DATATEC LIMITED - Interim management statement
30 July 2015 8:00
DTC 201507300002A
Interim management statement

Datatec Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1994/005004/06)
ISIN: ZAE000017745
Share Code: DTC
(“Datatec” or “the Group”)

Interim Management Statement

Datatec, ("Datatec" or the "Group", JSE and LSE: DTC), the international Information and
Communications Technology (ICT) group, is today publishing an Interim Management Statement
(IMS) covering the period from 1 March 2015 to 30 June 2015 ("the Reporting Period").


The Group has delivered good revenue growth of 18.2% for the Reporting Period compared to the
four months ended 30 June 2014 ("the Comparable Period"). Westcon continues to report excellent
revenue growth, particularly in North America. Logicalis also delivered revenue growth in relation to
the Comparable Period in a challenging market.

Gross margins have been lower across both divisions, notably in developed markets where product
sales have increased on the back of a number of large volume deals.

Growth in emerging markets has been affected by the sustained strength of the US Dollar. Group
operating margin improvement from increased revenues and cost containment initiatives has been
offset by restructuring expenditure and foreign exchange losses.

Jens Montanana, Chief Executive Officer said:

"We have continued to deliver sustainable revenue growth as a result of our
international scale and operational diversity.

“Westcon is contributing strongly to FY16 growth and continues to make progress in
improving operating efficiency although the division was impacted by foreign exchange

“Logicalis continues to adjust to changing market conditions and is addressing business
structures to improve its market positioning and operating efficiency.”


Westcon continues to experience strong revenue growth, especially in North America. Westcon has
reported revenue growth of 19.8% over the Comparative Period. However, gross margins were
lower due in part to the increased weighting of North America and volume increases, which were
above market growth rate trends.

From FY16 onwards, Westcon will disclose outbound freight as part of cost of sales rather than
operating costs as this matches the expense with corresponding revenues more accurately and
aligns with preferred IFRS classification. The effect of this is a reduction of approximately 0.8% and
0.6% in Westcon’s and Datatec’s gross margins respectively when compared to FY15. This
reclassification will have no effect on operating profit or operating margins.
Westcon will be implementing a restructuring of its Europe, Middle East and Africa (EMEA)
operations in the second half of FY16 aimed at delivering future improvements in operational
efficiency through the creation of a shared services function. The extent of the restructuring, as well
as its anticipated cost, is in the process of being finalised and will be communicated with the interim
results in October.

The imposition of capital controls at the end of 2014 in Angola, and the recent devaluation of the
Kwanza, has resulted in foreign exchange losses in that market. A series of actions have been
instituted to reduce the exposure and limit the losses. Total current assets in Angola at 30 June 2015
were $51 million.


Logicalis reported revenue growth of 14.7% (6.8% excluding the effect of acquisitions) over the
Comparable Period. Gross margins have come under pressure due to a small number of high volume
transactions, in particular in the United States, and lower services margins.

EBITDA increased strongly due to operating leverage in contrast with the lower performance in the
Comparable Period.

As highlighted in the FY15 results announcement, Logicalis UK is undergoing a reorganisation to
improve the business model and enhance operating margins and profitability. This is expected to
have an adverse impact on profitability in FY16. Other regions continue to be affected by the
strength of the US Dollar, particularly Latin America.

Yesterday, Logicalis conditionally agreed to acquire Advanced Technology Integration Group (ATIG),
a solution provider offering system integration and professional services to enterprise and
commercial customers across the Midwest region of the United States, for up to $42m. The
acquisition will consolidate Logicalis’ presence in the key Midwest region and present significant
cross-selling opportunities for its services offering.

Consulting Services

This division experienced a slow start to the year due partly to softer conditions in the UK and the
weaker Euro. The management team is taking action to improve performance in the second half of

Interim results and reporting

The Group expects to release its results for the six months ending 31 August 2015 on Wednesday 21
October 2015.

In FY16 Datatec will be implementing restructuring actions in its divisions as indicated above aimed
at improving operating efficiency and margins. Given the non-recurring nature thereof, Datatec will,
from FY16, disclose separately and exclude from underlying* EPS any restructuring costs incurred or
provided for which conform to the definition provided in IAS 37.

The financial information on which this statement is based has not been reviewed and reported on
by Datatec's external auditors.

* Excluding impairment of goodwill and intangible assets, profit or loss on sale of investments and
assets, amortisation of acquired intangible assets, unrealised foreign exchange movements,
acquisition related adjustments, fair value movements on acquisition-related financial instruments,
restructuring costs and the taxation effect on all of the aforementioned

30 July 2015

RAND MERCHANT BANK (A division of FirstRand Bank Limited)


Datatec Limited (
Jens Montanana – Chief Executive Officer                       +44 (0) 1753 797 118
Jurgens Myburgh – Chief Financial Officer                       +27 (0) 11 233 3301
Wilna de Villiers – Group Investor Relations Manager            +27 (0) 11 233 1013

Jefferies International Limited – Nominated Advisor and Broker
Nick Adams/Alex Collins                                        +44 (0) 20 7029 8000

finnCap – Broker
Andrew Stewart                                                 +44 (0) 20 7220 0500

Instinctif Partners
Adrian Duffield/Chantal Woolcock (UK)                          +44 (0) 20 7457 2020
Frederic Cornet/Pietman Roos (SA)                               +27 (0) 11 447 3030

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