At the start of the 2009 financial year we once again set ourselves some challenging goals and objectives. We are pleased to report that our team has executed against our strategic vision and would like to share with you the results of our efforts as well as provide some insight into our future growth strategy.

FINANCIAL
We achieved revenues of R2.082 billion and slightly lower operating profit of R132 million. We generated R185 million in cash from operations and ended the year with R92 million in cash on the Balance Sheet. Our profit for the year has been materially affected by an increased amortisation charge, higher professional fees, a large bad debt write-off and the impairment of inventory. Although our operating results have not met our expectations they are a fair reflection of our performance in a difficult trading environment.

We are very focused on improving our financial performance going forward and in this regard have terminated certain low margin business and have placed increased emphasis on improving our gross profit margins across the board and managing our fixed cost infrastructure.

PRODUCTS
This year was remarkable for the level of innovation within Vox. We launched Fishbone, our world-class line bonding solution that has rapidly emerged as the gold standard in South Africa. We have over 200 implementations within a 6-month period which is unparalleled in our history. In addition, we launched our mid-market video conferencing solution, Eyeris, in partnership with our technology partner Imago. With travel costs impacting on South African business, this solution is starting to experience good customer acceptance. In addition, we branded our telco voice solution Cristal Vox, which is the result of four years of work in the voice sector. This product will be central to our future as we focus on the voice revenue opportunity available as the market is further liberalised with the implementation of local number portability. We recognise that to compete in a highly commoditised telecommunications environment we will have to continue to innovate with differentiated branded products that are superior to our competitors.

CONSUMER
Our consumer ISP division, @lantic, had a difficult year and churned 14,000 customers. However, despite a difficult economic environment @lantic managed to increase revenues by 18% to R199 million. In addition, @lantic managed to increase ARPU from approximately R99 as at the end of 2008 to R135, as a result of upgrading acquired customers and offering new products and services including Vox Telepreneur and Cristal Vox. @lantic will be highly focused on growing ARPU across the entire customer base in the forthcoming financial year by offering new products and upgrading customers. @lantic remains the third largest consumer ISP in South Africa with over 136,000 customers and a market share of 16%.

VOICE
Vox Orion, our corporate voice division experienced a small decline in revenues to R1.3 billion across 7,600 customers. The negative growth was largely as a result of the termination of lower margin business that was acquired through prior acquisitions as well as increased competition. The Vox group now has interconnect arrangements with all the incumbent fixed line and cellular operators, which enable us to offer a full range of voice services for inbound and outbound calls using our own number ranges as well as geographic numbers. Our investment in our voice network has started to pay off and Vox Telecom now generates the majority of alternative voice traffic with the cellular operators and is also the major aggregator of traffic on behalf of other VANS.

We continue to see strong month-on-month growth and believe that our investment in this infrastructure gives us a competitive advantage in a deregulating environment. Vox Orion today is a leader in supplying managed voice services to corporate South Africa and services over 60% of the top 200, JSE listed companies as well as four provincial governments and over 50 municipalities. Since inception Vox Orion has saved government and corporate South Africa over R4.1 billion through the implementation of cellular least cost routing (LCR).

With the phased reduction in wholesale mobile termination rates over the next two to three years this business model is under threat. Although there will always be arbitrage opportunities in the market the actual saving achieved through traditional cellular least cost routing will diminish over time thus reducing the economic incentive for customers to utilise this offering. All LCR players in the market will need to innovate to ensure their survival. Vox Orion has been preparing for this eventuality and with the launch of Cristal Vox, our carrier-class voice solution, as well as the availability of our own upgraded voice network, we will transition our cellular LCR business over to this network. Of great significance, however, is the potential to manage all of the voice business of our corporate customers not just the outbound cellular voice calls. This represents the single greatest opportunity for Vox Telecom to address and the entire group is focused on this objective. This opportunity will be accelerated through the implementation of Local Number Portability and we are hopeful that this will become a reality over the next calendar year.

DATA
Vox Datapro, our corporate data division further consolidated its position in the data market growing overall revenues in this segment 57% to R413 million across 7,800 customers. Of significance during the fiscal year is the fact that the Average Revenue Per User (ARPU) of Vox Datapro customers increased by 33%. In line with global trends, we expect to continue to see significant growth in the data market segment and will continue to focus on increasing ARPU across our corporate customer base as well as driving further growth from new customers as the demand for bandwidth continues unabated.

VOX TELEPRENEUR
We have always been known for innovation in the South African market and in February 2008 we launched a consumer voice offering under the Vox Telepreneur brand. Since our launch we have signed on over 4,000 dealers and acquired over 11,000 customers with an ARPU of R272, the fastest growing startup in our history.

For the first time in the South African telecommunications market consumers receive rebates for incoming calls on our own number ranges. We expect to see strong growth in this market segment and we will continue to challenge the status quo in this segment of our business offering.

FAX
Vox Amvia, the leading supplier of corporate faxing solutions to the South African market performed below expectations for the fiscal year mainly as a result of slower CAPEX spending by large corporate customers. Vox Amvia resells RightFax, which is developed and marketed by Captaris, a US-based company that has now been acquired by Open Text. Amviarepresents a significant opportunity with respect to the disintermediation of fax traffic. We are marketing the Amvia products directly and through our voice and data division and have high expectations for this business over the next few years.

CUSTOMERS
Over 16,000 corporate customers and 145,000 consumers trust us as their supplier of a critical service. It has taken us 12 years to achieve our current level of customer penetration and we understand the time and effort it involves to build relationships and demonstrate delivery and performance on a consistent basis. We pride ourselves on the fact that we think differently and are prepared to challenge the status quo as evidenced by new offerings such as Cristal Vox, Fishbone and Eyeris. Our customers expect outstanding execution, great customer service and continuous innovation. As we operate in a more challenging economic environment we recognise our responsibility to work with our customers to add value and help them become more competitive and reduce costs.

PEOPLE
As a result of organic growth, we now have 783 employees within the Vox Telecom Group. We would like to acknowledge everyone’s contribution to the growth and success of Vox Telecom. We will continue to provide outstanding career opportunities to motivated, talented and committed people who share our vision and appreciate a challenging and exciting working environment.

OUTLOOK
On balance we have generated solid operating results during fiscal 2009. With further liberalisation of the South African telecoms market over the next few years we believe Vox will have an unprecedented opportunity to provide an alternative solution to corporate customers and consumers alike.

We are focused on leveraging the voice and data assets that we have developed over the last 12 years and managing a sustainable business model that generates consistent organic growth and creates shareholder value. We would like to thank all our employees for their dedication and hard work, our customers for their loyalty and our shareholders for their support during a challenging year. We look forward to reporting on our progress again in next year’s Annual Report.