| Thu 15 Mar 2001, 0:00 | | Datatec - Shareholder Update |
|
DATATEC LIMITED
(Registration number 1994/005004/06)
("Datatec")
SHAREHOLDER UPDATE
Datatec wishes to inform its shareholders of the following matters relating to
its operations:
1. Review of operations
The restructuring of the Logical Group will be completed by 31 March 2001. The
restructuring programme comprised: exiting the low margin desktop PC business;
exiting certain other non-core business areas and merging similar businesses in
common geographical regions. In line with the Logical Group restructuring,
Logical South Africa (Pty) Ltd, the Microsoft services and solutions business,
has been disposed of by way of a management buy out.
The restructuring now positions the Logical Group in the higher margin
professional services and network integration business, providing consulting
and integration services in networking, Internet and e-business technologies.
As previously communicated to shareholders, as a consequence of the
restructuring programme the contribution of the Logical Group to Datatec's
profits for the current financial year is anticipated to be below that achieved
in the previous financial year.
Shareholders are referred to Siltek Limited's ("Siltek") published results for
the six months ended 31 December 2000 and are advised that Datatec's 23% stake
in Siltek will result in an equity accounted loss of 10.9 cents per share from
Siltek for the current financial year. This compares with an equity accounted
profit from Siltek of 8.3 cents per share in the previous financial year.
Trading and profitability in Datatec's other major divisions remain in line
with Datatec's expectations.
2. Westcon
In light of weak capital market conditions, the timetable for the initial
public offering ("IPO") of Westcon Group, Inc. ("Westcon") on NASDAQ has been
revised. This will allow for the inclusion in the S-1 Registration Statement
of the audited financial results of Westcon for the year ended 28 February 2001
As a consequence of the rules of the Securities Exchange Commission in the
United States of America, and to comply with the requirements of fair
disclosure of information to shareholders and third parties, Datatec has
decided to change the basis of consolidating Westcon. With effect from 31
March 2001, Datatec will consolidate Westcon's financial results to 28 February
of each year, i.e. to Westcon's financial year-end. The impact of this change
in accounting treatment, had it been applied to Datatec's financial year ended
31 March 2000, would have been a reduction in reported headline earnings per
share excluding restructuring costs from 351.6 cents per share to 325.8 cents
per share.
This change in accounting treatment will form the basis of the comparative
numbers that will be shown on a pro-forma basis when Datatec releases its
results for the year ending 31 March 2001, on or around 23 May 2001.
To take account of the factors noted above relating to Logical Group, Siltek
and Westcon, shareholders are accordingly advised to revise their forecasts of
headline earnings per share for the financial year ending 31 March 2001.
3. Mason
JP Morgan Chase has recently been appointed as advisors to Datatec and the
Mason Communications Limited ("Mason") to advise on alternatives to realise
value, including an independent IPO of Mason in the United Kingdom.
4. Share Buy Back
The shareholders recently granted authority to the Board of Directors by way of
a special resolution to buy back shares in Datatec. The Board of Directors is
considering exercising this authority, which would result in a buy back of
shares.
5. Directors
DRL Jones and R Michalowski, both non-executive directors, have resigned from
the Datatec Board with effect from 9 March 2001.
JS James, currently Group Finance Director of Datatec, has been appointed Chief
Operating Officer of Logical Australia with effect from 2 April 2001. RS
Rindel, currently Group Commercial Director of Datatec will take over
responsibility as Group Finance Director with effect from 2 April 2001. JS
James will remain on the Datatec Board.
Sandton
15 March 2001
PRIVATE AND CONFIDENTIAL
FOR DATATEC BOARD MEMBERS AND PROFESSIONAL ADVISORS ONLY
