Datatec - Trading update for the six months ended
2 October 2006 8:01
DTC
 DTC                                                                             
Datatec - Trading update for the six months ended 31 August 2006                
DATATEC LIMITED                                                                 
(Incorporated in the Republic of South Africa)                                  
(Registration number: 1994/005004/06)                                           
ISIN: ZAE000017745                                                              
Share Code: DTC                                                                 
("Datatec" or "the Group")                                                      
Trading update for the six months ended 31 August 2006                          
Datatec, the international Information and Communications Technology (ICT)      
group, announces its trading update for the six months ended 31 August          
2006. Datatec has also announced separately today its intention to seek a       
listing of its shares on AIM.                                                   
Trading during the first half of the year has been in line with                 
management"s expectations, with the Group delivering a good performance in      
terms of overall revenues and margins.                                          
Westcon has continued to make good progress with its European businesses,       
in particular, improving financial performance across all of its divisions.     
Westcon"s gross margin for the period was 8.2%, remaining constant with         
last year (excluding the benefit from non-recurring items last year).           
Operating costs have also remained tightly controlled. During the period,       
Westcon US acquired the distribution arm of Ronco Communications and            
Electronics (now renamed Ronco Distribution). The acquisition expanded          
Westcon"s core convergence expertise, specifically in the voice arena, and      
resulted in Nortel becoming Westcon"s second largest vendor by revenue          
after Cisco.                                                                    
Trading in Logicalis has also been in line with management"s expectations,      
with growth in all regions and a strong performance in the UK. Overall          
gross margin for the period remained relatively constant at approximately       
20.0% (2005: 20.1%), despite the increase in product-based business as a        
result of the strategic acquisitions made over the last 18 months.              
Operating costs have remained under tight control and there remains scope       
for further improvement, particularly in the US, as the benefits of scale       
are realised.                                                                   
During the period, Logicalis US acquired the US Southwest focused               
consulting business of Alliance Consulting Inc., and Computech Resources        
Inc., an IBM Premier Business Partner and solutions business.  Logicalis        
also acquired an equity interest in a small German ICT services                 
organisation called re:solution, and announced plans to establish offices       
in Chile and Peru, to extend the Group"s presence in South America.             
Analysys Mason has made good progress during the period, with the impact of     
the completion of the Vodafone contract offset by a strong performance by       
its strategy consulting business.  The EBITDA margin for the period was         
10.5% (2005: 10.9%). Opportunities remain to broaden and deepen both the        
service offering and the geographic footprint, as well as improve               
productivity and operational synergies from the integrated businesses.          
The Group"s net working capital at the period end increased to                  
approximately US$259.7 million (FY06: US$196.9 million), with a significant     
proportion of this increase resulting from the investment in working            
capital in newly acquired businesses. The Group"s net cash position (after      
taking into account long term liabilities) at the period end was US$80.7        
million (FY06: US$129.4 million).                                               
The Directors remain confident about the Group"s prospects for the              
remainder of the financial year and encouraged by the continued development     
of the operations and management of the Group"s businesses. Extracting          
further operating efficiencies from recent and planned acquisitions remains     
an important driver in the performance expectations of both Westcon and         
Logicalis.                                                                      
Datatec"s interim financial results for the six months ended 31 August 2006     
are expected to be released on 1 November 2006.                                 
The financial information in this trading update has not been reviewed and      
reported on by Datatec"s auditors.                                              
For further information, please contact:                                        
Datatec Limited (www.datatec.co.za)                                             
Jens Montanana, Group Chief         + 44 (0) 1753 797 118                      
 Executive                                                                      
 David Pfaff, Group Finance          + 44 (0) 1753 797 118                      
 Director                                                                       
Wilna de Villiers, Group            +27 (0) 11 233 1013                        
 Marketing Manager                                                              
Metier                                                                          
    Paul Botha/Greg von Holdt,       +27 (0) 11 268 4000                        
Metier Advisory                                                                 
College Hill (UK press)                                                         
 Adrian Duffield/Corinna Dorward     +  44 (0) 20 7457 2020                     
Fleishman-Hillard (SA press)                                                    
Michelle de Pons/Lucien Vallun      + 27 (0) 11 548 2000                       
Sandton                                                                         
2 October 2006                                                                  
Sponsor                                                                         
RAND MERCHANT BANK (A division of FirstRand Bank Limited)                       
Date: 02/10/2006 08:01:06 AM Produced by the JSE SENS Department