Datatec Limited - Interim Management Statement

Datatec, the international Information and Communications Technology group, is today publishing an Interim Management Statement covering the period from 1 September 2009
to 31 December 2009.

Based on trading and profitability during the Period, as anticipated the second half of the current financial year is expected to be sequentially and comparatively better than the first half of the current financial year and the second half of the prior financial year.

The Group has now returned to revenue growth in all its divisions during the second half with the early signs of improvement seen at the end of the second quarter continuing into the second half of the current financial year. Overall gross margins have remained stable.

On 14 May 2009 the Group published a forecast for the financial year ending 28 February 2010 of revenues of between $3.7 billion and $4 billion, profit after tax of approximately $44 million, underlying earnings per share of approximately 29 US cents and earnings* and headline* earnings per share of approximately 23 US cents. Based on current exchange rates and trading conditions, all of these forecasts remain unchanged.

Jens Montanana, Chief Executive Officer said: "We are very pleased to see that all parts of the Group around the world are now showing revenue growth with Logicalis appearing to pass its inflection point at the end of 2009. Our cash generation remains strong and margins are steady. The inherent leverage in our business model is beginning to show through as the cost reductions initiated over a year ago provide a solid basis for capturing the benefits of any revenue growth".

Westcon and Westcon Emerging Markets
Westcon's strong financial performance during the first half of the current financial year continues to improve steadily. Third quarter revenues showed sequential growth over the first two quarters, with stable gross margins, EBITDA margins and improved profitability. Westcon is benefiting strongly from the high operational gearing that exists as a result of its significantly reduced cost base and improved operational efficiencies.

Trading in the Americas, particularly in the US, continued to improve over the first half of the current financial year, with conditions in Europe stable and the Asia Pacific region remaining strong.

Westcon Emerging Markets (Africa, Middle East and India) is continuing to trade well with an improved performance over the prior year. Westcon's strong working capital and operating cash flow management has continued.

Logicalis
Trading improved from the first half of the financial year, although the business continues to be affected by larger projects being delayed with the resultant impact on attached services. However, all operations appear to have recently passed an inflection point.

Particularly pleasing was a very strong performance in the UK in December on the back of the IBM year end and another solid performance in South America. Logicalis is typically a business that improves later in the economic cycle, in part due to the longer term nature of its customer contracts. Logicalis is expected to produce a better second half performance in the current financial year than the first half.

Consulting Services
Trading in the second half is expected to show a sequential improvement over the first half of the financial year, and operating profits have improved after a difficult start to the financial year. Telecommunications operators and service providers reduced discretionary spend significantly through much of 2009, resulting in lower strategy consulting revenues.

Acquisition of NetStar
The acquisition of NetStar Group Holding Limited for $19.8 millionin new Datatec shares, announced on 8 December 2009, is expected to complete shortly. This is expected to be an earnings enhancing acquisition of an established independent provider of network integration and managed services across the Asia-Pacific region, and brings with it an excellent reputation.

It establishes a sizeable presence for Logicalis across South East Asia, China and Australia and in one transaction provides:
- an ideal pan Asia-Pacific platform to develop the business by further acquisitions in the region and to roll-out new services in some of the world's most dynamic economies and markets;
- the ability to meet the growing requirement from many multinational customers to provide them with coverage across the region; and
- a presence in mainland China, the most significant developing market in the world.

The Group expects to release its preliminary results for the year ending 28 February 2010 on Thursday 13 May 2010.