 222

Business combination acquisitions

at cost 15 295 730 49 122 – 65 147

Cost 15 295 7 656 154 978 – 177 929

Accumulated depreciation – (6 926) (105 856) – (112 782)

Disposals – – 767 – 767

Cost – (1 418) (74 426) (3 309) (79 153)

Accumulated depreciation – 1 418 75 193 3 309 79 920

Depreciation – (104) (27 365) (3 971) (31 440)

Carrying amount at 30 June 2016 15 295 2 416 80 823 21 477 120 011

Valuation/cost 15 295 10 073 214 421 37 941 277 730

Accumulated depreciation – (7 657) (133 598) (16 464) (157 719)


Additions at cost – – 28 073 1 705 29 778

Disposals – – (11) (7 527) (7 538)

Cost – (5 836) (33 903) (13 456) (53 195)

Accumulated depreciation – 5 836 33 892 5 929 45 657

Depreciation – (941) (30 231) (6 418) (37 590)

Carrying amount at 30 June 2017 15 295 1 475 78 654 9 237 104 661

Valuation/cost 15 295 4 237 208 591 26 190 254 313

Accumulated depreciation –* (2 762) (129 937) (16 953) (149 652)

* The residual value of the buildings exceeds the depreciable amount of the buildings and therefore no depreciation charge (2016: Rnil) has

been recognised in profit or loss for the reporting period.

There were no encumbered motor vehicles, plant and equipment or office equipment (2016: R255 183) at the

end of the reporting period (refer note 15).

Rental assets with a net carrying amount of R8 685 277 (2016: R16 693 329) serves as security for the Nedbank

facility held by Centrafin (Pty) Ltd (refer to note 10).

The Group reviews the estimated useful lives and residual values of property, plant and equipment in terms of

IAS 16: Property, plant and equipment, at the end of each reporting period. No changes to the useful lives or

residual values of property and equipment were made based on the current period review.

The Group reviews the carrying amount of property, plant and equipment at the end of each reporting period

to determine whether any indication of impairment is present. No indicators of impairment were present

based on the current period review and therefore no impairment loss was recognised in profit or loss for the

Group.

No current contractual commitments exist to purchase items of property, plant and equipment.


7 4

Notes to theannual financial statementsfor the year ended 30 June 2017 (continued)

GROUP

2017

R’0002016R’000

1. PROPERTY, PLANT AND EQUIPMENT (continued)

1.1 Details of land and buildings

Midrand property

Land comprises stand number 865 Kosmosdal, Extension 11, Gauteng with

buildings and additions thereon

Land and buildings acquired through business combination in January 2016

Land at cost 1 915 1 915

Buildings at cost 13 380 13 380

15 295 15 295

GROUP

Customerrelation-

shipsR’000

SoftwareR’000

Intellectualproperty

R’000

Trade-marksR’000

TotalR’000

2. INTANGIBLE ASSETS

Carrying amount as at 1 July 2015 511 21 147 – – 21 658

Cost 1 046 39 744 – 135 40 925

Accumulated amortisation (535) (18 597) – (135) (19 267)

Carrying amount for the year 2016

Additions at cost – 9 870 – – 9 870

Business combination acquisition

at cost149 584 9 549 – – 159 133

Cost 149 584 46 915 – – 196 499

Accumulated amortisation – (37 366) – – (37 366)

Amortisation (16 743) (15 101) – – (31 844)

Carrying amount at 30 June 2016 133 352 25 465 – – 158 817

Cost 150 630 96 529 – 135 247 294

Accumulated amortisation (17 278) (71 064) – (135) (88 477)


Additions at cost – 5 544 3 500 – 9 044

Derecognition – – – – –

Cost - (76 967) – – (76 967)

Accumulated amortisation - 76 967 – – 76 967

Amortisation (34 320) (17 809) (875) – (53 004)

Carrying amount at 30 June 2017 99 032 13 200 2 625 - 114 857

Cost 150 630 25 106 3 500 135 179 371

Accumulated amortisation (51 598) (11 906) (875) (135) (64 514)

The Group reviews the useful lives of the intangible assets at the end of each reporting period, no changes have been made in the current or prior reporting periods.

The Group reviews the carrying amount of intangible assets at the end of each reporting period to determine any indication of impairment present. No indicators of impairment were present based on the current period review and therefore no impairment loss was recognised in profit or loss of the Group.


7 5


GROUP

2017

R’0002016R’000

3. GOODWILL

Balance at the beginning of the year 347 846 108 166

Cost 355 676 115 996

Accumulated impairments (7 830) (7 830)

Business combination acquisition at cost - 239 680

Balance at the end of the year 347 846 347 846

Cost 355 676 355 676

Accumulated impairments (7 830) (7 830)

Method of calculation for impairment

In testing the impairment of goodwill allocated to cash-generating units, the following key assumptions and pre-tax rates were used:

• Average discount rate 15.5%

• Growth rate 6% to 10%

• Terminal growth rate 6%

The recoverable amounts have been calculated using the value in use method. Discounted cash flow forecasts for a five-year period were used to determine the recoverability of the goodwill.

Due to the fact that the Group has a centralised treasury function which determines an average discount rate applicable to the Group as a whole, each recoverable amount calculation includes a specific adjustment in terms

of segment-related risk-factors not considered by the treasury function in determining the average discount rate.

GROUP

Segment

Year of

acquisition

2017

R’0002016R’000

Cash-generating units and

goodwill allocation

Explix Technologies (Pty) Ltd ICT Distribution 2008 24 591 24 591

Pinnacle Micro (Pty) Ltd ICT Distribution 2009 15 801 15 801

Datanet Infrastructure Group (Pty) Ltd ICT Distribution 2010 1 339 1 339

Centrafin (Pty) Ltd Financial Services 2011 12 744 12 744

Devtrade Security (Pty) Ltd ICT Distribution 2013 25 360 25 360

JAG Engineering (SA) (Pty) ICT Distribution 2013 6 761 6 761

Modrac (Pty) Ltd and Precision ICT

(Pty) LtdICT Distribution 2013 19 819 19 819

Pacific Cables (Pty) Ltd ICT Distribution 2014 1 751 1 751

Datacentrix Ltd Services and Solutions 2016 190 465 190 465

Solareff (Pty) Ltd Services and Solutions 2016 45 222 45 222

Intdev Internet Technologies (Pty) Ltd Services and Solutions 2016 3 993 3 993

347 846 347 846


7 6


3. GOODWILL (continued)

ICT Distribution

Explix Technologies (Pty) Ltd, Pinnacle Micro (Pty) Ltd, Datanet Infrastructure Group (Pty) Ltd, Devtrade Security

(Pty) Ltd, JAG Engineering (SA) (Pty) Ltd, Modrac (Pty) Ltd (including Precision ICT (Pty) Ltd) and Pacific Cables

(Pty) Ltd) were purchased in prior years and the respective goodwill formed part of the assets acquired in that

period.

There were no acquisitions in the current reporting period.

Cash flows were determined using a combination of actual profits and budgeted profits, as approved by

management. The key assumptions used in these budgets were a reflection of management’s past experience in

the market in which the unit operates. Cash flows for the budgeted periods were extrapolated using a steady 8%

per annum (2% growth and 6% inflation) growth rate, thereafter a terminal growth rate of 6%.

These cash flows were discounted using a discount rate of 15.5%. The various sensitivity analyses performed by

changing key variables by 1% in the calculation resulted in the recoverable amount exceeding the carrying amount

in all instances.

Services and Solutions

Datacentrix, Solareff and Intdev were acquired during the prior reporting period. Cash flows were determined

using the actual profits and were extrapolated in five future periods using a steady 8% to 10% per annum (2% to 4%

growth and 6% inflation) growth rate, thereafter a terminal growth rate of 6%. These cash flows were discounted

using a discount rate of 15.5%. The various sensitivity analyses performed by changing key variables by 1% in the

calculation resulted in the recoverable amount exceeding the carrying amount in all instances.

Financial Services

Centrafin (Pty) Ltd was purchased in a prior reporting period and the goodwill formed part of the assets acquired

in that period. Cash flows were determined using the actual profits and were extrapolated in five future periods

using a steady 8% per annum (2% growth and 6% inflation) growth rate, thereafter a terminal growth rate of 6%.

These cash flows were discounted using a discount rate of 15.5%. The various sensitivity analyses performed by

changing key variables by 1% in the calculation resulted in the recoverable amount exceeding the carrying amount

in all instances.

Impairment

No impairment loss was recognised in profit or loss in the current or prior reporting period.


7 7


4. INTEREST IN SUBSIDIARIES

The direct and indirect interests in subsidiaries prior to the restructuring of the organisational structure of the Alviva Holdings

Limited Group are set out below:

Country of

incorporation

Principle operating

industry

Interest

classi-

fication

Issued

share

capital

% of pro-

portion of

owner-

ship

interest

2016

% of

voting

rights

held

2016

Invest-

ment

held

2016

R’000

Investment in subsidiaries:

Appleby Solutions Limited ZambiaICT industry and

relatedIndirect 5 000 100,0 100,0 –

Axiz Investment Trust South Africa Employee Trust Direct 100,0 100,0 –

Axiz Namibia Proprietary Limited NamibiaICT industry and

relatedIndirect 100 100,0 100,0 –

Axiz Proprietary Limited South AfricaICT industry and


Axiz Technology Proprietary Limited

South AfricaICT industry and

relatedDirect 8 825 000 100,0 100,0 151 200

Axizworkgroup Mozambique Limitada

MozambiqueICT industry and

relatedIndirect 20 000 99,0 99,0 –

Boditse Proprietary Limited BotswanaICT industry and

relatedDirect 1 000 100,0 100,0 2

Centrafin Proprietary Limited South Africa Financial Services Direct 1 000 100,0 100,0 23 800

Centravoice Proprietary Limited South AfricaICT industry and

relatedDirect 1 000 000 100,0 100,0 –

Datacentrix Holdings Limited South AfricaInvestment holding

in ICT industryIndirect 205 265 683 55,2 55,2 –

Datacentrix Properties Proprietary Limited

South Africa Property Holding Indirect 100 55,2 55,2 –

Datacentrix Proprietary Limited South AfricaICT industry and


DCT Holdings Proprietary Limited South AfricaInvestment Holding

CoDirect 120 100,0 100,0 –

Devfam Fire Prevention Equipment Proprietary Limited


related 100 100,0 100,0 25 274

eNetworks Proprietary Limited South AfricaICT industry and


Froggy IT Solution Proprietary Limited


relatedDirect 100 100,0 100,0 –

Infrasol Proprietary Limited South AfricaICT industry and


Intdev Internet Technologies Proprietary Limited

South Africa Operating Co Direct 2 500 60,0 60,0 1 710

JAG Engineering (SA) Proprietary Limited


relatedDirect 100 100,0 100,0 1 400

Merqu Communications Proprietary Limited



Modrac Proprietary Limited South AfricaICT industry and

relatedDirect 1 830 100,0 100,0 –

Parcea Computing Proprietary Limited



PinnAcc Proprietary Limited South Africa Intermediate Direct 120 100,0 100,0 –

Pinnacle Business Solutions Proprietary Limited


relatedDirect 100 100,0 100,0 –

Pinnacle Facilities Management Proprietary Limited

South Africa Property Holding Co Indirect 100 100,0 100,0 –


7 8


4. INTEREST IN SUBSIDIARIES (continued)

Country of

incorporation

Principle operating

industry

Interest

classi-

fication

Issued

share

capital

2016

% of pro-

portion of

owner-

ship

interest

2016

% of

voting

rights

held

2016

Invest-

ment

held

2016

R’000

Pinnacle Micro Namibia Proprietary Limited

NamibiaICT industry and


Pinnacle Micro Proprietary Limited South AfricaICT industry and


Pinnacle Technology Shared Management Services Proprietary Limited

South Africa Group services Direct 1 000 100,0 100,0 1

Pinnacle Treasury Services Proprietary Limited

South Africa Intermediate Direct 179 238 346 100,0 100,0 101 695

Protectaire Properties Proprietary Limited

South Africa Property Holding Co Indirect 8 000 100,0 100,0 –

Solareff Proprietary Limited South Africa Operating Co Direct 1 000 51,0 51,0 54 811

The Pinnacle Share Purchase Scheme Trust

South Africa Employee Trust Direct 100,0 100,0 –

Workgroup IT Proprietary Limited South AfricaICT industry and

relatedDirect 1 000 100,0 100,0 30 993

Dormant

Axiz Botswana Proprietary Limited Botswana Dormant Indirect 100 100,0 100,0 –

Datacentrix Infrastructure Optimisation Proprietary Limited

South Africa Dormant Indirect 22 220 55,2 55,2 –

Datacentrix Outsourcing Proprietary Limited South Africa Dormant Indirect 100 55,2 55,2 –

Datacentrix Solutions Proprietary Limited

South Africa Dormant Indirect 200 55,2 55,2 –

Datanet Infrastructure Group Proprietary Limited

South Africa Dormant Direct 1 000 000 100,0 100,0 –

Dezzo Trading 386 Proprietary Limited


Dirigible IT Proprietary Limited South Africa Dormant Indirect 100 55,2 55,2 –

Nokusa Engineering Informatics Proprietary Limited


Pacific Cables Proprietary Limited South Africa Dormant Direct 100 100,0 100,0 –

Precision ICT Proprietary Limited South Africa Dormant Direct 120 100,0 100,0 –

Styleprops Services 18 Proprietary Limited


Tri Continental Distribution SA Proprietary Limited

South Africa Dormant Direct 100 100,0 100,0 –

Loan to subsidiary:

Pinnacle Treasury Services

Proprietary Limited353 229

744 115


7 9



The direct and indirect interests in subsidiaries post to the restructuring of the organisational structure of the Alviva

Holdings Limited Group are set out below:

Country of

incorporation

Principle operating

industry

Interest

classi-

fication

Issued

share

capital

% of pro-

portion of

owner-

ship

interest

2017

% of

voting

rights

held

2017

Invest-

ment

held

2017

R’000

Investment in subsidiaries:

Appleby Solutions Limited ZambiaICT industry and

relatedIndirect 5 000 100.0 100,0 –

Axiz Botswana Proprietary Limited BotswanaICT industry and

relatedIndirect 100.00 100.00 100.00 –

Axiz Investment Trust South Africa Employee Trust Direct 100.0 100,0 –

Axiz Namibia Proprietary Limited NamibiaICT industry and

relatedIndirect 100 100.0 100,0 –

Axiz Proprietary Limited South AfricaICT industry and

relatedIndirect 90 70.1 70,1 –

Axiz Technology Proprietary

LimitedSouth Africa

ICT industry and

relatedDirect 8 825 000 100.0 100,0 –

Axizworkgroup Mozambique

LimitadaMozambique

ICT industry and

relatedIndirect 20 000 99.0 99,0 –

Boditse Proprietary Limited BotswanaICT industry and

relatedIndirect 1 000 100.0 100.0 –

Centrafin Proprietary Limited South Africa Financial Services Direct 1 000 100.0 100.0 23 801

Centravoice Proprietary Limited South AfricaICT industry and

relatedIndirect 1 000 000 70.1 70.1 –

Datacentrix Holdings Limited ** South AfricaInvestment holding

Indirect 189 636 519 70.1 70.1 –in ICT industry

Datacentrix Properties Proprietary

LimitedSouth Africa Property Holding Indirect 100 70.1 70.1 –

Datacentrix Proprietary Limited South AfricaICT industry and

relatedIndirect 2 70.1 70.1 –

DCT Holdings Proprietary Limited South AfricaInvestment Holding

CoDirect 705 70.1 70.1 2 950 479

Devfam Fire Prevention Equipment

Proprietary LimitedSouth Africa

ICT industry and

relatedDirect 100 100.0 100.0 25 274

eNetworks Proprietary Limited South AfricaICT industry and


Froggy IT Solution Proprietary

LimitedSouth Africa

ICT industry and

relatedDirect 100 70.1 70.1 –

Infrasol Proprietary Limited South AfricaICT industry and


Intdev Internet Technologies

Proprietary LimitedSouth Africa Operating Co Indirect 2 500 70.1 70.1 –

Merqu Communications


ICT industry and


Modrac Proprietary Limited South AfricaICT industry and

relatedDirect 1 830 70.1 70.1 –

Parcea Computing Proprietary

LimitedSouth Africa

ICT industry and


* Deregistered during the reporting period.

** The interest held in this company has been provided as security for the Class B preference shares as per note 15.3.


8 0



Country of

incorporation

Principle operating

industry

Interest

classi-

fication

Issued

share

capital

% of pro-

portion of

owner-

ship

interest

2017

% of

voting

rights

held

2017

Invest-

ment

held

2017

R’000

PinnAcc Proprietary Limited South Africa Intermediate Direct 120 100.0 100.0 151 202

Pinnacle Business Solutions


ICT industry and


Pinnacle Facilities Management

Proprietary LimitedSouth Africa Property Holding Co Indirect 100 100.0 100.0 –

Pinnacle Micro Namibia Proprietary

LimitedNamibia

ICT industry and


Pinnacle Micro Proprietary Limited South AfricaICT industry and


Pinnacle Technology Shared Management Services Proprietary Limited

South Africa Group services Direct 1 000 70.1 70.1 2 500


Proprietary LimitedSouth Africa Intermediate Direct 179 238 346 100.0 100.0 101 695

Protectaire Properties Proprietary

LimitedSouth Africa Property Holding Co Indirect 8 000 100.0 100.0 –

Solareff Proprietary Limited South Africa Operating Co Indirect 1 000 35.8 35.8 –

The Pinnacle Share Purchase

Scheme Trust *South Africa Employee Trust Direct – – – –

Dormant

Datacentrix Infrastructure

Optimisation Proprietary LimitedSouth Africa Dormant Indirect – – – –

Datacentrix Outsourcing

Proprietary Limited * South Africa Dormant Indirect– – –

–Datacentrix Solutions Proprietary

Limited *South Africa Dormant Indirect – – – –

Datanet Infrastructure Group

Proprietary Limited *South Africa Dormant Direct – – – –

Dezzo Trading 386 Proprietary


Dirigible IT Proprietary Limited South Africa Dormant Indirect 100 70.1 70.1 –

JAG Engineering (SA) Proprietary

Limited *South Africa

ICT industry and

relatedDirect – – – –

Nokusa Engineering Informatics

Proprietary Limited *South Africa Dormant Indirect – – – –

Pacific Cables Proprietary Limited * South Africa Dormant Direct – – – –

Precision ICT Proprietary Limited South Africa Dormant Direct 120 100.0 100.0 –

Styleprops Services 18 Proprietary


Tri Continental Distribution SA

Proprietary LimitedSouth Africa Dormant Direct 100 100.0 100.0 –

Workgroup IT Proprietary Limited South AfricaICT industry and

relatedDirect 1 000 100.0 100.0 30 993

Loan to subsidiary:


Proprietary Limited219 728

3 505 672

* Deregistered during the reporting period.


8 1


4. INTEREST IN SUBSIDIARIES Loan to Pinnacle Treasury Services Limited

The loan is unsecured, has no fixed terms of repayment and bears interest at commercial rates on substantial parts

of the outstanding amount. There is no expectation of repayment or intention to call for repayment within the next

twelve months.

Restructuring of the organisational structure of Alviva Holdings Limited

The board of directors of the Alviva controlled a restructuring project which was planned, executed and finalised

during the reporting period. The project resulted in a material change in the organisational group structure without

the loss of control of any investee within the Group. The main objective of the restructuring transaction was an

improved and competitive B-BBEE rating within the Group.

The restructuring was concluded on 2 August 2016.

The project met the definition of a wholly-owned intra-group transaction and was thus exempt from the

requirements of section 112 of the Companies Act and by implication did not meet the classification criteria of an

affected transaction.

The transaction met the requirements of section 42 of the Income Tax Act of South Africa, 1962 (Act 58 of 1962),

as amended.

The transaction does not meet the definition of a business combination.

The direct impact of the restructuring on the Company and the Group is set out below:

Preference shares

In terms of a legal set-off between Alviva and DCT Holdings Proprietary Limited (“DCT”), DCT issued 29 000 Class A

cumulative redeemable non-participating preference shares to Alviva in relation to the settlement of the fair value

of the empowerment assets or interests in subsidiaries acquired by DCT from the Alviva.

The applicable rate assigned to the issued preference shares is prime plus 3% per annum.

Due to the nature of this transaction, the preference shares are classified as part of the investment in DCT.

The restructuring had no direct financial impact on the financial position, results or cash flows of the Group at the

effective date of the transaction.

[G4-13]


8 2


5. INVESTMENT IN EQUITY-ACCOUNTED INVESTEE

GROUP

2017

R’000

2016

R’000

Investment in joint venture (Electronic-DNA Proprietary Limited)

Effective rate of indirect interest held in joint venture (%) 50.0% 27.6%

Reconciliation between investment at cost and carrying amount:

Investment at cost 1 204 665

Equity-accounted share in losses (1 204) (665)

Investment in equity-accounted investee – –

Unrecognised share of losses - opening balance 1 182 -

Unrecognised share of losses due to change in effective interest in

investment 786 1 075

Unrecognised share of losses for the period - 107

Utilisation of unrecognised share of losses for the period (1 081) -

Unrecognised share of losses carried forward 887 1 182

The Group has an indirect interest in Electronic-DNA Proprietary Limited (“EDNA”), a company incorporated

in South Africa, through its subsidiary Datacentrix Proprietary Limited which holds a 50% interest in EDNA.

EDNA supplies licences for security software. EDNA is not a publicly listed entity and consequently does not

have a published price quotation. The change in the effective interest held in the equity-accounted investment

is directly linked to the change in interest of the Group in Datacentrix Holdings Limited that took place during the

current reporting period.

EDNA

2017

R’000

2016

R’000

The financial information of EDNA is as follow:

Non-current assets 1 195 1 467

Current assets 6 046 2 813

Total assets 7 241 4 280

Non-current liabilities (216) (235)

Current liabilities (8 799) (8 328)

Total liabilities (9 015) (8 563)

Net asset value (1 774) (4 283)

Revenue 7 825 1 729

Cost of sales (5) -

Gross profit 7 820 1 729

Other expenses (5 496) (1 973)

Net interest 164 33

Operating profit/(loss) 2 488 (211)

Income tax expense 18 29

Profit/(loss) for the period 2 506 (182)


8 3


GROUP COMPANY

2017R’000

2016

R’0002017

R’000

2016

R’000

6. FINANCE LEASE RECEIVABLES

Non-current assets 434 581 408 020 – –

Finance services-related agreements 425 521 408 020 - –

Managed Print and Document Services

agreements 9 060 - - –

Current assets 210 972 178 663 – –

Finance services-related agreements 202 988 178 663 – –

Managed Print and Document Services

agreements 7 984 – – –

645 553 586 683 – –

6.1 Finance services-related agreements

Future minimum lease payments 846 450 787 004 – –

- within one year 295 824 267 558 – –

- within two to five years 550 626 519 446 – –

Less: Unearned finance income (199 008) (189 858) – –

Less: Allowance for uncollectible minimum

lease payments (18 933) (10 463) – –

Present value of minimum lease payments 628 509 586 683 – –

- within one year 202 988 178 663 - -

- within two to five years 425 521 408 020 - -

These leases are mainly for ICT and office equipment asset financing to customers over the economic life of

the assets leased, subject to specified minimum periods varying between one and five years. The receivables

bear interest at an average rate of 17.02% (2016: 17.02%) and are secured by retention of ownership of the

assets leased. These receivables have been provided as security for the Nedbank Senior loan and Nedbank

overdraft facilities granted (as disclosed under notes 10 and 15) and some of the finance services-related

agreement receivables were transferred into a securitisation structure more fully described in note 27).

6.2 Managed Print and Document Services agreements

Future minimum lease payments 20 340 - – –

- within one year 10 036 - - -

- within two to five years 10 304 - - -

Less: Unearned finance income (3 296) - – –

Less: Allowance for uncollectable minimum

lease payments - - - -

Present value of minimum lease payments 17 044 - – –

- within one year 7 984 - - -

- within two to five years 9 060 - - -

The Group has entered into finance leases in respect of customer transactions in the Managed Print and Document

Solutions service offering in the current reporting period. These leases are covered in back-to-back transactions

with vendors. The leases have a maturity timeline of between 24 and 36 months. The leases bear interest at rates

varying between 8% - 13%.


8 4


GROUP COMPANY

2017R’000

2016

R’0002017

R’000

2016

R’000

7. DEFERRED TAX

Deferred tax assets at the beginning of the

year19 158 7 341 – 18

Previously unrecognised deferred tax asset 433 – – –

Deferred tax assets acquired through

business combinations– 36 395 – –

Utilisation of assessed loss (2 295) (3 255) – (18)

Temporary differences 29 101 16 244 – –

Deferred tax liability reversed on revaluation

of land and buildings– 4 198 – –

Temporary differences from business

combination acquisition– (42 163) – –

(Over)/under provisions relating to prior

periods(5 455) 398 – –

40 942 19 158 – –

Comprising:

Assessed losses 2 520 2 913 – –

Temporary differences 38 422 16 245 – –

Allowance for credit losses 39 218 6 379 – –

Property, plant and equipment (355) 2 219 – –

Intangible assets (27 552) (41 619) – –

Provisions and accruals 46 893 59 383 – –

Imputed interest

Finance lease receivables (19 782) (10 117) – –

Net balance 40 942 19 158 – –

Categorised as

Deferred tax asset 77 119 65 697 – –

Deferred tax liability (36 177) (46 539) – –

Management expects sufficient future taxable income in the relevant subsidiaries to enable these companies to

utilise the unutilised tax losses as at 30 June 2017.


8 5


GROUP COMPANY

2017R’000

2016

R’0002017

R’000

2016

R’000

8. INVENTORIES

Inventory on hand 756 799 909 989 – –

Goods in transit 58 119 63 418 – –

Work-in-progress 24 458 49 274 – –

839 376 1 022 681 – –

Allowance for obsolete inventory on hand (87 674) (64 956) – –

751 702 957 725 – –

During the current period there was an

increase in the allowance for obsolete

inventory of R22.718 million (2016: decrease

R39.342 million) with a corresponding effect

in cost of sales recognised in profit or loss.

9. TRADE AND OTHER RECEIVABLES

Trade receivable balances 2 247 923 2 492 003 – –

Allowances for impairments (88 111) (51 901) – –

2 169 390 2 440 102 – –

Other receivables 117 389 51 385 – –

Derivative asset - forward exchange

contracts 9 578 – – –

Value-added Tax receivable 17 850 32 886 – –

2 304 629 2 524 373 – –

A portion of trade receivables in Pinnacle Micro Proprietary Limited and Axiz Proprietary Limited have been

provided as security for banking facilities (refer to note 10).


8 6


GROUP COMPANY

2017R’000

2016

R’0002017

R’000

2016

R’000

10. CASH AND CASH EQUIVALENTS

Cash on hand 279 159

Balances with banks 389 481 241 334 134 90

South African Rand 357 471 227 485 134 90

Namibian Dollar 2 192 -

US Dollar 27 208 2 240 - -

Botswana Pula 2 610 10 144 - -

Mozambican Metical - 1 461

Zambian Kwacha - 4 - -

Bank overdraft - (18 585)

389 760 222 908 134 90

The Group and Company had no overdrawn bank accounts at the reporting date and therefore no off-setting of bank accounts occurred on the statement of financial position.

The Group holds cash and cash equivalents with reputable financial institutions. These institutions have a national short-term and national long-term credit rating of zaA or above and zaA-1 or above, respectively. (Source: S&P Global rating agency).

Banking facilities

The significant banking facilities available to specific companies within the Group were as follow at the end of the reporting period:

Axiz

Proprietary

Limited

R’000

Centrafin

Proprietary

Limited

R’000

Datacentrix

Proprietary

Limited

R’000

Pinnacle

Micro

Proprietary

Limited

R’000

Direct facilities 450 000 70 000 152 250 322 935

Contingent facilities - - 1 546 274 000

Settlement facilities 100 000 - 319 454 4 102

550 000 70 000 473 250 601 037


8 7


10. CASH AND CASH EQUIVALENTS (continued)

Securities provided in terms of the banking facilities

Facility holder: Axiz Proprietary Limited

The following securities have been provided to Nedbank Limited:

A deed of cession whereby the company cedes all of its right, title and interest in and to its book debts.

A limited guarantee, including a pledge in security of intra-group accounts, for an amount of R550 000 000 between the company and Alviva Holdings Limited.

Cession by the company of its right, title and interest in the Credit Guarantee Insurance Corporation of Africa insurance policies as set out below:

- Policy number SDC151755;

- Policy number 169459/ED; and

- Policy number 316228/ED.

The following imposed covenant is directly linked to the facility:

Debt cover ratio in relation to utilised direct facilities not to be less than 1, based on a specific debtors book formula applied by the bank.

Facility holder: Centrafin Proprietary Limited

The following securities have been provided to Nedbank Limited:


A limited guarantee for an amount of R70 000 000 between the company and Alviva Holdings Limited.



Rental assets with a net book value of R8 685 277 (2016: R116 693 329) also serve as security as further detailed in note 1.

Facility holder: Datacentrix Proprietary Limited

The following securities have been provided to ABSA Limited:

Unlimited cross suretyship between the company and Datacentrix Holdings Limited, excluding cession of loan accounts.


A limited guarantee for an amount of R208 000 000 between the company and Datacentrix Holdings Limited, excluding cession of loan accounts.

Cession by the company of ABSA Limited investment accounts as set out below:

- An investment account amounting to R533 376;

- An investment account amounting to R315 700; and

- An investment account amounting to R697 010.




8 8


10. CASH AND CASH EQUIVALENTS (continued)

Facility holder: Pinnacle Micro Proprietary Limited

The following securities have been provided to First National Bank, a division of FirstRand Bank Limited:

The facilities have been secured by means of group cross sureties provided by the following related entities within the Group:

- Axiz Proprietary Limited limited to R298 000 000;

- Axiz Technology Proprietary Limited limited to R40 000 000;

- Pinnacle Facilities Management Proprietary Limited limited to R14 000 000;

- Pinnacle Treasury Services Proprietary Limited limited to R400 000 000;

- Protectaire Properties Proprietary Limited limited to R500 000; and

- Workgroup IT Proprietary Limited limited to R15 000 000.

In addition to the Group cross securities provided, the company provided surety for the facilities in its own capacity limited to R400 000 000.

The Group’s bankers have issued guarantees to the value of R17 253 003 (2016: R862 520 ) on behalf of the Group.

GROUP COMPANY

2017

R’000

2016

R’0002017

R’000

2016

R’000

11. STATED CAPITAL

Authorised share capital

300 000 000 ordinary shares of R0.01 each 3 000 3 000 3 000 3 000

Issued share capital

169 392 570 (2016: 183 296 036) ordinary

shares 1 694 1 833 1 694 1 833

Share premium 41 665 191 813 41 664 191 813

43 359 193 646 43 358 193 646

2017

Shares

2016

Shares2017

Shares2016

Shares

Reconciliation of issued shares

Opening balance 183 296 036 167 992 449 183 296 036 167 992 449

Shares issued - 15 303 587 - 15 303 587

Specific repurchase and cancellation of

treasury shares (5 569 974) - (5 569 974) -

General share repurchase and cancellation (8 333 492) - (8 333 492) -

Closing balance 169 392 570 183 296 036 169 392 570 183 296 036


8 9


GROUP COMPANY

2017

R’000

2016

R’0002017

R’0002016

R’000

11. STATED CAPITAL (continued)

Reconciliation of share premium

Opening balance 191 813 - 191 813 –

Shares issued - 191 813 - 191 813

Specific repurchase and cancellation of

treasury shares - - – -

General share repurchase and cancellation (150 148) - (150 149) -

Closing balance 41 665 191 813 41 664 193 813

During the previous reporting period, the Company issued 15 303 587 shares to shareholders of Datacentrix Holdings Limited in an off-market purchase and sale agreement and the resulting mandatory offer to the remaining shareholders (refer to note 26).

During the current reporting period, Alviva repurchased a total of 8 333 492 of its ordinary shares on the open

market for a total consideration of R150 287 115. These repurchases were executed in terms of the general authority granted by shareholders at the annual general meeting (“AGM”) held on 25 November 2016.

The Company also repurchased 5 569 974 ordinary shares from its subsidiary, Pinnacle Treasury Services Proprietary Limited, for a total consideration of R94 633 858, in terms of the specific authority granted by shareholders at the AGM.

GROUP

2017Number

2016

Number2017

R’000

2016

R’000

12. TREASURY SHARES

Opening balance 12 069 974 12 069 974 72 856 72 856

Repurchased and cancelled (5 569 974) – (33 566) –

Shares allocated to FSP participants * 3 220 000 – 59 202 –

9 720 000 12 069 974 98 492 72 856

* Refer to note 27.3.


9 0


GROUP

2017R’000

2016

R’000

13. DERIVATIVE FINANCIAL ASSET/(LIABILITY)

Derivatives designated as hedging instruments

Put and call option – cash flow hedge 3 287 (19 598)

Total derivatives designated as hedging instruments 3 287 (19 598)

Current and non–current

Current 3 287 (16 154)

Non–current – (3 444)

Total derivative financial asset/(liability) 3 287 (19 598)

Cash flow hedge

The Group has hedged the risk arising in respect of its obligation in terms of

the long-term incentive scheme (refer to note 27.3). The hedged item and

hedged risk is the liability in terms of the scheme and the effect of changes

in the share price on the amount of this liability. The Group has entered into

put and call options to hedge this risk.

This hedging relationship has been classified as a cash flow hedge and cash

flow hedge accounting has been applied.

The notional principal amounts of the cash flow hedges at inception were as

follows:

Current portion of hedge 14 779 17 821

Non-current portion of hedge – 14 779

The fair value of the derivative asset as at 30 June 2017 was R3 287 440

(2016: R19 598 047 liability). The amount reclassified from the cash flow

hedge reserve to profit or loss in the current reporting period was

R2 269 703 (2016: R5 685 114).

Cash flow hedge reserve

Fair value of derivative financial liability at beginning of year (1 722) (7 407)

Less: amount reclassified to profit or loss in current reporting period 2 270 5 685

Cash flow hedge reserve at end of the year 548 (1 722)


9 1


14. OTHER EQUITY RESERVES

GROUP

Revalua-tion

reserveR’000

Foreigncurrency

translationreserve

R’000

Profit ondisposal of

treasurysharesR’000

Equity-

settled

share-

based

payment

reserve

R’000

Other

R’000Total

R’000

Balance at 1 July 2015 23 827 2 815 31 090 – 74 57 806

Movement in foreign currency

translation reserve– 2 126 – – – 2 126

Release of reserve on sale of

property, plant and equipment(23 827) – – – 2 (23 825)

Balance at 1 July 2016 – 4 941 31 090 – 76 36 107

Movement in foreign currency

translation reserve– 758 – – 1 759

Equity-settled share-based

payment (note 27.3)– – – 4 570 – 4 570

Balance at 30 June 2017 – 5 699 31 090 4 570 77 41 436

15. INTEREST-BEARING LIABILITIES

GROUP COMPANY

Totalbalance

R’000

Currentportion

R’000

Long-term

R’000

Totalbalance

R’000

Currentportion

R’000

Long-term

R’000

2017

Secured

Finance lease liabilities 15.1 12 635 3 927 8 708 – – –

Asset-backed senior loan:

Nedbank15.2 400 000 – 400 000 – – –

Redeemable preference shares 15.3 101 645 1 645 100 000 – – –

Unsecured

Outside shareholders' loans 15.4 437 – 437 – – –

Third-party loan 15.5 1 000 – 1 000 – – –

Loan from controlled entity 15.6 – – – 1 1 –

515 717 5 572 510 145 1 1 –

2016

Secured

Finance lease liabilities 15.1 330 154 176 – – –

Asset-backed senior loan:

Nedbank15.2 350 000 – 350 000 – – –

Outside shareholders' loans 15.4 2 803 – 2 803 – – –

Unsecured

Outside shareholders' loans 15.4 437 – 437 – – –

353 570 154 353 416 – – –


9 2


15. INTEREST-BEARING LIABILITIES (continued)

15.1 Finance lease liabilities

The Group has entered into finance leases in respect of customer transactions in the Managed Print and Document

Solutions service offering in the current reporting period. These leases are covered in back-to-back transactions

with vendors. The leases have a maturity timeline of between 24 and 36 months. The leases bear interest at rates

varying between 8% - 13%.

GROUP COMPANY

2017R’000

2016

R’0002017

R’000

2016

R’000

Future minimum lease payments 14 654 377 – –

- within one year 5 211 176 – –

- within two to five years 9 443 201 – –

Less: Future finance charges (2 019) (47) – –

Present value of minimum lease

payments 12 635 330 – –

- within one year 3 927 154 – –

- within two to five years 8 708 176 – –

15.2 Asset-backed senior loan: Nedbank

The asset-backed senior loan is secured by a cession over finance lease receivables amounting to R479 884 149

(2016: R423 634 567), cash resources of R51 015 886 (2016: R29 872 217) and trade debtors of R4 636 474 (2016:

R4 815 797), and bears interest at 3-month Jibar plus 2.5% and is repayable from 30 April 2019 over the life of the

financed assets.

15.3 Redeemable preference shares

DCT Holdings Proprietary Limited (“DCT”) issued 10 redeemable preference shares to ABSA Limited during the

reporting period. The applicable rate assigned to the preference shares is 79% of the official prime rate per annum

compounded on a monthly basis. The scheduled redemption date of the preference shares is three years and one

month from the issue date. The dividend payment dates are the 31st of January and 31st of July of each year until

the scheduled redemption date.

The investment commitment available from the holder of the preference shares will increase from R100 million

to R200 million on the 31st of July 2017 and again to R350 million on the 30th of September 2017, dependent on

DCT’s requirements. A commitment fee, equal to 0.5% per annum of the commitment fee less the value of the

issue price of issued preference shares, is payable to the holder of the preference shares. The maximum number

of preference shares that may be issued to the holder is 35 class B cumulative redeemable non-participating

preference shares.

The shares held in Datacentrix Holdings Limited (“DXL”), a subsidiary of the Group, have been pledged as security

to ABSA Bank Limited in relation to the preference shares. To this extent, DCT may not declare any distributions to

ordinary shareholders or Class A preference shareholders, i.e., Alviva, by utilising distributions received from DXL,

until the Class B preference shares have been fully redeemed.

The holder of the preference shares is entitled to monitor the use of the proceeds of the issue of preference

shares to ensure that the proceeds are used within the scope of the qualifying purpose. The qualifying purpose

is the use of the aggregate amount received to refinance bridge funding which was incurred in order to acquire

the remaining equity shares within DXL, pursuant to a scheme of arrangement in terms of section 114 of the

Companies Act.


9 3


15. INTEREST-BEARING LIABILITIES (continued)

15.3 Redeemable preference shares (continued)

DCT has amended its Memorandum of Incorporation in terms of the preference share agreement to stipulate that the preference shares will at least rank pari passu with the claims of all of its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies in general and that there shall be no class of shares in the stated capital of the company which ranks in priority to the preference shares issued in terms of this agreement.

The agreement requires Alviva to remain listed on the JSE.

No changes in the shareholding between Alviva, DCT, DXL and Datacentrix Proprietary Limited (“DXP”) are permitted until Class B preference shares have been redeemed.

Certain financial covenants apply to Alviva and DXP in terms of the preference share agreement.

15.4 Outside shareholders’ loans

GROUP COMPANY

2017R’000

2016

R’0002017

R’000

2016

R’000

Unsecured

Parcea outside shareholders 437 437 – –

Intdev outside shareholders * – 2 803 – –

437 3 240 – –

* Due to the fact that the interest held by non-controlling shareholders was acquired during the reporting period, this loan has been reclassified as

a third-party loan (refer note 15.5).

Loans due to outside shareholders bear no interest with no specified repayment terms. The Intdev shareholder

loan was subordinated in favour of outside creditors of the company.

15.5 Third-party loan

The third-party loan from Mr C Mienie, the previous managing director of Intdev Internet Technologies Proprietary

Limited, is unsecured, bears no interest and is repayable in monthly instalments of R100 000, which commenced

during the reporting period. The short-term portion has been reclassified to trade and other payables.

15.6 Loan from controlled entity

The loan from the Ledibogo Trust is interest free, bears no interest and has no fixed terms of repayment. The

company does not have the right to defer the settlement of this liability.


9 4


GROUP COMPANY

2017R’000

2016

R’0002017

R’000

2016

R’000

16. TRADE AND OTHER PAYABLES

Trade payables 1 621 384 1 767 738 1 254 10 883

Derivative liability – forward exchange

contracts– 9 651 – –

Cash-settled long-term incentive scheme 15 565 5 689 – –

Other payables * 115 102 53 768 – –

Value-added Tax payable 50 113 76 036 – –

Employee-related accruals 107 067 37 500 – –

Operating accruals 65 521 76 517 – –

1 974 752 2 026 899 1 254 10 883

* Includes R1.2million current portion of third-party loan (refer to note 15.5).

GROUP COMPANY

2017

R’000

2016

R’000

2017

R’000

2016

R’000

17. DEFERRED REVENUE

Warranty deferred revenue 9 268 5 968 – –

Service and maintenance deferred revenue 178 870 119 356 – –

188 138 125 324 – –

Non-current portion 39 320 29 213 – –

Current portion 148 818 96 111 – –

Warranty cover

The Group offers warranty cover in relation to the repair or replacement of goods sold with one, two or three year carry-in or on-site warranties in the event that the product should fail to operate under normal operating conditions. That portion of the revenue earned on the original sale that relates to the warranties is deferred and recognised in profit or loss over the period of the warranties.

Service and maintenance contracts

Deferred revenue relates to service and maintenance contracts contracted for a 12 to 36-month period. The related revenue, which has been deferred, is recognised on a systematic basis over the remainder of the

contract in terms of actual services rendered.


9 5


GROUP COMPANY

2017

R’000

2016

R’000

2017

R’000

2016

R’000

18. REVENUE

Goods 11 147 221 10 104 831 – –

Warranties 49 140 90 031 – –

Services 1 398 286 625 407 – –

Rental revenue 94 964 49 048 – –

Finance 121 887 99 815 – –

Investment – - 3 052 846 151 168

12 811 498 10 969 132 3 052 846 151 168

19. OPERATING PROFIT

Operating profit before interest is stated

after taking the following into account :

Auditors’ remuneration [G4-LA12] 3 430 3 919 – –

Audit services 3 430 3 919 – –

Employee benefit expenses 1 156 831 806 789 – –

Depreciation 37 590 31 440 – –

Leasehold improvements 941 104 – –

Equipment and vehicles, owned 30 231 27 365 – –

Rental equipment 6 418 3 971 – –

Intangible assets 53 004 31 844 – –

Amortisation 53 004 31 844 – –

Profit on disposal of property, plant and

equipment (858) (2 072) – –

Impairment of investment in subsidiary – – 1 400 –

Fair value adjustment on acquisition of

former associate - 17 654 – –

Profit on disposal of former subsidiary - (42 968) – (82 500)

Reclassification to profit or loss of cash

flow hedge 2 270 5 685 – –

Foreign exchange losses/(gains) 5 300 (6 384) – –

Operating lease expense 64 402 48 089 – –

Premises 63 465 47 864 – –

Equipment 937 225 – –

Investment income (39 453) (17 617) (142) (23 505)

Interest income (39 453) (17 617) (142) (23 505)


9 6


GROUP COMPANY

2017

R’000

2016

R’000

2017

R’000

2016

R’000

19. OPERATING PROFIT (continued)

Finance costs 146 490 126 311 - 24 950

Short-term finance 83 309 51 036 - -

Notional interest - - - 2 032

Interest (forward points) on forward

exchange contracts 61 382 51 330 - -

Deemed interest 1 645 951 - -

Bond interest - 22 762 - 22 918

Finance leases 13 77 - -

Tax authority 141 155 - -

GROUP COMPANY

2017R’000

2016

R’0002017

R’000

2016

R’000

20. TAX

20.1 Tax charge

Normal tax 193 360 165 588 (698) 15 429

Current year 193 959 165 103 38 15 429

Adjustments in respect of the prior year (599) 485 (736) –

Securities transfer tax 2 892 – 2 892 –

Non-residents shareholders' tax 1 500 – – –

Deferred tax (15 258) (17 305) – 18

Current year – originating (20 713) (16 918) – 18

Adjustments in respect of the prior year 5 455 (387) – –

[G4-EC1] 182 494 148 283 2 194 15 447

20.2 Reconciliation of tax rate

Net profit before tax 626 487 529 886 3 051 581 231 970

Tax (182 494) (148 283) (2 194) (15 447)

% % % %

Effective tax rate 29.1 28.0 0.1 6.7

RSA normal tax rate 28.0 28.0 28.0 28.0

Securities transfer tax 0.5 0.1 0.0

Non-residents shareholders' tax 0.2 0.0 0.0 0.0

Foreign and trust tax rate differential 0.1 0.2 0.0 0.0

Tax allowances not included in profit or

loss(0,5) 0.0 0.0 0.0

Non-deductible expenses 0.0 0.0 0.0 0.0

Non-taxable income (0.2) (0.2) (28.0) (21.4)

Adjustments in respect of the prior year 0.0 0.0 0.0 0.0

The estimated tax loss available within the Group for set off against future taxable income is R9 006 161 (2016:

R10 403 571).


9 7


GROUP

2017R’000

2016

R’000

21. EARNINGS AND HEADLINE EARNINGS PER SHARE AND DIVIDENDS PAID

21.1 Basic and diluted earnings per ordinary share

Basic earnings per ordinary share has been calculated using the following:

Net profit for the year 443 993 381 603

Non-controlling interest (38 716) (39 951)

Earnings attributable to ordinary shareholders 405 277 341 652

Weighted average number of shares in issue (‘000) * 165 944 164 992

Weighted average number of shares in issue for purpose of dilution

(000 shares) * 166 417 164 992

Basic earnings per ordinary share (cents) 244.2 207.1

Diluted basic earnings per ordinary share (cents) 243.5 207.1

21.2 Headline basic and diluted earnings per ordinary share

Headline earnings per ordinary share has been calculated using the following:

Earnings attributable to ordinary shareholders 405 277 341 652

Fair value adjustment on acquisition of former equity-accounted investee net

of tax - 13 700

Fair value adjustment on acquisition of former equity-accounted investee - 17 654

Less: Tax thereon - (3 954)

Profit on disposal of property, plant and equipment net of tax (618) (1 492)

Profit on disposal of property, plant and equipment (858) (2 072)

Less: Tax thereon 240 580

Profit on disposal of former subsidiary net of tax - (27 565)

Profit on disposal of former subsidiary - (42 968)

Less: Tax thereon - 15 403

Headline earnings 404 659 326 295

Weighted average number of shares in issue (000 shares)* 165 944 164 992


(000 shares) * 166 417 164 992

Headline earnings per ordinary share (cents) 243.9 197,8

Diluted headline earnings per ordinary share (cents) 243.2 197.8

21.3 Core and diluted core earnings per ordinary share

Core earnings per ordinary share has been calculated using the following:

Headline earnings 404 659 326 295

Acquisition costs net of tax 2 598 -

Amortisation of intangibles net of tax 17 997 12 052

Core earnings 425 254 338 347

* Excluding treasury shares.


9 8


GROUP

2017R’000

2016

R’000

21.3 Core and diluted core earnings per ordinary share (continued)

Weighted average number of shares in issue (000 shares) * 165 944 164 992


(000 shares) * 166 417 164 992

Core earnings per ordinary share (cents) 256.3 205.1

Diluted core earnings per ordinary share (cents) 255.6 205.1

Core EPS is considered a meaningful additional measure of evaluating the performance of the Group’s operations.

It is based on the HEPS measure and adjusted to exclude the amortisation cost of intangible assets recognised on

business combinations and related business combination acquisition costs.

* Excluding treasury shares.

Actual Weighted

21.4 Reconciliation of weighted average number of shares in issue (‘000)

Shares in issue at 1 July 2016 (‘000) 183 296 183 296

Less: Held as treasury shares (9 720) (7 222)

Shares acquired and cancelled (13 903) (10 130)

At the end of the year 159 673 165 944

Being:

Shares in issue at the end of the year 169 393 173 166

Held as treasury shares at the end of year (9 720) (7 222)

COMPANY

2017R’000

2016

R’000

21.5 Dividends paid

Total dividends paid to ordinary shareholders 35 761 –

35 761 –

Notice is hereby given that a final dividend of 25 cents (2016: 20 cents) per ordinary share for the year ended

30 June 2017 has been declared by the Board of Directors of the Company.

The salient dates applicable to the final dividend are as follows:

Last day of trade “cum” dividend Tuesday, 14 November 2017 First day to trade “ex” dividend Wednesday, 15 November 2017 Record date Friday, 17 November 2017 Payment date Monday, 20 November 2017

No share certificates may be dematerialised or rematerialised between Wednesday, 15 November 2017 and Friday, 17 November 2017, both days inclusive.

Dividends are to be paid out of distributable reserves. Dividend tax of 20% will be withheld in terms of the Income Tax Act for those shareholders who are not exempted from dividend tax. In accordance with paragraphs 11.17(1)(i) and (x) and 11.17(c) of the JSE Listings Requirements, the following additional information is disclosed:

– The gross local dividend amount is 25.00 cents per ordinary share for shareholders exempt from dividend tax;

– Alviva has 169 392 571 ordinary shares in issue (which includes 11 745 696 treasury shares); and

– Alviva’s income tax reference number is 9675/146/71/7.

Where applicable, payment in respect of certificated shareholders will be transferred electronically to shareholders’

bank accounts on the payment date.

In the absence of specific mandates, payment cheques will be posted to certificated shareholders at their risk on

the payment date. Shareholders who have dematerialised their shares will have their accounts at their Central

Securities Depository Participant or broker credited on the payment date.


9 9


GROUP COMPANY

2017R’000

2016

R’0002017

R’000

2016

R’000

Statement of cash flows

22. CASH GENERATED FROM OPERATIONS

Profit before tax 626 487 529 886 3 054 080 231 970

Adjusted for

Investment income (39 453) (17 617) (142) (23 505)

Dividends received included as revenue – – (422 399) (151 168)

Finance costs 146 490 126 311 - 24 950

Non-cash flow items 89 845 17 011 (2 631 547) (82 500)

Depreciation 90 594 63 284 – -

Amortisation and impairment 1 400 –

Dividend in specie received – – (2 630 447) –

Profit on disposal of property, plant and

equipment (858) (2 072) - -

Profit on disposal of subsidiaries - (42 968) - (82 500)

Equity-based share-based payment

expense/(income) 4 570 490 (2 500) -

Fair value adjustment on acquisition of

former equity-accounted investment - 17 654 - -

Share of profit of equity-accounted investee - (22 702) - -

Cash flow hedge reserve reclassified to

profit or loss 2 270 5 685 - -

Fair value decrease in derivative liability (6 731) (2 360) - -

Changes in working capital 436 434 90 178 (9 629) 3 889

Decrease in inventories 206 023 105 317 - -

Decrease/(increase) in trade and other

receivables 219 744 (606 975) - 20

(Decrease)/increase in trade and other

payables (52 147) 562 782 (9 629) 3 869

Increase in deferred revenue 62 814 29 054 - -

1 259 803 745 769 (9 637) 3 636

23. NORMAL TAX PAID Net tax payable/(receivable) at beginning of year

2 613 5 575 (68) -

Tax liability acquired in business

combinations - 11 861 - -

Normal tax 199 886 165 588 (698) 15 428

Securities transfer tax 2 892 - 2 892 -

Non-residents shareholders' tax 1 500 - - -

Net tax (payable)/receivable at end of year (4 407) (2 613) 68 68

Tax receivable at end of year 10 008 10 006 68 68

Tax payable at end of year (14 415) (12 619) - -

202 484 180 411 2 194 15 496


100


GROUP

2017

R’000

2016

R’000

24. NON-CONTROLLING INTERESTSBalance at the beginning of the year 323 342 375

Share of profit 38 716 39 951

Acquisition of non-controlling interest (339 607) 277 744

Non-controlling interests relating to outstanding vested options held by the

employees of Datacentrix – 5 272

Acquired – 5 445

Exercised – (173)

Balance at year-end 22 451 323 342

Non-controlling interests are summarised below :

Name of subsidiary Principal activity

Proportion

of

ownership

interests

and voting

rights held

by non-

controlling

interests

R’000

Opening

balance

R’000

Profit/

(loss)

allo-

cated to

non-

controlling

interests

R’000

Acquisition

of non-

controlling

interests

R’000

Accumu-

lated non-

controlling

interests

R’000

Datacentrix Holdings

Limited

Services and Solutions – 308 553 32 468 (341 021) -

Intdev Internet

Technologies

Proprietary Limited

Services and Solutions – (1 316) (98) 1 414 -

Solareff Proprietary

LimitedServices and Solutions 49 15 564 6 358 - 21 922

Parcea Computing

Proprietary LimitedGroup Central Services 49 541 (12) - 529

Total 323 342 38 716 (339 607) 22 451

Acquisition of NCI

Datacentrix Holdings Limited (“Datacentrix”)

In January 2017, the Group acquired the remaining 44.8% interest in Datacentrix for R564 million in cash, increasing its

ownership from 55.2% to 100%. The Group recognised a decrease in NCI of R341 million.

Intdev Internet Technologies Proprietary Limited (“Intdev”)

In February 2017, the Group acquired the remaining 40% interest in Intdev for R1 in cash, increasing its ownership from

60% to 100%. The Group derecognised NCI of R1.4 million.


101


24. NON-CONTROLLING INTERESTS (continued)

The following table summarises the information relating to each of the Group’s subsidiaries that has material

non-controlling interests, before any intra-group eliminations:

Datacentrix Holdings Limited

2016

4 months

ended

30 June

2016

12 months

ended

28 February

2016

Summary of financial information of subsidiaries with material

non-controlling interests

Non-controlling interests percentage 44.80% 44.80%

Non-current assets 242 021 251 260

Current assets 878 355 933 775

Non-current liabilities (29 230) (29 382)

Current liabilities (362 550) (464 919)

Net assets 728 596 690 734

Net assets attributable to non-controlling interests 326 411 309 449

Revenue 961 738 2 609 256

Profit for the period 41 135 123 171

Other comprehensive income - -

Total comprehensive income 41 135 123 171

Profit allocated to non-controlling interests 18 428 55 181

Other comprehensive income allocated to non-controlling interests - -

Cash flows from operating activities 25 444 (51 668)

Cash flows from investing activities (9 932) (94 470)

Cash flows from financing activities (13 487) (24 877)

Net movement in cash and equivalents 2 025 (171 015)

25. DEFINED CONTRIBUTION PLAN EXPENSEThe Group has existing Group retirement funds in place for all operating subsidiary companies. These retirement

benefits include a Pension and Provident Fund.

The Provident Fund is compulsory to all new employees joining the Group.

One subsidiary has a Retirement Annuity Fund in place for existing employees (closed for new employees).

Remuneration packages are based on a total cost-to-company basis (referred to as the “Gross Cost of

Employment”), with employees determining the levels of contributions to be made, by the employer, to the

Pension and Provident Fund.

The total employer contributions for the reporting period was R73 335 066 (2016: R33 134 931).


102


26. FINANCIAL INSTRUMENTS - FAIR VALUES AND RISK MANAGEMENT

26.1 Capital risk management

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while

maximising the return to shareholders through the optimisation of the debt and equity balance. In order to maintain

or adjust the capital structure of the Group, the Board of Directors may adjust the amount of dividends paid to

shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. This strategy remains

unchanged from the prior reporting period.

Externally imposed capital requirements are set out in Notes 10 and 15 of the annual financial statements. The Group

is not in breach of any of the capital requirements.

The debt to equity ratio of the Group is 25.8% (2016: 18.8%). The measure in terms of total debt for the Group excludes

derivative financial liabilities, deferred revenue, deferred tax and income tax liabilities as well as trade and other

payables when performing this calculation. The main contributing factors to the change of this ratio are related to the

redeemable preference shares issued during the current reporting period in relation to the acquisition of the minority

interest from outside shareholders of Datacentrix Holdings Limited and the slight increase in the secured facility

utilised to fund the Centrafin Proprietary Limited book. Details of these items are set out in Note 15 of the annual

financial statements. Shareholders’ Equity reduced following the buy-out of minorities in Datacentrix and various

share repurchase transactions and treasury shares processed during the year. These transactions offset the addition

to equity from profit for the period.

26.2 Measurement of fair values

The following summarises the valuation methods and assumptions used in estimating the fair values of financial

instruments reflected in the tables below.

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 flow.

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 flow.

Derivative financial instruments

The fair value of derivative financial instruments is based on observable inputs and unobservable inputs, within the

valuation model, directly linked to the underlying instrument to which the derivative is linked.

Fair value hierarchy

Included in the table below are financial instruments measured at fair value, including their levels in the fair value

hierarchy. 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 the asset or liability that are not based on observable market data (unobservable inputs).


103


26. FINANCIAL INSTRUMENTS - FAIR VALUES AND RISK MANAGEMENT (continued)

26.2 Measurement of fair values(continued)

CATEGORIES OF FINANCIAL INSTRUMENTS AND FAIR VALUE HIERARCHY

The following tables show the carrying amounts and fair values of financial assets and financial liabilities, including

their levels in the fair value hierarchy. The tables do not include fair value information for financial assets and financial

liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.

Financial assets

GROUP

Fair value

hierachy

At fair

value

through

profit or

loss

R’000

Loans and

receivables

R’000

Total

R’000

Fair value

R’000

2017

Finance lease receivables - 645 553 645 553 645 553

Derivative financial asset Level 2 3 287 - 3 287 3 287

Trade and other receivables

excluding VAT and derivatives - 2 277 201 2 277 201 2 277 201

Cash and equivalents - 389 760 389 760 389 760

Derivatives related to risk

management *Level 2 9 578 - 9 578 9 578

12 865 3 312 514 3 325 379 3 325 379

GROUP

Loans and

receivables

R’000

Total

R’000

Fair value

R’000

2016

Finance lease receivables 586 683 586 683 586 683

Trade and other receivables excluding VAT and derivatives 2 491 487 2 491 487 2 491 487

Cash and equivalents 241 493 241 493 241 493

3 319 663 3 319 663 3 319 663

* This asset is disclosed as part of the trade and other receivables line item in the statement of financial position.


104



26.2 Measurement of fair values(continued)

Financial liabilities

GROUP

Fair value

hierachy

At fair

value

through

profit or

loss

R’000

At

amortised

cost

R’000

Total

R’000

Fair value

R’000

2017

Interest-bearing liabilities – 515 717 515 717 515 717

Trade and other payables

excluding VAT, derivatives and

accruals **

– 1 817 572 1 817 572 1 817 572

[G4-EC3] – 2 333 289 2 333 289 2 333 289

2016

Interest-bearing liabilities - 353 570 353 570 353 570

Derivative liabilities Level 2 19 598 - 19 598 19 598


excluding VAT, derivatives and

accruals **

- 1 903 712 1 903 712 1 903 712

Bank overdrafts - 18 585 18 585 18 585


management *Level 2 9 651 - 9 651 9 651

29 249 2 275 867 2 305 116 2 305 116

* This liability is disclosed as part of the trade and other payables line item in the statement of financial position.

** Accrued expenses that are not financial liabilities are not included.

Financial assets

COMPANY

Loans and

receivables

R’000

Total

R’000

Fair value

R’000

2017

Loan to subsidiary 219 728 219 728 219 728

Cash and equivalents 134 134 134

219 862 219 862 219 862

2016

Loan to subsidiary 353 229 353 229 353 229

Cash and equivalents 90 90 90

353 319 353 319 353 319


105



26.2 Measurement of fair values (continued)

Financial liabilities

COMPANY

At

amortised

cost

R’000

Total

R’000

Fair value

R’000

2017

Interest-bearing liabilities 1 1 1

Trade and other payables excluding VAT, derivatives and

accruals * 1 254 1 254 1 254

[G4-EC3] 1 255 1 255 1 255

COMPANY

Loans and

receivables

R’000

Total

R’000

Fair value

R’000

2016

Trade and other payables excluding VAT, derivatives and

accruals * 10 883 10 883 10 883

10 883 10 883 10 883

* Accrued expenses that are not financial liabilities are not included.

26.3 Financial risk management objectives

Risks and related mitigating procedures are assessed by executives with assistance from line managers and employees

on a continuous basis to ensure the safeguarding of the Group, its people, its assets and its businesses.

The Group has exposure to the following risks from its financial instruments:

• Market risk (including currency and interest rate risk)

• Credit risk

• Liquidity risk

This note (note 26) presents information about the Group’s exposure to each of the above risks, the Group’s objectives,

policies and procedures for measuring and managing risk and the Group’s management of capital. Further quantitative

disclosures are included in the financial statement notes relating to the financial instrument concerned.

The Group’s objective is to effectively manage each of the above risks associated with its financial instruments, in

order to limit the Group’s exposure as far as possible to any financial loss associated with these risks.

The Board is ultimately responsible and accountable for ensuring that adequate procedures and processes are in place

to identify, assess, manage and monitor key business risks. The Board has established the Audit and Risk Committee,

which is responsible for monitoring the Group’s risk management policies.

The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set

appropriate risk limits and controls 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 business activities. The Group,

through training and management standards and procedures, aims to develop a disciplined and structured control

environment in which all employees understand their roles and obligations.

The Audit and Risk Committee reviews the adequacy of the risk management framework in relation to the risks faced

by the Group.


106



26.4 Foreign currency risk

The Group is exposed to foreign currency risk through the importation of merchandise. This risk is mitigated by entering into forward exchange contracts and by offsetting the risk against foreign currency receivables. The Group does not use forward exchange contracts for speculative purposes and does not apply hedge accounting. The adjustments to fair value are recognised in profit and loss. The Group varies its exposure depending on its view of the currency values, within acceptable risk parameters.

The fair value of forward exchange contracts has been determined based on inputs obtained from the Group’s bankers.

The primary foreign currency to which the Company is exposed is the US dollar, GBP and Euros.

GROUP

Spot rate

Contract FC

FC’000

Contract

spot rate

value

R’000

Derivative

asset/

(liability) *

R’000

2017

US Dollar 13.12 67 166 881 221 9 569

Euro 14.98 24 360 9

GBP 17.02 - - -

881 581 9 578

2016

US Dollar 14.94 90 328 1 349 500 (9 561)

Euro 19.67 3 59 (6)

GBP 16.39 44 721 (38)

1 350 280 (9 605)

* This asset/liability is presented as part of the trade and other receivables and trade and other payables line item respectively in the statement of financial position.

26.5 Foreign currency sensitivity

The following table indicates the Group’s sensitivity at reporting date to the indicated movements in foreign exchange on financial instruments, including forward foreign exchange contracts. The rates of sensitivity are the rates used when reporting the currency risk to the Group and represent management’s assessment of the possible change in reporting foreign currency exchange rates. The Group is exposed to movements in the exchange rates relating to the British Pound Sterling, the Euro and the US Dollar.

Based on the risk profile of the Group at the end of the reporting period, the foreign currency sensitivity is performed

only in relation to the US Dollar as this is the main foreign currency to which the Group has significant exposure.


107



26.5 Foreign currency sensitivity (continued)

GROUP

USD 1:

R12.12

R’000

R12.62

R’000

R13.62

R’000

R14.12

R’000

2017

Effect on profit or loss in relation to

foreign exchange * 4 896 5 098 5 502 5 704

GROUP

USD 1:

R13.94

R’000

R14.44

R’000

R15.44

R’000

R15.94

R’000

2016

Effect on profit or loss in relation to

foreign exchange * (5 957) (6 170) (6 598 ) (6 811)

* Effect on equity is equal to the effect on profit or loss (excluding tax effects thereon).

26.6 Interest rate risk

The Group’s exposure to interest rate risk is on a floating rate basis. At the reporting date, the interest rate profile of

the Group’s interest-bearing financial instruments were:

GROUP

2017

R’000

2016

R’000

Interest-bearing financial assets 645 553 586 683

Interest-bearing financial liabilities (515 717) (353 570)

Cash and equivalents 389 760 241 493

Bank overdrafts - (18 585)

519 596 456 021

Cash flow sensitivity analysis linked to interest rate risk

A change of 50 basis points (2016: 50 points) in interest rates at the reporting date would have increased profit or loss by the amounts shown below. This analysis assumes that the other variables remain constant and is based on closing balances compounded annually.

GROUP

2017R’000

2016

R’000

Impact on profit or loss for the reporting period * 2 598 2 280

* Effect on equity is equal to the effect on profit or loss (excluding tax effects thereon).


108



26.7 Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to

the Group. 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 carrying amount of financial assets recognised in the financial statements, which is net of impairment losses,

represents the Company’s maximum exposure to credit risk without taking account of the value of any collateral

obtained. At the reporting date, the credit risk profile of the company’s financial assets was:

GROUP

2017R’000

2016

R’000

Finance lease receivables 645 553 586 683

Trade and other receivables excluding VAT and derivatives 2 277 201 2 491 487

Cash and equivalents 389 760 241 493

3 312 154 3 319 663

Financial assets are considered or assessed to be neither past due nor impaired except certain trade receivables as

set out below.

Credit is granted on application in line with policies implemented by management. Finance leases are secured

by retaining ownership of the leased assets. Trade receivables comprise a widespread customer base with no

concentrations of credit risk. Credit insurance is purchased for most trade receivables. In certain cases, the financial

position of a customer is appraised and, if found to be of a high quality, the receivable is not insured.

The Group has the following amounts included in trade debtors, which are past due but not impaired:

GROUP

2017R’000

2016

R’000

30 days past due 422 285 277 927

In excess of 60 days past due 212 570 251 886

634 855 529 813

GROUP

Allowance for impairment

2017

R’000

2016

R’000

Balance at the beginning of the year 51 901 36 500

Business acquisitions – 6 951

Net movement in allowance for possible impairment 49 647 23 988

Irrecoverable debts written off (13 437) (15 538)

Balance at the end of the year 88 111 51 901

Management considers receivables to be impaired when customers are in financial distress or otherwise are assessed unable to pay.


109



26.7 Credit risk (continued)

Transferred financial assets not derecognised

During the prior year Centrafin Proprietary Limited transferred finance lease receivables, with an aggregate carrying

amount of R451 million as security for a senior loan facility amounting to R350 million, to Centrafin Receivables

(RF) Proprietary Limited (“Centrafin Receivables”). Centrafin Receivables is consolidated into the Group. If the

total aggregate loan amount, received by Centrafin Receivables from Nedbank, is not repaid at maturity of the

securitisation agreement or if there is an event of default, the bank will take control of Centrafin Receivables in order

to recover the outstanding loan balance through the collection of the finance receivables.

As the Group has not transferred the significant risk and rewards relating to these finance lease receivables, it

continues to recognise the full carrying amount of the receivables and has recognised the cash received on the

transfer as a secured borrowing.

At the reporting date, the carrying amount of the finance lease receivables that have been transferred to Centrafin

Receivables and consolidated by the Group, amounted to R479 million (2016: R423 million) and the capital amount of

the loan outstanding at the reporting date is R400 million (2016: R350 million) (refer note 15.2).

26.8 Liquidity risk

The liquidity risk of the Group is managed by the Group treasury function, which monitors the repayment and

settlement terms of all internally and externally funded debt. From a Group perspective, financial assistance

is available to Group companies to ensure that all repayment terms outside of the Group are adhered to by each

company. Any internal funding is repayable to the inter-group lender only when funds are available.

Refer to Note 10 of the annual financial statements for details of banking facilities available to the Group.

The maturity analysis of financial liabilities at the reporting date is set out in the table below. [G4-EC3]

GROUP

Total

R’000

Up to

3 months

R’000

Between

3 to 12

months

R’000

Between

1 to 5

years

R’000

In excess of

5 years

R’000

2017

Interest-bearing liabilities 618 612 18 519 37 502 562 591 -


excluding VAT, derivatives

and accruals *

1 817 572 1 817 572 - - -

2 436 184 1 836 091 37 502 562 591 -

2016

Interest-bearing liabilities 455 542 13 068 25 896 416 578 -

Derivative liabilities 19 598 - 16 154 3 444 -


excluding VAT, derivatives

and accruals *

1 903 712 1 903 712 - - -

Bank overdrafts 18 585 18 585 - - -


management 9 651 9 651 - - -

2 407 088 1 945 016 42 050 420 022 -

* Accrued expenses that are not financial liabilities are not included.


110


DirectNumber

IndirectNumber

TotalNumber

Total%

27. DIRECTORS

27.1 Directors’ interest in the share capital of the Company

2017

Executive directors

RD Lyon - 433 846 433 846 0.3


AJ Fourie - 4 022 847 4 022 847 2.5

A Tugendhaft - 218 600 218 600 0.1

B Sibiya - - - 0.0

- 4 675 293 4 675 293 2.9

2016

Executive directors

AJ Fourie – 4 022 847 4 022 847 2.3

RD Lyon – 433 846 433 846 0.3


A Tugendhaft – 218 600 218 600 0.1

E van der Merwe * – – – 0.0

B Sibiya – 38 925 38 925 0.0

– 4 714 218 4 714 218 2.7

* Mr E van der Merwe stepped down from the Board on 30 June 2016. He indirectly held 395 745 shares at 30 June 2016.

Mr B Sibiya disposed of 1 363 shares on 17 January 2017 and 37 562 shares on 18 January 2017.

There have been no changes between the year-end and the date of this report. The directors have no non-

beneficial shareholdings.


111


27. DIRECTORS (continued)

GROUP

BasicsalaryR’000

Direc-tors’ fees

R’000

Travelallo-

wanceR’000

Medicalcontri-

butionsR’000

Provi-dent fund

contri-butions

R’000

Short-term

incen-tive

R’000

Long-term

incen-tive

R’000

Servicesto othercompa-

nies inthe

GroupR‘000

TotalR’000

27.2 Directors’ remuneration

2017

Executive

directors

RD Lyon 2 022 – 96 51 318 1 659 – – 4 146

P Spies * 4 311 – 144 92 223 3 090 – – 7 860

Non-executive

directors

AJ Fourie ** – 546 – – – – – 530 1 076

B Sibiya – 401 – – – – – – 401

N Medupe – 283 – – – – – – 283

S Chaba – 215 – – – – – – 215

A Tugendhaft – 399 – – – – – – 399

[G4-EC1] 6 333 1 844 240 143 541 4 749 - 530 14 380

Basic

salary

R’000

Direc-

tors’

fees

R’000

Travel

allo-

wance

R’000

Medical

contri-

butions

R’000

Other

non-

cash

benefits

R’000

Short-

term

incen-

tive

R’000

Long-

term

incen-

tive

R’000

Services

to other

compa-

nies in

the

Group

R‘000

Total

R’000

2016

Executive

directors

AJ Fourie 5 299 – 122 151 – 1 857 – – 7 429

RD Lyon 1 844 – 96 51 355 1 132 276 – 3 754

P Spies * 1 691 – 60 36 88 1 875 – – 3 750

Non-executive

directors

B Sibiya ** – 364 – – – – – – 364

N Medupe *** – 264 – – – – – – 264

S Chaba – 201 – – – – – – 201

A Tugendhaft – 514 – – – – – – 514

E van der Merwe – 150 – – – – – – 150

8 834 1 493 278 238 443 4 864 276 – 16 426

* Mr P Spies joined the Board on 17 January 2016.

** Mr AJ Fourie was appointed as non-executive director on 1 July 2016 and also served as a non-executive director on the board of Datacentrix

Holdings Limited, a subsidiary of the Group.


112



Shares offered and accepted

Offerdate

Discharge date

Out-standing

number’000

Offerprice

RExercised

’000

Exerciseprice

R

Closingbalance

’000

27.3 Share awards

27.3.1 Equity-settled share

scheme

27.3.1.1 The Pinnacle Share

Purchase Scheme

2016

Other beneficiaries

4th issue 20-Jun-12 09-Mar-16 3 100 5.50/7.50 3 10010.90 to

13.20 –

3 100 3 100

GROUP

2017R’000

2016

R’000

Number of shares

Balance at beginning of year – 3 100

Shares exercised – (3 100)

Balance at end of the year – -

The Pinnacle Share Purchase Scheme was a share purchase scheme available to executive directors and other executive managers. Shares were offered to participants at prices determined by the Remuneration Committee and sanctioned by the Board of Directors, subject to a minimum price of 10% below the cost of the shares to the Company. Participants had accepted restrictive ownership of the shares when delivered to the trustees which had been done within seven days of acceptance of the offer. All the shares fully vested in the previous reporting period.

The impact, before tax, of the scheme on profit or loss was R Nil (2016: R Nil).

27.3.1.2 Forfeitable Share Plan 1 Scheme (“FSP 1”)

GROUP

2017R’000

2016

R’000

Equity-settled share-based reserve 4 570 –

Overview of scheme

FSP 1 was introduced during the 2017 financial reporting period. The scheme was introduced to executives and senior management of the Alviva Group. At the grant date of the scheme each participant received the respective voting and dividend rights in relation to the listed shares held in Alviva Holdings Limited.

Vesting conditions

Service conditions

The service condition of the scheme is a period of three years of employment within the Alviva Group. Should the employment of the employee be terminated before this date, for any reason, the scheme rules apply and the

transfer of ownership is not automatically forfeited.


113



27.3.1.2 Forfeitable Share Plan 1 Scheme (“FSP 1”) (continued)

Performance conditions

The performance conditions are based on the return on equity, core earnings per share and total shareholder return of Alviva Holdings Limited over the service condition period.

Valuation of the scheme

The Black Scholes Option Valuation Methodology was applied during the valuation of the scheme with the various inputs set out below:

Risk free rate The zero-coupon bond curve interest rate was used for each grant date in determining this rate.

Volatility The historical Alviva Holdings Limited share price was used to compute daily volatility which was then annualised. The percentage used in the valuation was 39.2%.

Vesting date The vesting date used was 30 September 2019.

Dividend yield An average dividend yield of 1.5% per annum was used within the model.

GROUP

27.3.2 Cash-settled long-term incentive scheme 2017R’000

2016

R’000

Cash-settled long-term incentive scheme 1

Liability at beginning of year 16 154 21 958

Fair value adjustment to cash flow hedge reserve - (5 804)

Settlement (16 154) -

Liability at end of year - 16 154

Scheme 1

This cash-settled long-term incentive scheme was introduced for executives and senior management and was linked to the performance of the share price. The amount payable in terms of the incentive was based on the excess of the volume weighted average price per share (“VWAP”) for the 10 business days ending on 30 June 2016 over the offer price of R13.68.

The VWAP was calculated at R14,5998 and a total payment of R1 039 374 was made to various members of the executive and senior management teams.

All liabilities under the scheme were settled in July 2016.


114



27.3.2 Cash-settled long-term incentive scheme (continued)

GROUP

2017R’000

2016

R’000

Cash-settled long-term incentive scheme 2

Liability at beginning of year 5 689 2 543

Amount recognised in profit or loss 6 615 3 146

Liability at end of year 12 304 5 689

During 2015, Alviva introduced another cash-settled long-term incentive scheme for executives and senior

management that is linked to the performance of the share price. The amount payable in terms of the

incentive is based on the excess of the VWAP per share for the 10 business days ending on 31 December 2017

over the offer price of R6.60. In the event that the offer price is equal to or greater than the VWAP per share on

31 December 2017, no incentive will be payable. The incentive is conditional on employment at Alviva Holdings

Limited, or any one of its subsidiaries, as at 31 December 2017. Should employment be terminated before this

date, for any reason, no benefit shall accrue to the employee and there will be no entitlement to any pro rata portion of the incentive.

27.3.3 Valuation of share-based payments

Cash-settled share-based payments are measured at fair value at the grant date. The fair value determined,

using the stochastic process of the Black Scholes formula to model simulations of future underlying share

prices at the grant date of the share-based payment, is expensed on a straight-line basis over the vesting

period. At the end of each reporting period, the Group reconsiders the value using the closing share price

as there are no non-market vesting conditions. The inputs used in the model have been adjusted, based on

management’s best estimate, for the effects of the change in the share price.


115



27.3.3 Valuation of share-based payments (continued)

GROUP

2017 2016

Cash-settled

scheme 2

Cash-

settled

scheme 1

Cash-

settled

scheme 2

Number of instruments granted 1 417 000 1 635 000 1 417 000

Weighted average fair value per instrument granted (R) (2.3200) 9.8804 2.4302

Weighted average share price (R) 19.35 14.42 14.42

Number of participants 11 23 11

Fair value at year–end (R) (3 287 440) 16 154 454 3 443 593

Weighted average expected volatility (%) 28.41 28.41 28.41

Weighted average risk–free interest rate (%) 6.90 6.90 6.90

Weighted average vesting period (months) 6 – 18

27.3.4 Employee share option plan of a subsidiary acquired in the prior reporting period

The scheme in Datacentrix Holdings Limited (“Datacentrix”) provided for a grant price equal to the average

quoted market price of the Datacentrix shares on grant date. The vesting period is 12 to 54 months for

employees and 12 to 36 months for directors. If the options remain unexcercised after a period of 10 years

from grant date, the options expire.

Furthermore, options are forfeited if the employee leaves Datacentrix before the option vests. Share options

excercised are equity-settled through a share trust. Datacentrix funded the cash flow of the trust and

had the obligation to fund the deficit of the trust on termination. Outstanding share options granted by

Datacentrix had not all vested at the acquisition date of Datacentrix.

Expected life : 12 to 54 months for employees, with 12 to 36 months for executive directors.

Risk free rate: The zero-coupon interest rate was used for each grant date in determining this rate.

Expected dividends: A dividend yield of 7.5% (2015: 7.5%) continously compounded was used based on

industry averages.

The fair value of the share options at the acquisition date amounted to R5 444 967.

As disclosed in note 24, the share scheme was settled during the current reporting period as a direct result

of the change in interest in Datacentrix.


116


28. RELATED PARTY TRANSACTIONS

A list of all subsidiaries and the equity-accounted investee are included in notes 4 and 5 respectively.

Type of

transaction

Amount of

transaction

R’000

Balance

R’000

GROUP

2017

Westside Trading 334 Proprietary Limited Sale of stock 17 –

2016

Westside Trading 334 Proprietary Limited Sale of stock 14 316 347

Westside Trading 334 Proprietary Limited, under executive influence by a key management member,

transacted with the Group as disclosed above.

Transactions with key management personnel

Key management personnel compensation is detailed in note 27.2.

Executives and senior management participate in the Group’s share schemes as detailed in note 27.3.

Type of

transaction

Amount of

transaction

R’000

Balance

R’000

COMPANY

2017


– SubsidiaryInterest received – 219 728

DCT Holdings Proprietary Limited

– SubsidiaryDividends received 2 851 185 –


– SubsidiaryDividends received 170 447 –

PinnAcc Proprietary Limited

– SubsidiaryDividends received 28 500 -

Pinnacle Share Incentive Trust


Datanet Infrastructure Group Proprietary Limited

– SubsidiaryDividends received 983 –

JAG Engineering Proprietary Limited

– SubsidiaryDividends received 331 -

2016

Pinnacle Treasury Services Limited

(formerly Pinnacle Holdings Limited)

– Subsidiary

Interest received 22 872 353 227

Axiz Technology Proprietary Limited


All related party transactions are conducted on an arm’s length basis and any outstanding balances to or from the

Group are no more or less favourable than any other supplier or customer of a similar size.


117


GROUP COMPANY

2017R’000

2016

R’0002017

R’000

2016

R’000

29. COMMITMENTS

Operating leases - premises

Up to one year 50 957 42 442 - -

One to five years 109 837 94 062 - -

160 794 136 504 - -

Future minimum lease payments on non-cancellable operating leases

These comprise leases on business premises occupied by the Group, and all are renewable at the end of term by

negotiation. None of the leases have any purchase options.

At the reporting date, the Group had outstanding commitments under non-cancellable operating leases relating

to equipment, which fall due as follows:

GROUP COMPANY

2017R’000

2016

R’0002017

R’000

2016

R’000

Operating leases - equipment

Up to one year 5 988 6 367 - -

One to five years 3 970 4 511 - -

9 958 10 878 - -

30. SEGMENT AND GEOGRAPHICAL ANALYSIS

GROUP

Segment revenue Segment EBITDA*

2017R’000

2016

R’0002017

R’000

2016

R’000

30.1 Segment analysis

Business unit

ICT Distribution 9 537 040 9 408 761 422 636 384 652

IT Projects and Services 3 539 563 1 608 180 271 979 152 710

Financial Services 172 237 148 840 116 831 100 664

Group Central Services – – 12 672 41 136

Less: Intergroup Revenue (437 342) (196 649)

12 811 498 10 969 132 824 118 679 162

Depreciation, amortisation and impairments (90 594) (63 284)

Investment income 39 453 17 617

Finance costs (146 490) (126 311)

Share of profit from equity-accounted investee – 22 702

Net profit before tax 626 487 529 886

* Earnings before interest, taxation, depreciation and amortisation.


118


30. SEGMENT AND GEOGRAPHICAL ANALYSIS (continued)

GROUP

Net operating assets

2017R’000

2016

R’000

Business unit

ICT Distribution 1 019 142 1 100 752

IT Projects and Services 499 213 746 490

Financial Services 197 254 151 205

Group Central Services 304 614 411 070

2 020 223 2 409 517

* Earnings before interest, taxation, depreciation and amortisation.

GROUP

Segment revenue Segment EBITDA*

2017R’000

2016

R’0002017

R’000

2016

R’000

30.2 Geographical analysis

Geographical location of business unit

South Africa 12 279 323 10 415 615 795 565 657 965

- Local 11 637 422 9 742 160 762 403 628 665

- International 641 901 673 455 33 162 29 300

Botswana 133 808 136 863 3 616 6 257

Namibia 284 665 299 940 13 814 14 719

Zambia 62 495 67 798 676 1 080

Zimbabwe 10 970 - 5 632 -

Mozambique 40 237 48 916 4 815 (859)

[G4-EC1] 12 811 498 10 969 132 824 118 679 162

Depreciation, amortisation and impairments (90 594) (63 284)

Investment income 39 453 17 617

Finance costs (146 490) (126 311)

Share of profit from equity-accounted investee – 22 702

Net profit before tax 626 487 529 886

The segments of the Group are based on the information reported to the chief operating decision maker (Chief

Executive Officer) and have not changed from the prior reporting period.


119


30. SEGMENT AND GEOGRAPHICAL ANALYSIS (continued)

GROUP

Net operating assets

2017R’000

2016

R’000

Geographical location of business unit

South Africa 1 940 870 2 370 637

Botswana 35 177 31 053

Namibia 42 469 7 781

Zambia (864) (77)

Mozambique 2 571 123

2 020 223 2 409 517

31. CONTINGENT LIABILITIESManagement is not aware of any contingent liabilities of a material nature relating to the reporting period.

GROUP

2017R’000

2016

R’000

32. SURETIES AND GUARANTEESIssued by the Company in favour of:

Canadian Solar International Limited 65 588 1 000

Capital Property Find (JHI) 254 254

Credit Guarantee Insurance Corporation of Africa Limited – 6 539

Depfin Investments Proprietary Limited 26 608 26 608

GE Capital Bank – 440 190

Hewlett-Packard Limited - Ireland 15 000 15 000

Huawei International Company Limited 196 763 –

IBM South Africa Proprietary Limited 262 350 264 114

Intel Americas Inc – 14 443

Microfocus Software (Ireland) Limited 459 113 –

Microsoft Ireland Limited 275 468 308 133

Outward Investments Proprietary Limited 572 572

Schneider Electric DC MEA FzCo – 29 346

Schneider Electric SA Proprietary Limited – 11 000

Shyr-li Properties Proprietary Limited 1 200 1 200

Three G Mobile (Namibia) Proprietary Limited 1 000 5 000

VMware International Limited 209 880 234 768

VCE Technology Solutions Limited 157 410 –

Vodacom South Africa Proprietary Limited 10 000 10 000

Wells Fargo Bank NA (Previously GE Capital Bank) 393 525 –

2 074 731 1 368 167

The Company has issued guarantees to the above entities in respect of credit facilities granted to subsidiaries of the Company. These guarantees would become payable by the Company to the extent of outstanding balances

should any subsidiary default. At reporting date none of the subsidiaries were in default.


120


33. CAPITAL MANAGEMENTThe Group manages its shareholders’ equity, i.e. its issued share capital (including share premium), reserves and

treasury shares, as capital. The Group’s prime objective when managing capital is to ensure it maintains sufficient

levels of capital to safeguard its sustainability as a going concern. Its next objective is to optimise capital levels to

maximise the returns per individual share by way of both dividends and capital appreciation.

In order to achieve these objectives, the Group may adjust the dividend cover, may return capital to shareholders

and may repurchase shares (in compliance with legislation and the JSE Listings Requirements), as it deems

appropriate.

Alviva repurchased a total of 8 333 492 of its shares during the reporting period for a total consideration of R150

million.

34. EVENTS AFTER THE REPORTING DATE

Share buy-back - Alviva Holdings Limited

At the last Alviva AGM held on 25 November 2016, shareholders gave the Board a general approval in terms of

sections 46 and 48 of the Companies Act, by way of special resolution, to acquire shares of the Company. In June

2017, the Board exercised this authority and mandated a buy-back of issued ordinary shares of the Company, to

a maximum of 3 840 000 shares. Since the mandate, and subsequent to the reporting period, 2 025 696 ordinary

shares have been bought back totalling 1.1% of the total issued share capital (excluding treasury shares). [G4-13]

The 2 025 696 ordinary shares were acquired at an average price of R19.29 per share (Total Rand value

R39 077 758) and were cancelled on 12 September 2017.

Business combinations

On 6 September 2017, Alviva, through its subsidiary company DCT Holdings Proprietary Limited, entered into an

agreement to acquire 51% of the shareholding in Sintrex Integration Systems Proprietary Limited, and has an

option to acquire a further 24% within a two year period following the effective date of the transaction. [G4-13] The

transaction is inter alia conditional on clearance from the relevant competition authorities.

In addition, the Company has acquired, for a nominal amount, 75% of Gridcars Proprietary Limited through its

subsidiary Solareff Proprietary Limited. The transaction is unconditional.

The initial accounting of the business combinations is not complete at the date of the issue of the financial

statements. Due to this fact, all information as required by IFRS 3: Business Combinations, has not been

disclosed.

Change in interest held without losing control

Subsequent to the reporting period, Alviva concluded a further B-BBEE transaction through the Ledibogo Trust, its

B-BBEE partner. The Ledibogo Trust through its subsidiary Ledibogo (RF) (Pty) Ltd, subscribed for a further 106

shares in DCT Holdings (Pty) Ltd (“DCT”), representing an additional effective 9.15% shareholding. The subscription

is funded by an interest free loan from DCT for R90 328 037 to be repaid out of future distributions received from

DCT. The effective shareholding of 39.08 %, together with the flow through of black shareholding from Alviva, will

result in an effective black shareholding in excess of 51% black ownership and in excess of 30% black women

ownership in DCT.

35. GOING CONCERN Following due consideration of the operating budgets, an assessment of group debt covenants and funding

requirements, solvency and liquidity, the major risks, outstanding legal, insurance and taxation issues, and other

pertinent matters presented by management, the directors have recorded that they have reasonable expectation

that the Company and the Group have adequate resources and the ability to continue in operation for the next 12

months. For these reasons, the consolidated and separate financial statements have been prepared on a going

concern basis.


121


36. PRIOR PERIOD ERROR

The restatement presented below has been identified by the Johannesburg Stock Exchange through its proactive

monitoring review process.

In the 2016 annual financial statements, the Group presented the realisation of revaluation reserve to retained

earnings via other comprehensive income in the Statement of Profit or Loss and Other Comprehensive Income.

The impact hereof was that total comprehensive income was understated by R23.8 million. The restatement had

no impact on the profit for the period, EBITDA, Statement of Financial Position, Statement of Changes in Equity,

Earnings per share or Headline earnings per share. [G4-22]

The effect of the restatement on the Statement of Profit or Loss and Other Comprehensive Income is illustrated

below:

Restated2016

R’000

Previously

reported

2016

R’000

Variance

R’000

Profit before tax 529 886 529 886 –

Tax (148 283) (148 283) –

Net profit for the year 381 603 381 603 –

- Owners of the Company 341 652 341 652 –

- Non-controlling interests 39 951 39 951 –

Other comprehensive income

Items that will not be reclassified into profit or loss: – (23 825) 23 825

Profit on revaluation of property – – –

Realisation of non-distributable reserve on disposal of properties – (23 825) 23 825

Tax relating to items that will not be reclassified – – –

Items that can be reclassified to profit or loss net of tax: 7 811 7 811 –

Exchange differences from translating foreign operations 2 126 2 126 –

Cash flow hedge 5 685 5 685 –

Total comprehensive income for the year 389 414 365 589 23 825

- Owners of the Company 349 463 325 638 23 825

- Non-controlling interests 39 951 39 951 –


122


37. ANALYSIS OF SHAREHOLDING

SHAREHOLDER SPREAD 2017 2016

Shareholders Shares in issue Shareholders Shares in issue

Range of shares held Number % Number % Number % Number %

1 - 5 000 3 504 79.48 4 761 943 2.81 3 339 77.74 4 620 089 2.52

5 001 - 10 000 370 8.39 2 867 883 1.69 381 8.87 2 991 910 1.63

10 001 - 50 000 363 8.23 8 310 381 4.91 391 9.10 8 834 294 4.82

50 001 - 100 000 54 1.22 4 092 307 2.42 60 1.40 4 619 811 2.52

100 001 - 1 000 000 89 2.02 28 084 945 16.58 93 2.17 31 075 079 16.95

Over 1 000 000 29 0.66 121 275 111 71.59 31 0.72 131 154 854 71.55

Total 4 409 100.00 169 392 570 100.00 4 295 100.00 183 296 037 100.00

SHAREHOLDER TYPE 2017 2016

Shareholders Shares in issue Shareholders Shares in issue

Number % Number % Number % Number %

Non-Public Shareholders 16 0.36 58 884 587 34.76 17 0.40 61 478 881 33.54

Strategic Shareholders

(>10%) – RBC Investor Trust

Clients

1 0.02 40 940 532 24.17 1 0.02 39 176 116 21.37

Treasury Shares 1 0.02 6 500 000 3.84 1 0.02 12 069 974 6.58

Share Schemes 1 0.02 3 220 000 1.90

Directors and Associates 6 0.14 5 390 893 3.18 11 0.26 6 293 671 3.43

Other Employees 7 0.16 2 833 162 1.67 4 0.09 3 939 120 2.15

Public Shareholders 4 393 99.64 110 507 983 65.24 4 278 99.60 121 817 156 66.46

Total 4 409 100.00 169 392 570 100.00 4 295 100.00 183 296 037 100.00

FUND MANAGERS WITH A HOLDING GREATER THAN 5% OF THE

ISSUED SHARES2017 2016

Shares in issue Shares in issue

Number % Number %

36One Asset Management 24 518 266 14.47 19 025 915 10.38

Fidelity Investments 9 698 150 5.73 10 325 950 5.63

Total 34 216 416 20.02 29 351 865 16.01

BENEFICIAL SHAREHOLDERS WITH A HOLDING GREATER THAN 5 %

OF ISSUED SHARES2017 2016

Shares in issue Shares in issue

Number % Number %

RBC Investor Trust Clients (Custodian) 40 977 664 24.19 39 176 116 21.37

36One Asset Management 10 770 095 6.36 12 723 546 6.94

Pinnacle Treasury Services Limited 6 500 000 3.84 12 069 974 6.58

Fidelity Investments 9 698 150 5.73 10 325 950 5.63

Total 67 945 909 40,12 74 295 586 40.53


123


37. ANALYSIS OF SHAREHOLDING (continued)

DISTRIBUTION OF SHAREHOLDERSNumber of

shareholders %

Number of

shares %

Assurance Companies 3 0,07 200 731 0,12

Close Corporations 37 0,84 366 959 0,22

Collective Investment Schemes 29 0,66 16 553 651 9,77

Custodians 59 1,34 80 929 041 47,78

Foundations and Charitable Funds 5 0,11 17 406 0,01

Hedge Funds 12 0,27 12 032 496 7,10

Investment Partnerships 24 0,54 885 003 0,52

Managed Funds 5 0,11 20 373 0,01

Private Companies 88 2,00 2 375 271 1,40

Public Companies 1 0,02 10 000 0,01

Retail Shareholders 3 839 87,07 27 434 727 16,20

Retirement Benefit Funds 2 0,05 58 470 0,03

Scrip Lending 2 0,05 1 892 129 1,12

Share Schemes 1 0,02 3 220 000 1,90

Stockbrokers and Nominees 26 0,59 8 206 815 4,84

Treasury 1 0,02 6 500 000 3,84

Trusts 272 6,17 8 689 484 5,13

Unclaimed Scrip 3 0,07 14 0,00

Total 4 409 100.00 169 392 570 100.00

SHARE PRICE PERFORMANCE

Opening price 1 July 2016 R14.40

Closing price 30 June 2017 R19.35

Closing high for peroid R22.58

Closing low for peroid R14.59

Number of shares in issue 169 392 570

Volume traded during period 72 917 759

Ratio of volume traded to shares issued (%) 43,05

Rand value traded during the period R1 291 426 411

Market capitalisation at 30 June 2017 R3 277 746 249


124

Shareholders’ diary

Financial year–end 30 June 2017

Record date to receive notice of AGM Friday, 22 September 2017

Mailing of Annual Report and no change statement released on SENS Friday, 29 September 2017

Notice of AGM to be posted to shareholders on Friday, 29 September 2017

Last day to trade to be recorded in the register on the record

date for participation in the AGMTuesday, 14 November 2017

Record date to participate in and vote at the AGM Friday, 17 November 2017

Dividend – Last day of trade “CUM” dividend Tuesday, 14 November 2017

Dividend – First day to trade “EX” dividend Wednesday, 15 November 2017

Dividend Record date Friday, 17 November 2017

Dividend Payment date Monday, 20 November 2017

Last day for lodging forms of proxy at 14:30 on Thursday, 23 November 2017

AGM at 14:30 on Thursday, 23 November 2017

Results of AGM released on SENS on Friday, 24 November 2017


125

Alviva Holdings Limited(Previously Pinnacle Holdings Limited)

(“Alviva”) or (“the Company”) or (“the Group”)

Registration number: 1986/000334/06

Share Code: AVV

ISIN: ZAE000227484

This document is important and requires your attention. If you are in any doubt as to what action you should take

in respect of the resolutions contained in this notice, please consult your Central Securities Depository Participant

(“CSDP” or “Participant”), broker, banker, attorney, accountant or other professional adviser immediately.

If you have sold or otherwise transferred all of your ordinary shares in the Company, please send this document together

with the accompanying form of proxy at once to the relevant transferee or to the stockbroker, CSDP, bank or other

person through whom the sale or transfer was affected, for transmission to the relevant transferee.

For consistency of reference in this notice of annual general meeting (hereinafter the “AGM”), the term “MOI” is used

throughout to refer to the Company’s Memorandum of Incorporation (previously the Company’s Memorandum and

Articles of Association) which was adopted by the shareholders at the AGM of shareholders held on Friday, 26 October

2012.

Section 63(1) of the Act – Identification of meeting participants

Kindly note that meeting participants (including proxies) are required to provide reasonably satisfactory identification

before being entitled to attend or participate in a shareholders’ meeting. Forms of identification include valid identity

documents, driver’s licenses and passports.

Notice of AGMNotice is hereby given that the AGM of the shareholders of Alviva Holdings Limited will be held on Thursday,

23 November 2017 at 14:30 (or at any adjournment or postponement thereof) in the boardroom of the registered

offices of Alviva Holdings Limited, at The Summit, 269 16th Road, Randjespark, Midrand, to transact the following

business and resolutions with or without amendments approved at the meeting:

The minutes of the AGM held on Friday, 25 November 2016 will be available for inspection at the registered office of the

Company until 30 minutes immediately preceding the 2017 AGM.

Included in this document are the following:

� The notice of AGM setting out the resolutions to be proposed at the meeting, together with explanatory notes.

� A proxy form for completion, signature and submission to the transfer secretaries by shareholders holding

Alviva ordinary shares in certificated form or recorded in the sub-register in electronic form in “own name”.

Mailing details of the transfer secretaries are detailed on the proxy form and notes thereto.

Presentation of annual financial statements and reportsThe consolidated audited annual financial statements for the Company and the Group, including the external

Independent Auditor’s Report, the Audit and Risk Committee Report and the Directors’ Report for the year ended

30 June 2017, have been distributed, as required, and will be presented to shareholders at the AGM.

The consolidated audited annual financial statements, together with the abovementioned reports, are set out on pages

41 to 123 of the Annual Report.

Notice ofannual general meetingof shareholders


126

Notice ofannual general meetingof shareholders (continued)

Report from the Social and Ethics CommitteeIn accordance with Companies Regulation 43(5) (c), issued in terms of the Companies Act, the Chairperson of the

Social and Ethics Committee, or in the absence of the Chairperson any member of the Committee, will present the

Committee’s report to shareholders at the AGM. The Report of the Social and Ethics Committee is set out on pages 23

to 27 of the Annual Report.

SPECIAL RESOLUTIONS

Special resolution number 1To issue a general authority to the Company to repurchase its own shares

“RESOLVED THAT, the Company or a subsidiary, be and is hereby authorised, by way of general authority in terms

of article 16 of the MOI, to acquire shares issued by it, subject to the requirements of sections 46 and 48 of the

Companies Act and the Listings Requirements of the JSE Limited (“JSE”) and the MOI of the Company.”

It is recorded that the Listings Requirements of the JSE require, inter alia, that the Company or a subsidiary may make

a general acquisition of shares issued by the Company only if:

� the repurchase of the ordinary shares is effected through the order book operated by the JSE trading system

and done without any prior understanding or arrangement between the Company and the counterparty

(reported trades are prohibited);

� at any point in time the Company may only appoint one agent to effect any repurchases on its behalf;

� this general authority shall only be valid until the next AGM of the Company, provided that it shall not extend

beyond 15 (fifteen) months from the date of passing of this special resolution;

� the maximum price at which the shares may be acquired will be 10% (ten percent) above the weighted average

market value at which such ordinary shares are traded on the JSE, for such ordinary shares for the 5 (five)

business days immediately preceding the date on which the transaction is effected;

� any such acquisition shall not, in any one financial year, exceed 20% (twenty percent) of the Company’s issued

ordinary shares as at the passing of the general authority;

� the Company or its subsidiaries may not repurchase ordinary shares during a prohibited period as defined in

paragraph 3.67 of the JSE Listings Requirements, unless they have in place a repurchase programme where

the dates and quantities of securities to be traded during the relevant period are fixed (not subject to any

variation) and has been submitted to the JSE in writing prior to the commencement of the prohibited period;

� the repurchase may only be effected if the shareholder spread requirements, as set out in paragraph 3.37 of the

JSE Listings Requirements, are still met after such repurchase;

� the directors have passed a resolution authorising the repurchase, resolving that the Company or the subsidiary,

as the case may be, has satisfied the solvency and liquidity test as defined in Section 4 of the Companies Act

and resolving that since the solvency and liquidity test had been applied, there have been no material changes

to the financial position of the Group;

� should derivatives be used, such authority is limited to paragraphs 5.68, 5.72(a), (c) and (d) of the JSE

Listings Requirements;

� when the Company has cumulatively repurchased 3% (three percent) of the initial number (the number

of that class of shares in issue at the time that the general authority from shareholders is granted) of the

relevant class of securities for each 3% (three percent) in aggregate of the initial number of that class acquired

thereafter, an announcement must be made. Such announcement must be made as soon as possible and, in

any event, by not later than 8:30 on the second business day following the day on which the relevant threshold

is reached or exceeded and must contain the following information in terms of paragraph 11.27 of the JSE

Listings Requirements:


127

(continued)

– the date(s) of repurchase(s) of securities;

- the highest and lowest prices paid for securities so repurchased;

- the number and value of securities repurchased;

- the extent of authority outstanding, by number and percentage (calculated by using the number of shares in issue before any repurchases were effected);

- a statement as to the source of funds utilised;

- a statement by the directors that after considering the effect of such repurchase:

-- the Company and the Group will be able, in the ordinary course of business, to pay its debts for a period of 12 (twelve) months after the date of the announcement;

-- the assets of the Company and the Group 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 announcement. For this purpose, the assets and liabilities should be recognised and measured in accordance with the accounting policies used in the latest audited Group annual financial statements;

-- the share capital and reserves of the Company and the Group will be adequate for ordinary business purposes for a period of 12 (twelve) months after the date of the announcement;

-- the working capital of the Company and the Group will be adequate for ordinary business purposes for a period of 12 (twelve) months after the date of the announcement;

– a statement confirming that paragraph 5.72 (a) of the JSE Listings Requirements has been complied with;

– an explanation including supporting information (if any) of the impact on the repurchase on the financial information;

– the number of treasury shares held after the repurchase;

– the date on which the securities will be cancelled and the listing removed, if applicable; and

– in the event that the repurchase/purchase was made during a prohibited period through a repurchase programme pursuant to paragraph 5.72 and/or paragraph 14.9 (e) of Schedule 14, a statement confirming that the repurchase was put in place pursuant to a repurchase programme

prior to the prohibited period in accordance with the JSE Listings Requirements.

The directors of the Company do not have any specific intentions for utilising this general authority as at the date of

this AGM.

Additional disclosure requirements required in terms of paragraph 11.26 of the JSE Listings Requirements

Material changes

No material changes have occurred since 30 June 2017 and the distribution of this notice as incorporated with the

Annual Report.

Directors’ responsibility statement

The directors, whose names are given on pages 7 and 8 of the Annual Report have considered all statements of fact

and opinion in the notice and Annual Report to which this notice is attached and therefore collectively and individually

accept full responsibility for the accuracy of the information given 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 notice and Annual Report contain all

information required by law and the JSE Listings Requirements.



128

The JSE Listings Requirements require the following disclosures, which are contained in the Annual Report as tabled

below: –

Requirements Reference

Major shareholders Pages 122 and 123, Note 37

Share capital of the Company Pages 88 and 89, Note 11

Statement by directors in terms of 11.26 (d) of the JSE Listings Requirements

The Company’s directors state that they have resolved by resolution that after considering the effect of such maximum

repurchase:

� the Company and the Group will be able in the ordinary course of business to pay its debts for a period of 12

months after the date of the notice of the AGM;

� assets of the Company and the Group will be in excess of the liabilities of the Company and the Group for a

period of 12 months after the date of the notice of the AGM. For this purpose, the assets and liabilities should

be measured in accordance with the accounting policies used in the latest audited annual group financial

statements;

� the share capital and reserves of the Company and the Group will be adequate for ordinary business purposes

for a period of 12 months after the date of the notice of the AGM;

� working capital of the Company and the Group will be adequate for ordinary business purposes for a period of

12 months after the date of the notice of the AGM; and

� a resolution by the board of directors has been passed that it has authorised the repurchase, that the company

and its subsidiaries have passed the solvency and liquidity test and that, since the test was performed, there

have been no material changes to the financial position of the Group.

The directors state further in terms of 11.26 (e) of the JSE Listings Requirements, that such resolution contains a

statement that such authority is limited to paragraph 5.72 (a), (c), (d) and 5.68 of the JSE Listings Requirements.

Reason for and effect of special resolution number 1

The reason for and effect of special resolution number 1 is to authorise the Company and/or its subsidiaries by way of

a general authority to acquire Alviva issued shares on such terms, conditions and in such amounts as determined from

time to time by the directors of the Company, subject to the limitations set out above and in compliance with sections

46 and 48 of the Companies Act. It is the intention of the directors of the Company to use such authority should

prevailing circumstances, such as market conditions, in their opinion warrant it.

Percentage voting rights

This resolution requires at least 75% (seventy-five percent) of the voting rights exercised by shareholders present or

represented by proxy and entitled to exercise voting rights on the resolution.



129

Special resolution number 2General authority to provide financial assistance in terms of section 44 of the Companies Act

“RESOLVED THAT, in terms of section 44(3)(a)(ii) of the Companies Act, as a general approval, that the Board be

and is hereby authorised to approve that the Company provides any direct or indirect financial assistance (“financial

assistance” will herein have the meaning attributed to it in sections 44(1) and 44(2) of the Companies Act), that

the Board may deem fit to any company or corporation that is related or inter-related to the Company (“related” or

“inter-related” will herein have the meaning attributed to it in section 2 of the Companies Act) and/or to any financier

who provides funding by subscribing for preference shares or other securities in the Company or any company or

corporation that is related or inter-related to the Company, on the terms and conditions and for amounts that the Board

may determine for the purpose of, or in connection with, the subscription of any shares or other securities, issued or

to be issued by the Company or a related or inter-related company or corporation, or for the purchase of any shares

or securities of the Company or a related or inter-related company or corporation, provided that the aforementioned

approval shall be limited to a maximum amount of R750 million (seven hundred and fifty million Rand) and be valid until

the date of the next AGM of the Company.”

Reason for special resolution number 2

The reason for and effect of special resolution number 2 is to grant the directors the authority, until the next AGM of

the Company, to provide financial assistance to any company or corporation which is related or inter-related to the

Company and/or to any financier for the purpose of or in connection with the subscription or purchase of shares or other

securities in the Company or any related or inter-related company or corporation.

This means that the Company is authorised, inter alia, to grant loans to its subsidiaries and to guarantee and furnish

security for the debt of its subsidiaries where any such financial assistance is directly or indirectly related to a party

subscribing for shares or securities in the Company or its subsidiaries. A typical example of where the Company may

rely on this authority is where a subsidiary raises funds by way of issuing preference shares and the third-party funder

requires the Company to furnish security, by way of a guarantee or otherwise, for the obligations of its subsidiary to the

third-party funder arising from the issue of the preference shares.

Approval is not sought for loans to directors or other individuals and no such financial assistance will be provided under

this authority.

Compliance with section 44(3)(b)

The directors of the Company will, in accordance with the Companies Act, ensure that financial assistance is only

provided if the requirements of that section are satisfied, inter alia, that immediately after providing the financial

assistance, the Company would satisfy the solvency and liquidity test set out in section 4(1) of the Companies Act and

the terms under which the financial assistance is proposed to be given are fair and reasonable to the Company.




(continued)



130

Special resolution number 3Specific authority to provide financial assistance in terms of section 44 of the Companies Act

“RESOLVED THAT, in terms of section 44(3)(a)(ii) of the Companies Act, as a specific approval, that the Company

may provide financial assistance in the form of guarantees to Absa Bank Limited, who provides funding by subscribing

for preference shares in the Company or any company or corporation that is related or inter-related to the Company, on

the terms and conditions and for amounts that the Board may determine, provided that the aforementioned approval

shall be limited to a maximum amount of R250 million (two hundred and fifty million Rand) plus related costs and

interest and be valid for the duration of the agreement.”

Reason for special resolution number 3

The reason for and effect of special resolution number 3 is to grant the directors the authority, for the duration of the

agreement, to furnish security to Absa Bank Limited, by way of a guarantee, for the obligations of a subsidiary company,

arising from the issue of the preference shares in the subsidiary company.

Compliance with section 44(3)(b)

The directors of Alviva will, in accordance with the Companies Act, ensure that financial assistance is only provided if

the requirements of that section are satisfied, inter alia, that immediately after providing the financial assistance, the

Company would satisfy the solvency and liquidity test set out in section 4(1) of the Companies Act and the terms

under which the financial assistance is proposed to be given are fair and reasonable to the Company.




Special resolution number 4To approve the fee structure, exclusive of Value Added Tax, to be paid to directors for their services as non-

executive directors of the Company

“RESOLVED THAT, in terms of section 66(9) of the Companies Act, the Company be and is hereby authorised to

remunerate its directors for their services as directors and/or pay any fees related thereto on the following basis and

on any other basis as may be recommended by the Remuneration Committee and approved by the Board of Directors,

provided that the aforementioned authority shall be valid with effect from Thursday, 23 November 2017 until the next

AGM of the Company to be held in the last quarter of 2018 as follows:

2016/2017R

2017/2018R

Chairmanships

Board Chair 363 000 385 000

Board Deputy Chair 216 000 229 000

Lead Independent Director 186 000 197 000

Audit and Risk Committee 51 000 60 000

Remuneration Committee 24 000 25 000

Social and Ethics Committee 0 25 000

Memberships

Board 170 000 180 000

Audit and Risk Committee 25 000 27 000

Remuneration Committee 13 000 14 000

Social and Ethics Committee 7 000 8 000



131

Each fee is paid to each director who is a member of the Board or Committees referred to above. Chair fees are paid in

addition to membership fees. Executive directors do not receive directors’ fees.

Reason for and effect of special resolution number 4

The reason for and effect of special resolution number 4 is for the Company to obtain the approval of shareholders

by way of special resolution to remunerate its non-executive directors in accordance with the requirements of the

Companies Act without requiring further shareholder approval until the next AGM.




ORDINARY RESOLUTIONSThe minimum percentage of voting rights required for ordinary resolutions 1 to 5 and 7 below to be adopted is more than

50% (fifty percent) of the voting rights exercised on each of the resolutions by shareholders present or represented

by proxy. Ordinary resolution 6 must be passed by a 75% (seventy-five percent) majority of votes cast in favour of the

resolution by all members present or represented by proxy.

Ordinary resolution number 1Re-appointment of retiring directors

1.1 Ms SH Chaba

“RESOLVED THAT, Ms SH Chaba, who retires in compliance with the MOI requirement that one- third or more of

the non-executive directors must retire at each AGM, and being eligible offers herself for re-election, be and is

hereby re-elected and confirmed as an independent non-executive director.”

A brief biography of Ms SH Chaba (59) is as follows:

BA (Economics and Industrial Psychology); Post-Graduate Diploma in Human Resources Management (Wits);

Senior Executive Programme (Wits and Harvard Business School)

Appointed to the Board: 31 August 2012

Ms Chaba has extensive public and private sector experience at both executive and board level. In the public

sector, she has engaged at all three spheres of government as well as with state-owned enterprises. In the

private sector, she has experience in the petrochemical, retail and financial industries.

She is an HR expert and business strategist and works mainly in these areas as a consultant as well as in an

advisory capacity as a board member.

She is a member of the Audit and Risk Committee as well as the Remuneration Committee and chairs the Social

and Ethics Committee.

1.2 Mr B Sibiya

Mr B Sibiya, who retires in compliance with the MOI requirement that one-third or more of the non-executive

directors must retire at each AGM, retires and opts to not make himself available for re-election.

(continued)



132

Ordinary resolution number 2Appointment of the members of the Audit and Risk Committee

“RESOLVED THAT, the following independent non-executive directors, all of whom qualify in terms of section 94(4) of

the Companies Act, be appointed as the Chairperson and members (re-appointed) of the Audit and Risk Committee,

subject to Ms SH Chaba ratification as director pursuant to ordinary resolution number 1.1:

2.1 Ms N Medupe (Chairperson)

A brief biography of Ms N Medupe is as follows:

BAcc (KZN University); Post-Graduate Diploma in Accountancy (KZN University); CA(SA)

Appointed to the Board: 29 August 2014

Ms Medupe is the Executive Chairperson of Nexia SABT, a medium-sized audit and accounting firm. Her

areas of expertise include governance, risk, compliance, audit and financial management. She is currently a

member of the South African Institute of Chartered Accountants, the Institute of Directors in Southern Africa

and the Institute of Internal Auditors.

She is Chairperson of the Audit and Risk Committee and the Remuneration Committee.

2.2 Ms SH Chaba

A brief biography of Ms SH Chaba is included under 1.1 above.

2.3 Mr B Sibiya

As stated under 1.2 above, Mr B Sibiya opts to not make himself available for re-election. His term as member

of the Audit and Risk Committee will therefore also end on 23 November 2017, following which the Board has

forty days, in terms of Section 94(6) of the Companies Act, to fill the vacancy.

Ordinary resolution number 3Re-appointment of the auditors

“RESOLVED THAT, upon the recommendation given by the Audit and Risk Committee of the Company,

SizweNtsalubaGobodo Incorporated be re-appointed as auditors of the Company and Mr A Philippou be re-appointed

as the designated partner who will undertake the audit of the Group, both until the date of the next AGM.”

Ordinary resolution number 4Endorsement of the Company’s Remuneration Policy and its implementation

“RESOLVED THAT, shareholders endorse the Company’s Remuneration Policy as detailed in the Remuneration

Committee Report in the Annual Report, through a non-binding advisory vote as recommended in principle 2.27 of the

King Code of Governance for South Africa 2009.”

Ordinary resolution number 5Placement of unissued shares under the control of the directors

“RESOLVED THAT, all of the authorised but unissued ordinary shares in the capital of the Company be and are hereby

placed under the control of the directors of the Company as a general authority to allot or issue the same at their

discretion in terms of and subject to the provisions of section 38 of the Companies Act, the JSE Listings Requirements

and the Company’s MOI and subject to the proviso that the aggregate number of ordinary shares which may be allotted

and issued in terms of this ordinary resolution number 5, shall be limited to 10% (ten percent) of the number of ordinary

shares in issue from time to time.”



www.alvivaholdings.com 133

Ordinary resolution number 6Authority to issue shares for cash

“RESOLVED THAT, the directors of the Company be and are hereby authorised by way of a general authority to allot or

issue all or any of the authorised but unissued shares in the capital of the Company for cash, at the discretion of the

directors, as and when suitable opportunities arise, subject to the Listings Requirements of the JSE.”

The allotment and issue of shares for cash shall be subjected to the following limitations:

� that the securities which are the subject of the issue for cash must be of a class already in issue, or where this

is not the case, must be limited to such securities or rights that are convertible into a class already in use;

� that this authority shall not be extended beyond the next AGM or 15 (fifteen) months from the date of this AGM,

whichever date is earlier;

� issues in terms of this authority in any one financial year shall not exceed 15 764 687 (fifteen million seven

hundred and sixty-four thousand six hundred and eighty-seven) ordinary shares, which is not greater than 10%

(ten percent) in aggregate of the number of shares (excluding treasury shares) in the Company’s issued share

capital in issue at the date of this notice of the AGM. The 10% (ten percent) shall also take into account (and

shall include, if applicable) any securities to be issued pursuant to a rights issue which has been announced

which is irrevocable and fully underwritten, or securities issued in terms of an acquisition which has had the

final terms announced;

� after the Company has issued equity securities in terms of the approved general issue for cash representing,

on a cumulative basis within the financial year, 5% (five percent) or more of the number of equity securities in

issue prior to that issue, the Company shall publish an announcement giving full details of the issue, including:

– the number of securities issued;

– the average discount to the weighted average trading price of the securities over the 30 (thirty) days

prior to the date that the issue was determined and agreed by the directors of the Company; and

– the impact on Net Asset Value, Net Tangible Asset Value and on Earnings and Headline Earnings per

Share shall be published at the time of any issue representing, on a cumulative basis within a financial

year, 5% (five percent) or more of the number of shares in issue, prior to such issue;

� In determining the price at which shares will be issued in terms of this authority, the maximum discount

permitted shall be 10% (ten percent) of the weighted average traded price of such shares, as determined over

the 30-day (thirty-day) business period prior to the date that the price of the issue is determined or agreed by

the directors of the Company. If no shares have been traded in the said 30-day (thirty-day) business period, a

ruling will be obtained from the JSE; and

� Any such issue will be made to public shareholders as defined in paragraphs 4.25 to 4.27 of the JSE Listings

Requirements and not to related parties.

A 75% (seventy-five percent) majority of votes cast in favour of the resolution by all members present or represented

by proxy, is required for this ordinary resolution to be passed.

(continued)



www.alvivaholdings.com134

Ordinary resolution number 7Authorisation of the directors to implement the special and ordinary resolutions

“RESOLVED THAT, any one director of the Company or the Company Secretary be and is hereby authorised to do all such

things as are necessary and to sign all such documents issued by the Company so as to give effect to such ordinary

resolutions and special resolutions with or without amendment and, where applicable, registered.”

Transaction of such other matters as may be transacted at an AGM.

Salient dates and times

Record date to receive notice of AGM Friday, 22 September 2017

Notice of AGM to be posted to shareholders and announced on SENS on Friday, 29 September 2017

Last day to trade to be recorded in the register on the record date for participation

in the AGMTuesday, 14 November 2017

Record date to participate in and vote at the AGM Friday, 17 November 2017

Last day for lodging forms of proxy at 14:30 onThursday, 23 November

2017

AGM at 14:30 onThursday, 23 November

2017

Results of AGM released on SENS on Friday, 24 November 2017

Note:

Any changes to the above dates will be announced on SENS, subject to JSE approval.

Voting and ProxiesCertificated shareholders and dematerialised shareholders who hold shares in “own name” registration who are unable

to attend the AGM and who wish to be represented thereat, must complete the form of proxy as attached to this notice

of AGM, in accordance with the instructions contained therein and return it to the transfer secretaries to be received by

no later than 14:30 on the day of the AGM, being Thursday, 23 November 2017.

Completion of the relevant form of proxy will not preclude such shareholder from attending and voting (in preference

to those shareholders’ proxies) at the AGM.

Every person present and entitled to vote at the general meeting shall, on a show of hands, have one vote only, and on

a poll, shall have one vote for every ordinary share held or represented.




Shareholders’ rights regarding proxies in terms of section 58 of the Companies Act are as follows:

1. At any time, a shareholder of a Company may appoint any individual, including an individual who is not a

shareholder of that Company, as a proxy to –

(a) participate in, and speak and vote at, a shareholders meeting on behalf of the shareholder; or

(b) give or withhold written consent on behalf of the shareholder to a decision contemplated in section 60.

2. A proxy appointment –

(a) must be in writing, dated and signed by the shareholder; and

(b) remains valid for:

(i) a period as set out in 23.7 of the MOI.

(ii) any longer or shorter period expressly set out in the appointment, unless it is revoked in a manner

contemplated in section 58(4)(c) of the Companies Act, or expires earlier as contemplated in

section 58(8)(d) of the Companies Act.

3. Other –

(a) a shareholder of the Company may appoint two or more persons concurrently as proxies, and may

appoint more than one proxy to exercise voting rights attached to different securities held by the

shareholder;

(b) a proxy may delegate the proxy’s authority to act on behalf of the shareholder to another person, subject

to any restriction set out in the instrument appointing the proxy; and

(c) a copy of the instrument appointing a proxy must be delivered to the Company or to another person

on behalf of the Company, before the proxy exercises any rights of the shareholder at a shareholders

meeting.

4. Irrespective of the form of instrument used to appoint a proxy –

(a) the appointment is suspended at any time and to the extent that the shareholder chooses to act directly

and in person in the exercise of any rights as a shareholder;

(b) the appointment is revocable unless the proxy appointment expressly states otherwise; and

(c) if the appointment is revocable, a shareholder may revoke the proxy appointment by:

(i) cancelling it in writing, or making a later inconsistent appointment of a proxy; and

(ii) delivering a copy of the revocation instrument to the proxy, and to the Company.

5. The revocation of a proxy appointment constitutes a complete and final cancellation of the proxy’s authority to

act on behalf of the shareholder as of the later of –

(a) the date stated in the revocation instrument, if any; or

(b) the date on which the revocation instrument was delivered as required in section 58(4)(c)(ii) of the

Companies Act.

6. A proxy is entitled to exercise, or abstain from exercising, any voting right of the shareholder without direction,

except to the extent that the instrument appointing the proxy otherwise provides.

(continued)



www.alvivaholdings.com136

Electronic participationShould any shareholder wish to participate in the AGM by way of electronic participation, that shareholder should

make application in writing (including details as to how the shareholder or its representative can be contacted) to

so participate to the transfer secretaries at the address below, to be received by the transfer secretaries at least 5

(five) business days prior to the AGM in order for the transfer secretaries to arrange for the shareholder (and its

representative) 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) with

details as to how to access any electronic participation to be provided. The Company reserves the right to elect not to

provide for electronic participation at the AGM in the event that it determines that it is not practical to do so. The costs of

accessing any means of electronic participation provided by the Company will be borne by the shareholder so accessing

the electronic participation. Shareholders are advised that participation in the AGM by way of electronic participation

will not entitle a shareholder to vote. Should a shareholder wish to vote at the AGM, he/she may do so by attending and

voting at the AGM either in person or by proxy.

By order of the Board

SL Grobler Company Secretary

29 September 2017

Registered address

Alviva Holdings Limited

The Summit, 269, 16th Road, Randjespark, 1685, Midrand

Transfer secretaries

Computershare Investor Services Proprietary Limited

PO Box 61051, Marshalltown, 2107



Form of proxy

(previously Pinnacle Holdings Limited)(incorporated in the Republic of South Africa)

Registration number: 1986/000334/06ISIN: ZAE000227484 • Share code: AVV

“Alviva” or “the Company” or “the Group”

Only to be completed by certificated and dematerialised shareholders with “own name” registration.

If you are a dematerialised shareholder, other than with “own name” registration, do not use this form. Dematerialised shareholders other than those with “own name” registration who wish to attend the annual general meeting, must inform their CSDP or broker of their intention to attend and request their CSDP or broker to issue them with the relevant Letter of Representation to attend the annual general meeting in person and vote, or, if they do not wish to attend the meeting in person, but wish to be represented thereat, provide their CSDP or broker with their voting instructions in terms of the relevant custody agreement entered into between them and their CSDP or broker in the manner and cut-off time stipulated therein.

An ordinary shareholder entitled to attend and vote at the annual general meeting to be held in the Alviva Holdings Limited boardroom at The Summit, 269, 16th Road, Randjespark, Midrand, on Thursday, 23 November 2017 at 14.30, is entitled to appoint a proxy to attend, speak or vote thereat in his/her stead. A proxy need not be a shareholder of the Company.

All forms of proxy must be lodged at the Company’s transfer secretaries, Computershare Investor Services Proprietary Limited, Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196 (PO Box 61051, Marshalltown, 2107), by no later than 14:30 on Thursday, 23 November 2017.

I/We (please print name in full)

of (address) Telephone number:

E-mail address: Cellphone number:

being an ordinary shareholder(s) of the Company holding ordinary shares in the Company do hereby appoint

1. or failing him/her

2. or failing him/her

3. the chairman of the annual general meeting

as my/our proxy to vote on my/our behalf at the abovementioned annual general meeting (and any adjournment thereof) to be held at 14:30 in the Alviva Holdings Limited boardroom at The Summit, 269, 16th Road, Randjespark, Midrand, on Friday, 23 November 2017, for the purpose of considering and, if deemed fit, passing with or without modifications, the following resolutions to be considered at such meeting:

Number of votes (one per share)

In favour of Against Abstain

Special resolutions

1. Issue of a general authority for the Company to repurchase its own shares

2. Issue of a general authority to provide financial assistance in terms of section 44 of the Companies Act

3. Issue of a specific authority to provide financial assistance in terms of section 44 of the Companies Act

4. Approval of the fee structure to be paid to non-executive directors

Ordinary resolutions

1. Re-appointment of retiring directors

1.1 Re-appointment of Ms SH Chaba as an independent non-executive director

2. Appointment of the members of the Audit and Risk Committee

2.1 Ms N Medupe (Chairperson)

2.2 Ms SH Chaba

3. Approval to re-appoint SizweNtsalubaGobodo Incorporated and Mr A Philippou as auditors

4. Endorsement of the Company’s Remuneration Policy and its implementation

5. General authorisation to place unissued shares under the control of the directors

6. General authorisation to issue shares for cash

7. Authorisation of the directors to implement the special and ordinary resolutions

Insert an “X” in the appropriate block. If no indications are given, the proxy will vote as he/she deems fit. Each member entitled to attend and vote at the meeting may appoint one or more proxies (who need not be a member of the Company) to attend, speak and vote in his/her stead.

Signed at on 2017

Signature

Assisted by (where applicable)

Please read the notes on the following page.


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Notes to theform of proxy

1. A shareholder may insert the names of a proxy or the names of two alternative proxies of the member’s choice

in the space provided, with or without deleting “the chairman of the meeting”, but any such deletion must

be initialed by the shareholder. The person whose name appears first on the proxy and which has not been

deleted shall be entitled to act as proxy to the exclusion of those names following.

2. A shareholder is entitled to one vote on a show of hands and, on a poll, one vote in respect of each ordinary

share held. A shareholder’s instructions to the proxy must be indicated by inserting the relevant number of

votes exercisable by the shareholder in the appropriate box. Failure to comply with this will be deemed to

authorise the proxy to vote or to abstain from voting at the annual general meeting as he/she deems fit in

respect of all the shareholder’s votes.

3. A vote given in terms of an instrument of proxy shall be valid in relation to the annual general meeting

notwithstanding the death, insanity or other legal disability of the person granting it, or the revocation of the

proxy, or the transfer of the ordinary shares in respect of which the proxy is given, unless notice as to any of

the aforementioned matters shall have been received by the transfer secretaries or by the chairman of the

annual general meeting before the commencement of the annual general meeting.

4. If a shareholder does not indicate on this form that his/her proxy is to vote in favour of or against any

resolution or to abstain from voting, or gives contradictory instructions, or should any further resolution(s) or

any amendment(s) which may properly be put before the general meeting, be proposed, the proxy shall be

entitled to vote as he/she thinks fit.

5. The authority of a person signing a proxy in a representative capacity must be attached to the proxy unless

that authority has already been recorded with the Company’s transfer secretary or waived by the chairperson

of the annual general meeting.

6. A minor or any other person under legal incapacity must be assisted by his/her parent or guardian as

applicable, unless the relevant documents establishing capacity are produced or have been registered with

the transfer secretaries.

7. Where there are joint holders of ordinary shares: any one holder may sign the form of proxy; the vote(s) of the

senior shareholders (for that purpose seniority will be determined by the order in which the names of ordinary

shareholders appear in the Company’s register) who tender a vote (whether in person or by proxy) will be

accepted to the exclusion of the vote(s) of the other joint shareholder(s).

8. Proxies must be lodged at or posted to the Company’s transfer secretaries, Computershare Investor Services

Proprietary Limited, Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196 (PO Box 61051, Marshalltown,

2107), to be received not later than 14:30 on Thursday, 23 November 2017.

9. Any alteration or correction made to this form of proxy other than the deletion of alternatives must be initialed

by the signatory/ies.

10. The completion and lodging of this proxy shall not preclude the relevant shareholder from attending the

meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof.

11. The chairperson of the meeting may reject or accept a proxy that 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.



Corporate Information

Alviva Holdings Limited(previously Pinnacle Holdings Limited)

Incorporated in the Republic of South Africa

Company Registration Number: 1986/000334/06

(“Alviva” or “the Company” or “the Group”)

Business address

The Summit

269,16th Road

Randjespark

Midrand

1685

Postal address

PO Box 483

Halfway House

1685

Company Secretary

Ms SL Grobler CA (SA)

PO Box 483

Halfway House

1685

E-mail: [email protected]

Transfer Secretaries

Computershare Investor Services (Pty) Ltd

PO Box 61051

Marshalltown

2107

JSE Limited

Share Code: AVV

ISIN: ZAE000227484

Auditors

SizweNtsalubaGobodo Incorporated

Summit Place Office Park

Building 4

221 Garsfontein Road

Menlyn

0081

Attorneys

Tugendhaft Wapnick Banchetti and Partners

20th Floor

Sandton City Office Towers

5th Street

Sandton

2196

Bankers

Rand Merchant Bank

(a division of FirstRand Bank Limited)

1 Merchant Place

Corner Fredman Drive and Rivonia Road

Sandton

2196

Nedbank Limited

Corporate and Investment Banking Division

5th floor, F block

Nedbank 135 Rivonia Campus

135 Rivonia Road

Sandown

Sandton

2196

Sponsors

Deloitte & Touche Sponsor Services (Pty) Ltd

The Woodlands

20 Woodlands Drive

Woodmead

2196

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