Interim Management Statement

Datatec, ("Datatec" or the "Group", JSE and LSE: DTC), the international Information and Communications Technology (ICT) group, is today publishing an IMS (Interim Management Statement) covering the period from 1 March 2010 to 30 June 2010 ("the Period").  

Group

Trading and profitability are continuing to improve in all of the Group's divisions.  Revenues and operating profits in the Period have improved in comparison with the four months ended 30 June 2009 ("the Comparative Period"). This is driven in particular by the continuing recovery in the US, stable conditions in Europe and resilient performance in Asia. Brazil remains the most promising of the major emerging economies in which the Group operates.

Overall gross margins have remained stable and the Group continues to benefit from operational gearing. Operating costs remain tightly controlled and the Group remains vigilant to any interruption in the overall global economic recovery.

On 13 May 2010 the Group published a forecast for the financial year ending 28 February 2011 of revenues of between $4.1 billion and $4.4 billion, profit after tax** of approximately $58 million, underlying* earnings per share of approximately 35 US cents and earnings** and headline earnings** per share of approximately 30 US cents. Based on current exchange rates and trading conditions, these forecasts remain unchanged.

Jens Montanana, Chief Executive Officer said:

"We are delighted to report that the improvement in trading and profitability reported at our recent full year results has continued in all of the Group's divisions. We remain cautiously optimistic for the year, in line with our previously published forecasts."

Westcon and Westcon Emerging Markets

Westcon's solid financial performance during the previous financial year is continuing, with trading in all regions showing an improvement over the Comparative Period. Trading increased in North America, Europe and Asia Pacific, while trading in Latin America was particularly strong. Westcon produced its fourth consecutive quarter of revenue growth during the first quarter of the current financial year. Gross margins remain in line with historical trading norms.

Westcon Emerging Markets (Africa, Middle East and India) is continuing to trade well with an improved performance over the Comparative Period.

Supply constraints, existing at the previous financial year end, have eased and product lead times are improving.

As anticipated, extended credit terms from suppliers during the previous financial year have now been reduced to normal levels, resulting in a consumption of working capital.  Separately, Westcon is looking at earnings enhancing re-financing activities by taking advantage of vendor supplier prompt pay arrangements. These activities will reduce Westcon's net cash position over time.

Logicalis

The steadily improving performance of Logicalis from the end of the previous financial year continued during the Period with revenues, gross and operating margins all improving  relative to the Comparative Period.  In particular, profitability in the US has improved, on the back of continued recovery and an overall increase in the proportion of services in the revenue mix. Demand in South America has strengthened and Asia Pacific is performing strongly. The UK is performing satisfactorily, although the long term impact of government austerity measures in the UK is unclear.

Consulting Services

Trading and profitability have improved over the Comparative Period, with an encouraging performance from Analysys Mason and an increased order backlog from the Intact business. Asia is delivering the best relative performance in this division.

Interim results

The Group expects to release its interim results for the six months ending 31 August 2010 on Wednesday 13 October 2010.

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

* Underlying earnings per share excludes goodwill and intangibles impairment, amortisation of acquired intangible assets, profit or loss on sale of assets and businesses, fair value movements on acquisition related financial instruments and unrealised foreign exchange movements.  


** Forecasts for profit after tax, earnings per share and headline earnings per share do not take into account any fair value gains or losses on acquisition related financial instruments, which are required under IFRS.