Commentary

Datatec is an international ICT solutions and services group operating in more than 50 countries across North America, Latin America, Europe, Africa, Middle East and Asia-Pacific. The Group's service offering spans the integration and managed services, technology distribution and management consulting sectors of the ICT market.

Datatec operates two main divisions:

• Logicalis: ICT infrastructure solutions and services; and
• Westcon International: Technology distribution of security and networking products.

The specialist activities of Management Consulting and Datatec Financial Services are included with the corporate head office functions in the "Corporate, Management Consulting and Financial Services" segment of the Group.

Datatec's strategy is to improve shareholder returns over the medium term through a combination of corporate and business development actions aimed at enhancing the competitiveness and profitability of its subsidiaries and operating divisions.

The Group achieved a solid operational performance in the year ended 28 February 2021 ("FY21") with all divisions showing resilient trading with strong operating cash flows and significantly enhanced liquidity. This was achieved despite the challenging socio-economic environment resulting from the declaration of Covid-19 as a pandemic by the World Health Organization ("WHO") on 11 March 2020, at the start of FY21.

The multi-year investments in Westcon International's advanced systems and business automation enabled business continuity plans to be deployed effectively with almost the entire workforce switching to remote working. Most of Logicalis' global workforce was also able to work remotely, limiting operational disruptions during lockdown periods.

Although some delays and supply disruptions were experienced, especially in countries with highly restrictive lockdowns, the business operations coped very well and performed ahead of the expectations set at the start of the year.

Datatec's divisions are focusing on the products and services required to support the digitisation trend prevailing in the industry, which has been driven faster by the demand for remote IT networking during the pandemic. This trend has already seen a repositioning of our business away from many forms of traditional hardware to software and services with growing annuity revenue.

Group revenue was US$4.1 billion in FY21, down by 2.5% on the US$4.2 billion^ restated revenue recorded in the financial year ended 29 February 2020 ("the Comparable Period" or "FY20"). In constant currency*** terms, Group revenue decreased by 0.7%.

^FY20 revenue restatement

During the year, the volumes of software, software services and cloud computing solutions, which include Infrastructure as a Service ("IaaS") and Software as a Service ("SaaS") sold by Datatec, have grown in significance. As a result, the Group revisited the revenue recognition for these arrangements leading to the decision to restate its consolidated statement of comprehensive income, reflecting a decrease in revenue and a corresponding decrease in cost of goods sold in the previous financial year. There was no impact on gross profit or items below gross profit and hence, there was no impact on earnings or earnings per share.

The amount of the restatement for FY20 is shown in the table below.

FY20		Before  re-  statement	After  re-  statement	Total  re-  statement
Revenue (US$ million)		4 304.8	4 214.4	(90.4)
Cost of sales (US$ million)		(3 563.2)	(3 472.8)	90.4
Gross profit (US$ million)		741.6	741.6	–
Gross margin (%)		17.2	17.6	0.4

The Group's vendors continuously change the way in which they bring their products and services to market and there is a significant amount of judgement involved in determining whether or not the Group acts as an agent or principal with regards to these arrangements. In its reassessment, the Group concluded that in those arrangements where the software service is delivered remotely entirely by the vendor, or where the updates and cloud access are critical to the effectiveness of the solution and there is no material "on-premise" component to the solution, the Group will recognise revenue at the time of invoice on a net basis as the Group is acting as an agent in the transaction. The restated consolidated statement of comprehensive income reflects only the fees earned, for acting as an agent in these arrangements, as revenue.

Note that despite the revenue being disclosed on a net basis, the Group has a contractual right to the gross amount of cash related to the gross revenue and therefore, for any amounts remaining unpaid at the period end, the Group continues to present these amounts as gross trade receivables in the consolidated statement of financial position. The restatement has no impact on the consolidated statement of financial position or consolidated statement of cash flows.

The impact of the revenue restatement on the first half of FY21 ("H1 FY21") was as follows:

H1 FY21		Before  re-  statement	After  re-  statement	Total  re-  statement
Revenue (US$ million)		2 031.2	1 962.9	(68.3)
Cost of sales (US$ million)		(1 707.0)	(1 638.7)	68.3
Gross profit (US$ million)		324.2	324.2	–
Gross margin (%)		16.0	16.5	0.5

Of the US$68.3 million H1 FY21 restatement, US$61.2 million related to Westcon International and US$7.1 million to Logicalis.

EBITDA for FY21 was US$118.6 million (FY20: US$158.7 million). Adjusted EBITDA** excluding restructuring costs was US$141.0 million (FY20: US$158.7 million, as there were no restructuring costs in FY20).

Restructuring costs of US$22.4 million relate to fundamental reorganisations and restructuring as a result of Covid-19, which is considered fundamental in nature and would not otherwise have been incurred. US$5.9 million of restructuring costs were incurred in the first half of FY21, with US$16.5 million being incurred in the second half as the Covid-19 pandemic intensified. The restructuring had the greatest impact on the Logicalis business, Datatec's most people-intensive division.

The EBITDA in FY20 included a tax credit in Logicalis Brazil of approximately US$14 million relating to certain overpaid indirect taxes. FY20 interest income included US$7.5 million regarding these overpaid taxes ("The Tax Credit").

Underlying* earnings per share ("UEPS") were 13.6 US cents in FY21 compared to UEPS of 9.9 US cents for FY20 (which also reflected the impact of The Tax Credit in Brazil).

The Group ended FY21 with enhanced liquidity and the Group statement of financial position remains strong with much reduced net debt at 28 February 2021 of US$60.9 million compared to US$139.9 million at 29 February 2020. Excluding lease liabilities, net cash was US$53.4 million (FY20: net debt US$10.4 million).

Logicalis

Logicalis is the largest contributor to the Group in terms of profitability. The division also has the widest geographical exposure and Datatec intends to continue to develop and grow Logicalis globally, both organically and through acquisitions.

Logicalis revenue reduced by 13.8% to US$1.45 billion compared to US$1.68 billion^ restated revenue for FY20. In constant currency***, Logicalis revenue reduced by 7.8%. Revenue increased in Europe but declined in other regions, with Latin America particularly impacted by adverse currency translation. Operating costs were lower than in the Comparable Period. Adjusted** EBITDA was US$96.1 million compared to US$123.9 million in FY20, which included the impact of The Tax Credit in Brazil.

Even though global trading uncertainties are expected to persist for the short to medium term, Logicalis is confident in its ability to continue to respond to market needs caused by Covid-19 disruptions. The technology segments that Logicalis specialises in are key parts of cloud infrastructure and the remote access computing solutions necessary for enterprises to adjust.

Westcon International

Westcon International revenue increased by 4.6% to US$2.6 billion (FY20: US$2.5 billion^ restated revenue) on strong demand for networked cloud computing, remote access solutions for mobile working and virtual office environments, unified communications and enhanced network security. In constant currency*** terms, revenue improved by 3.5%. Adjusted** EBITDA was US$52.5 million (FY20: US$40.0 million).

Westcon International remains focused on profitability by driving business improvement through revenue growth and margin expansion supported by cost controls. While several macro-economic risks exist, the FY21 results highlight Westcon International's ability to respond effectively to challenging circumstances.

In June 2020, Datatec strengthened Westcon International's standalone statement of financial position by converting US$80 million of intercompany loans to equity in order to enable the division to obtain improved commercial terms. Prior to this capitalisation, Westcon International was 90% owned by Datatec following the sale of Westcon Americas to SYNNEX Corporation ("SYNNEX"), which held the other 10% of Westcon International. After the capitalisation, Datatec (via Datatec PLC, an intermediate holding company), increased its shareholding in Westcon International to 92.1% and the minority interest of SYNNEX decreased to 7.9%.

Westcon International completed two significant refinancing arrangements during FY21:

• A two-year US$80 million new receivables securitisation facility for its Asia-Pacific subsidiaries ("Westcon APAC").
• A three-year EUR275 million new invoice assignment facility for its European subsidiaries ("Westcon Europe").

These new facilities considerably enhance Westcon International's liquidity.

While the Covid-19 pandemic continues to cause unpredictable business disruptions, economic uncertainty and currency volatility, the Group's divisions are in a strong position with a solid order book related to remote working, cloud access and fixed or mobile secured networking.

The trend towards digitisation is set to continue and the structural shift away from many forms of traditional hardware to increasing software and services with growing annuity revenue is already benefiting our divisions as they provide many of the products and services required to support a remote IT networked-based way of doing business. The trends experienced during FY21 have continued into FY22.

Operationally, the Group continues to reap the benefits of the investments in business automation and the technology systems rolled out over the past few years.

The improved liquidity following the refinancing of the major subsidiaries of Westcon International on more favourable terms during FY21 will provide greater flexibility and reduce interest expense going forward.

The global semiconductor shortage due to Covid-19-related constraints is impacting all technology participants across the entire value chain and Datatec continues to monitor and mitigate the impact on availability and costs where possible.

Dividend policy

The Group's policy is to maintain a fixed three times cover relative to underlying* earnings when declaring ordinary dividends.

The Board declared a cash dividend with a scrip alternative of 100 South African cents per share (approximately 7.1 US cents per share), which is in excess of the amount determined under the policy. This decision was informed by the strength of the balance sheet and enhanced liquidity in the Group, positive operating profitability across all divisions of the Group and the cautiously optimistic trading outlook for the Group.

All divisions delivered solid performances as falling operating costs offset the effect of lower gross profits due to a change in revenue mix that saw an increased contribution from the distribution segment, which has lower margins. Overall revenue was broadly flat with good growth in Westcon International balancing a decline in Logicalis.

Emerging markets such as Brazil, Argentina, Chile, Mexico, Indonesia and South Africa were impacted by local currency weakness in FY21 which reduced their dollar-reported contribution to the results.

Overall operating costs (including FY21 restructuring costs of US$22.4 million) were US$571.9 million (FY20: US$582.9 million). Restructuring costs include costs relating to fundamental reorganisations and Covid-19-related restructuring. Any restructuring as a result of Covid-19 is considered fundamental in nature and would not otherwise have been incurred.

EBITDA was US$118.6 million (FY20: US$158.7 million including The Tax Credit of approximately US$14.0 million) and included US$7.9 million of foreign exchange losses
(FY20: US$1.7 million). EBITDA margin was 2.9% (FY20: 3.8% restated). Excluding restructuring costs, adjusted ** EBITDA was US$141.0 million (no restructuring costs in FY20) and adjusted** EBITDA margin was 3.4% (FY20: 3.8% restated).

Foreign exchange losses consisted of unrealised foreign exchange losses of US$0.3 million (FY20: US$1.2 million) and realised foreign exchange losses of US$7.6 million
(FY20: US$0.5 million). Unrealised foreign exchange differences are excluded from UEPS.

Depreciation and amortisation decreased to US$68.6 million (FY20: US$76.1 million) and operating profit was US$50.0 million (FY20: US$82.6 million).

The net interest charge decreased slightly to US$25.7 million (FY20: US$25.9 million). The FY20 charge was mitigated by US$7.5 million interest income recognised by Logicalis Brazil in FY20 pursuant to The Tax Credit, so the underlying decrease was notably more as the new finance facilities took effect and net debt reduced.

Profit before tax was US$25.2 million (FY20: US$58.5 million).

A tax charge of US$19.5 million has arisen on profits of US$25.2 million. The effective tax rate of 77.4% continues to be adversely affected by losses arising in Westcon International's Asia and South African operations for which no deferred tax assets have been recognised and its UK operation for which deferred tax assets are only partially recognised at a low rate of tax credit. In addition, Logicalis has incurred taxation arising from the reorganisation of its Latin American holding structure, which saw FY21's mix of profits move towards higher taxed jurisdictions. As at 28 February 2021, there are estimated tax loss carry forwards of US$240.5 million, with an estimated future tax benefit of US$52.6 million, of which only US$24.8 million has been recognised as a deferred tax asset. The Group expects a much lower effective tax rate from FY22 onwards, as Westcon International continues to become more profitable with an improved mix of profits across the Group.

UEPS were 13.6 US cents (FY20: 9.9 US cents). Headline earnings per share were 1.8 US cents (FY20: 5.9 US cents). Earnings per share were 1.3 US cents (FY20: 6.8 US cents from continuing and discontinued operations). The FY20 earnings metrics all reflect the impact of The Tax Credit.

Cash

The Group generated US$234.4 million of cash from operations during FY21 (FY20: US$215.6 million) and ended the period with a net debt of US$60.9 million
(FY20: US$139.9 million). Excluding lease liabilities, net cash would have been US$53.4 million (FY20: net debt US$10.4 million). The net debt has been calculated as: cash resources of US$488.6 million (FY20: US$347.2 million), bank overdrafts of US$131.4 million (FY20: US$263.8 million); short-term borrowings and current portion of long-term debt of US$297.9 million (FY20: US$109.5 million); and long-term debt of US$120.2 million (FY20: US$113.8 million). During the second half of FY21, Westcon International replaced its previous European invoice financing facility with a new invoice assignment facility. The new invoice assignment facility is accounted for as short-term debt compared to the previous facility which was accounted for as part of bank overdrafts.

The Group restated its FY20 statement of cash flows to exclude certain bank overdrafts from cash and cash equivalents. Bank overdrafts that are repayable on demand under certain circumstances, but not unconditionally repayable on demand, have now been excluded from cash and cash equivalents and cash flows associated with these bank overdrafts are now shown as cash flows from financing activities. The restatement relates to banking arrangements that form an integral part of the Group's cash management. This restatement did not impact the balance sheet or the net cash/debt for the Group or its subsidiaries.

Acquisitions

Effective 1 April 2020, Analysys Mason acquired 100% of the shares in Allolio&Konrad for US$7.8 million. The consideration paid included US$6.7 million to settle debt of Allolio&Konrad with the seller. Allolio&Konrad is a consultancy based in Bonn, Germany with an excellent track record in the telecommunications industry and long-term client relationships with Europe's leading telecom operators. The acquisition accounting has been finalised at the reporting date. Acquisition-related costs of US$0.3 million have been incurred.

Effective 4 November 2020, Logicalis Asia acquired 65% of the shares in iZeno Private Limited ("iZeno") for a cash consideration of US$8.2 million. A specialist in Digital Transformation solutions based in Singapore, iZeno has additional operations in Malaysia, Indonesia and Thailand. Acquisition-related costs of US$0.2 million have been incurred.

As a result of the two acquisitions referred to above, goodwill and other intangible assets increased by US$9.5 million and US$7.6 million respectively. The fair value assessment of assets and liabilities acquired and the amounts recognised as goodwill and intangible assets have been finalised at year end. None of the goodwill recognised is expected to be deductible for income tax purposes. The revenue and EBITDA included from these acquisitions in FY21 were US$16.4 million and US$4.1 million respectively; profit after tax included from these acquisitions was US$2.2 million. Had the acquisition date been 1 March 2020, the revenue and EBITDA would have been approximately US$25.7 million and US$5.9 million respectively. Profit after tax for the full year would have been approximately US$3.5 million.

Effective 31 July 2020, PromonLogicalis Latin America Limited ("PLLAL"), a 65% owned subsidiary of the Group, acquired 30% of the shares in Cirrus Participações S.A. ("Kumulus") for US$1.2 million. There is a put and call option for PLLAL to acquire an additional interest of 20.1% in Kumulus US$1.2 million which PLLAL exercised in March 2021. The Kumulus FY21 results have been equity accounted for in the Group's results.

On 30 September 2020, Logicalis acquired the outstanding minority stake of 49% in NubeliU Limited for US$0.6 million. NubeliU subsequently became a 100% subsidiary of PLLAL.

Liquidity and borrowing facilities

The Group continues to actively assess the outlook for liquidity in its divisions to ensure that sufficient cash will continue to be generated to settle liabilities as they fall due.

In February 2020, Logicalis completed a new three-year US$155 million banking facility for its subsidiaries. This senior facility covers Logicalis' operations throughout the world, excluding Latin America, which has its own separate uncommitted credit facilities. The facility is used to fund working capital requirements and also includes a new acquisition credit line. In addition, the Latin American credit facilities are considered adequate in the current environment.

In August 2020, Westcon Europe entered into a EUR275 million new invoice assignment facility with a European banking syndicate, led by Crédit Agricole Leasing & Factoring ("CAL&F"). This invoice assignment facility replaced Westcon Europe's previous invoice financing facility of US$224 million with effect from 1 October 2020. The new committed facility is for an initial period of three years. It will be used to fund Westcon Europe's working capital requirements and will bear interest at a much reduced rate compared to the previous facility. The CAL&F facility replaced the previous syndicated invoice finance facility led by HSBC ("HIF facility"). The HIF facility was disclosed under bank overdrafts in the statement of financial position. Due to the different nature of the CAL&F facility, it is disclosed under short-term interest-bearing liabilities in the statement of financial position. Both facilities form part of the net cash/debt of the business.

Westcon APAC also entered into a two-year US$80 million new receivables securitisation facility with Westpac Banking Corporation, replacing Westcon APAC's previous financing facilities in Australia, New Zealand and Singapore. This provides an incremental US$25 million working capital facility at improved interest rates for Westcon APAC, compared to its previous uncommitted facilities. This became effective on 25 September 2020.

The Group has performed covenant projections for the next 12 months to confirm that banking covenants are likely to be met.

The new financing facilities, as well as the very strong operating cash flow generated during FY21, have significantly improved the Group's liquidity position, despite the Covid-19 pandemic.

Foreign exchange translation

Losses of US$6.4 million (FY20: US$38.2 million) arising on translation to presentation currency are included in total comprehensive loss of US$1.3 million (FY20: US$8.1 million). The majority of these losses arise from the weakening in the Brazilian Real/US$ exchange rate from 4.47 at 29 February 2020 to 5.60 at 28 February 2021.

Logicalis

Logicalis accounted for 35% of the Group's revenue (FY20: 40%).

Logicalis is an international multi-skilled solution provider of digital enablement services, helping customers harness digital technology and innovative services to deliver powerful business outcomes.

Revenue from operations decreased by 13.8% to US$1.4 billion (FY20: US$1.7 billion^ restated revenue). However, expressed in constant currency terms, Logicalis' revenue decreased by only 7.8% in FY21 compared to FY20. Revenue contribution by geography is shown below:

Revenue increased in Europe in absolute terms due to large contracts secured in the Spanish and German operations and contributions from the Cilnet and Orange Networks acquisitions completed during FY20. The decrease elsewhere was attributable to the difficult trading conditions caused by the Covid-19 pandemic, as well as worsening exchange rates in many regions, which exacerbated the decline in revenue in US$ terms.

Logicalis' gross margin was 25.4% (FY20: 26.2%). Underlying gross margin percentage remained solid with the headline decrease being caused by The Tax Credit in FY20. Gross profit was down 16.7% to US$367.5 million (FY20: US$441.2 million).

Logicalis' gross profit contribution by geography is shown below:

Operating costs decreased to US$285.6 million (FY20: US$317.3 million). The FY21 results include US$14.2 million of restructuring costs necessary to adjust the business for the current environment.

EBITDA was US$81.9 million (FY20: US$123.9 million including The Tax Credit), with a corresponding EBITDA margin of 5.7% (FY20: 7.4% restated). Adjusted** EBITDA, excluding the restructuring costs, was US$96.1 million with an adjusted** EBITDA margin of 6.6% (FY20: 7.4% restated). Operating profit was US$40.3 million (FY20: US$72.3 million).

Argentina continued as a hyperinflation economy during FY21, although the impact on the Group results was not material.

The net interest charge increased by US$1.5 million, reflecting the effect of interest receivable of US$7.5 million on The Tax Credit in FY20.

Net debt of US$123.4 million (FY20: US$156.7 million) consisted of: cash resources of US$154.4 million (FY20: US$144.2 million); bank overdrafts of US$126.5 million (FY20: US$131.6 million); short-term borrowings and current portion of long-term debt of US$69.4 million (FY20: US$100.8 million); and long-term debt of US$81.9 million (FY20: US$68.5 million). The decrease in net debt compared to FY20 was driven primarily by working capital improvements.

Logicalis continues to have a contingent liability in respect of a possible tax liability at its subsidiary in Brazil.

On 31 July 2020, Logicalis acquired a minority stake in Brazil-based Cirrus Participações S.A., which trades under the Kumulus brand. Kumulus is focused on delivering high value, impactful services and solutions to its customers' businesses, through cloud and data solutions. Logicalis exercised a call option to purchase a further minority stake in March 2021.

The increased investment in NubeliU from 51% to 100%, will allow for the integration of NubeliU as a 100% subsidiary of PLLAL.

Logicalis Group purchased a 65% interest in iZeno Group in November 2020, a company specialising in digital transformation, application modernisation, DevOps, customer experience and hybrid cloud solutions. Headquartered in Singapore with additional operations in Malaysia, Indonesia, and Thailand, iZeno holds a leading presence in the region. With this investment, Logicalis strengthens its ability to offer differentiated, high impact solutions and accelerates its vision to be the preferred digital transformation enabler for its customers.

After the balance sheet date, Logicalis acquired a 70% stake in Áudea on 31 March 2021, a Spanish company which specialises in cyber security and regulatory compliance. This investment reinforces Logicalis' ability to offer a comprehensive service to customers looking to secure their critical data.

Logicalis continues to develop its capabilities within cloud, IoT, software, security, data management and intelligent networks in support of its strategy to provide full life-cycle services around IT infrastructure solutions to its customers.

Each region has delivered compelling offers to customers and markets aligned to managing business through the through the Covid-19 pandemic disruptions during the last 12 months, including rapid remote deployment of essential solutions and services. These are designed to support customers in the areas that are most relevant to them right now, including secure remote working solutions, collaboration packages and improvements to IT resilience. Furthermore, the Group introduced its first globally scalable solution during the year which enables rapid deployment of workloads onto the public cloud.

While the exact impact of the Covid-19 pandemic on medium-term trading remains difficult to predict at this stage, Logicalis remains confident about the long-term prospects for the industry and its positioning within it. Over the short term, emerging markets currencies are expected to remain volatile.

Westcon International

Westcon International accounted for 63% of the Group's revenue (FY20: 59%).

Westcon International is a value-added speciality distributor of industry-leading cyber security and network infrastructure, unified communications products, data centre solutions and channel services with a global network of service providers, systems integrators, and speciality resellers. Westcon International has operations in 50-plus countries and goes to market under the Westcon and Comstor brands. Westcon International's portfolio of market-leading vendors includes: Cisco, Palo Alto Networks, Check Point, F5, Extreme Networks, Avaya, Broadcom, and Juniper.

Westcon International's revenue increased by 4.6% to US$2.59 billion (FY20: US$2.47 billion^ restated) with higher revenue in Europe and Asia-Pacific. In constant currency*** revenue grew by 3.5%.

Westcon International's gross margins increased to 11.3% (FY20: 11.1% restated) with higher margins in Europe and MEA. Westcon International's gross profit increased by 5.6% to US$291.0 million (FY20: US$275.7 million) with higher results across all regions.

Operating costs increased to US$246.2 million (FY20: US$235.7 million). The FY21 results include US$7.7 million of restructuring costs primarily related to initiatives in Europe (FY20: US$ nil), as well as US$9.8 million of foreign exchange losses (FY20: US$1.3 million). Excluding those costs, operating expenses decreased 2.4%. Central costs of US$29.4 were incurred in FY21 (FY20:US$29.1 million).

EBITDA was US$44.8 million (FY20: US$40.0 million), with an EBITDA margin of 1.7% (FY20: 1.6%). Excluding restructuring costs, adjusted** EBITDA of US$52.5 million (FY20: US$40.0 million) reflected an improvement across all regions. Adjusted** EBITDA margin was 2.0% (FY20: 1.6% restated).

The strong trading performance was supported by a strengthening balance sheet position. Net working capital days decreased to 18 days (FY20: 22 days) as a result of strong working capital management reducing days sales outstanding ("DSO") and increasing inventory turns. Net debt was US$19.0 million (FY20: US$48.7 million).

The net debt consisted of cash resources of US$243.1 million (FY20: US$127.7 million); bank overdrafts of US$4.9 million (FY20: US$132.2 million); short-term borrowings and current portion of long-term debt of US$225.4 million (FY20: US$6.6 million); and long-term debt of US$31.8 million (FY20: US$37.6 million).

During the year, and despite the pandemic, Westcon International secured new working facilities in its key markets for Europe and Asia-Pacific. A three-year €275 million (approximately US$330 million) new invoice assignment facility led by Crédit Agricole Leasing & Factoring ("CAL&F") was concluded in Europe. A two-year US$80 million new receivables securitisation facility led by Westpac Banking Corporation was concluded in Asia-Pacific. The new committed facilities provide enhanced liquidity at reduced costs and are used to fund the Company's working capital requirements.

Westcon International continues to monitor and respond to the Covid-19 pandemic with its priority on maintaining the health and wellbeing of its staff in compliance with relevant government directives, while limiting business impacts for channel and vendor partners.

Westcon International's key logistics centres in the UK, Netherlands, Middle East, South Africa, and Asia-Pacific remain open and are being managed under strict measures to ensure the wellbeing of logistics and warehousing teams while maintaining service levels. This has enabled the division to take an active role in servicing the needs of critical business sectors alongside partners during the pandemic.

The multi-year investments in Westcon International's advanced systems and business automation enabled business continuity plans to be deployed seamlessly with almost the entire workforce continuing to work remotely.

Westcon International's strategy is to bring to market industry-leading fixed or wireless-based networking solutions, including unified communications, security, virtualisation, remote access, and cloud computing products. While the near term remains uncertain, current conditions are driving demand for technologies that Westcon International sells.

The global semiconductor shortage due to Covid-19-related constraints is impacting all technology participants across the entire value chain and Westcon International continues to monitor and mitigate the impact on availability and costs where possible.

Corporate, Management Consulting and Financial Services

This segment accounted for 2% of Group's revenue (FY20: 1%).

The Management Consulting unit comprises Analysys Mason, a provider of strategic, trusted advisory, modelling and market intelligence services to the telecoms, media and technology industries.

The Management Consulting unit delivered an excellent performance in FY21. Revenue was US$73.2 million (FY20: US$58.7 million). Gross profit increased to US$31.0 million from US$23.8 million in FY20. EBITDA increased to US$10.2 million (FY20: US$9.4 million) and EBITDA margins decreased to 13.9% compared to 16.0% in FY20.

Effective 1 April 2020, Analysys Mason acquired 100% of the shares in Allolio&Konrad, a consultancy based in Bonn, Germany with an extensive track record in the telecommunications industry and long-term client relationships with Europe's leading telecom operators. The acquisition contributed significantly to the division's results for FY21.

Analysys Mason has a strategy focused on specialisation in the technology, media and telecommunications (TMT) sector where increasingly the industries of telecommunications and information technology are converging and driving rapid digitisation across many industries often brought about by the move to cloud computing.

Datatec Financial Services provides financing/leasing solutions for ICT customers. The business recorded revenue of US$1.1 million in FY21 (FY20: US$1.0 million) and an EBITDA loss of US$1.1 million (FY20: US$1.2 million loss) and adjusted EBITDA loss of US$0.6 million. The business will be moved into Westcon International during FY22 in order to leverage the capabilities and scale of both businesses.

Corporate includes the net operating costs of the Datatec head office entities which were US$17.2 million (FY20: US$15.3 million). These costs include the remuneration of the Board and head office staff, consulting and audit fees. In FY21, foreign exchange losses were US$0.4 million (FY20: foreign exchange gains of US$1.9 million).

As at 28 February 2020, Datatec head office entities held cash of US$74.2 million, of which US$18.3 million (including R99.2 million held in ZAR) is held in South Africa and subject to the SA Reserve Bank regulations. These cash balances increased by US$6.7 million from the year ended 29 February 2020 mainly as a result of net settlement of intercompany loans from subsidiaries.

*	Excluding impairments 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 relating to fundamental reorganisations and the taxation effect on all of the aforementioned.
**	Adjusted EBITDA excludes restructuring costs.
***	The pro forma constant currency and adjusted EBITDA information, which is the responsibility of the Datatec directors, presents the Group's revenue for the current reporting period had it been translated at the average foreign currency exchange rates of the prior reporting period as well as EBITDA had restructuring costs not been incurred. This information is for illustrative purposes only and because of its nature, may not fairly present the Group's results. The pro forma supplementary information contained in this announcement has been reported on by the Group's external auditor. The Group's auditor, PwC, has issued a limited assurance report (in terms of ISAE 3420: Assurance Engagements to Report on the Compilation of pro forma Financial Information Included in a Prospectus) on the pro forma financial information presented. Refer to Assurance report on the pro forma supplementary information included in the 2021 annual financial results announcement for their unmodified opinion thereon.

To determine the revenues in constant currency terms, the current financial reporting period's monthly revenues in local currency have been converted to US Dollar at the average monthly exchange rates prevailing over the same period in the prior year. The average exchange rates of the Group's material currencies are listed below:

Average US Dollar exchange rates		FY21	FY20
British Pound/US Dollar		1.30	1.27
Euro/US Dollar		1.16	1.11
US Dollar/Brazilian Real		5.39	4.06
US Dollar/Australian Dollar		1.41	1.46
US Dollar/Singapore Dollar		1.37	1.37
US Dollar/South African Rand		16.47	14.67

On 1 March 2021, Logicalis Group's 65% subsidiary PLLAL exercised its option to acquire an additional interest of 20.1% in Kumulus for US$1.2 million. Kumulus will continue to be equity-accounted for in the Group's results because the Group does not have management control.

On 31 March 2021, Logicalis acquired a 70% stake in Áudea, a Spanish company which specialises in cyber security and regulatory compliance, for a consideration of US$2.0 million.

Introduction

Notice is hereby given that the Board of Datatec has declared a final distribution for the year ended 28 February 2021, by way of a cash dividend of 100 ZAR cents per Datatec ordinary share ("Cash Dividend") payable to the ordinary shareholders (the "Shareholders"), which will be in proportion to your ordinary shareholding in Datatec at the close of business on the record rate, being Friday, 16 July 2021.

Shareholders will be entitled, in respect of all or part of their shareholding, to elect to receive new, fully paid ordinary Datatec shares in proportion to their ordinary shareholding on the Record Date as an alternative to the cash dividend (the "Scrip Distribution"). The Cash Dividend has been declared and paid out of Datatec's distributable retained profits. A dividend withholding tax of 20% will be applicable in respect of the Cash Dividend to all Shareholders not exempt therefrom after deduction of which, the net Cash Dividend is 80 ZAR cents per share.

The new ordinary shares will, pursuant to the Scrip Distribution, not be subject to a dividend withholding tax, and the issue price of the Scrip Distribution (which will equal the volume weighted average price ("VWAP") of Datatec's ordinary shares traded on the Johannesburg Stock Exchange Limited ("JSE") for the 30-day trading day period ending on Tuesday, 6 July 2021) will be settled by way of a capitalisation of Datatec's distributable retained profits.

The Company's total number of issued ordinary shares as at 25 May 2021 is 201 450 000. Datatec's income tax reference number is 9999/493/71/2.

Terms of the Cash Dividend and Scrip Distribution

The Shareholders will be entitled to receive the Cash Dividend of 100 ZAR cents per ordinary Datatec share in respect of their shareholding as at the close of trading on the JSE at the close of business on the record date, being Friday, 16 July 2021, in proportion to their ordinary shareholding in Datatec and to the extent that such Shareholders have not elected to receive the Scrip Distribution alternative in respect of all or a part of their shareholding.

Shareholders will, however, be entitled to elect to receive a Scrip Distribution of new, fully paid Datatec ordinary shares in respect of their shareholding in Datatec as at the record date, in respect of all or part of their ordinary shareholding, instead of the Cash Dividend.

The number of Scrip Distribution shares to which each of the Shareholders will become entitled pursuant to the Scrip Distribution (subject to their election thereto) will be determined by reference to such Shareholder's ordinary shareholding in Datatec (at the close of business on the record date, being Friday, 16 July 2021) in relation to the ratio that 100 ZAR cents bears to the VWAP of a Datatec ordinary share traded on the JSE during the 30-day trading period ending on Tuesday, 6 July 2021, provided that, where the application of this ratio gives rise to a fraction of an ordinary share, the rounding principles will be applied. Where a Shareholder's entitlement to new Datatec ordinary shares calculated in accordance with the above formula gives rise to a fraction of a new ordinary share, such fraction of a new ordinary share will be rounded down to the nearest whole number, resulting in allocations of whole ordinary shares and a cash payment for the fraction. The applicable cash payment will be determined with reference to the VWAP of an ordinary Datatec share traded on the JSE on Wednesday, 14 July 2021, (being the day on which Datatec ordinary shares begin trading "ex" the entitlement to receive the Cash Dividend or the Scrip Distribution alternative), discounted by 10%.

Details of the ratio will be announced on the Stock Exchange News Service ("SENS") of the JSE in accordance with the timetable on below.

Circular and salient dates

A circular providing Shareholders with full information on the Cash Dividend or Scrip Distribution alternative, including a Form of Election to elect to receive the Scrip Distribution alternative will be distributed to Shareholders on or about Thursday, 3 June 2021.

The salient dates of events thereafter are as follows:

EVENT		2021
Audited financial results of Datatec for the year ended 28 February 2021 and declaration of Cash Dividend with Scrip Dividend Alternative announced on SENS on		Tuesday, 25 May
Audited financial results of Datatec for the year ended 28 February 2021 and declaration of Cash Dividend with Scrip Dividend Alternative published in the South African press on		Wednesday, 26 May
Distribution of Circular announced on SENS on		Thursday, 3 June
Circular and Form of Election distributed on		Thursday, 3 June
Distribution of Circular announcement published in the South African press on		Friday, 4 June
Announcement released on SENS in respect of the ratio applicable to the Scrip Distribution alternative, based on the 30-day VWAP ending on Monday, 5 July 2021, by 11:00 on		Tuesday, 6 July
Announcement published in the South African press of the ratio applicable to the Scrip Distribution alternative, based on the 30-day VWAP ending on Monday, 5 July 2021 on		Wednesday, 7 July
Last day to trade in order to be eligible for the Cash Dividend and the Scrip Distribution alternative		Tuesday, 13 July
Ordinary shares trade "ex" the Cash Dividend and the Scrip Distribution on		Wednesday, 14 July
Listing and trading of maximum possible number of Datatec ordinary shares on the JSE in terms of the Scrip Distribution alternative from the commencement of business on		Wednesday, 14 July
Announcement released on SENS in respect of the cash payment applicable to fractional entitlements, based on the VWAP of a Datatec ordinary share traded on the JSE on Wednesday, 14 July 2021, discounted by 10%, by 11:00 on		Thursday, 15 July
Last day to elect to receive the Scrip Distribution alternative instead of the Cash Dividend, Forms of Election to reach the Transfer Secretaries by 12:00 on		Friday, 16 July
Record date in respect of the Cash Dividend and the Scrip Distribution alternative		Friday, 16 July
Cash Dividend payments made, CSDP/broker accounts credited/updated on		Monday, 19 July
Announcement relating to the results of the Cash Dividend and the Scrip Distribution alternative released on SENS on		Monday, 19 July
Announcement relating to the results of the Cash Dividend and the Scrip Distribution alternative published in the South African press on		Tuesday, 20 July
JSE listing of Datatec ordinary shares in respect of the Scrip Distribution alternative adjusted to reflect the actual number of ordinary shares issued in terms of the Scrip Distribution alternative at the commencement of business on or about		Tuesday, 20 July

All times provided are South African local times. The above dates and times are subject to change. Any material change will be announced on SENS.

Share certificates may not be dematerialised or rematerialised between Wednesday, 14 July 2021 and Friday, 16 July 2021, both days inclusive. If Datatec maintains a certificated register, then the register will be closed from Wednesday, 14 July 2021 and Friday, 16 July 2021, both days inclusive.

At the Annual General Meeting of the shareholders of Datatec held on 29 July 2020, PricewaterhouseCoopers Inc. ("PwC") was appointed as the new independent external auditor of the Group.

This announcement may contain statements regarding the future financial performance of the Group which may be considered to be forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty, and although the Group has taken reasonable care to ensure the accuracy of the information presented, no assurance can be given that such expectations will prove to have been correct.

The Group has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements and there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. It is important to note, that:

1. unless otherwise indicated, forward-looking statements indicate the Group's expectations and have not been reviewed or reported on by the Group's external auditors;
2. actual results may differ materially from the Group's expectations if known and unknown risks or uncertainties affect its business, or if estimates or assumptions prove inaccurate;
3. the Group cannot guarantee that any forward-looking statement will materialise and, accordingly, readers are cautioned not to place undue reliance on these forward-looking statements; and
4. the Group disclaims any intention and assumes no obligation to update or revise any forward-looking statement even if new information becomes available, as a result of future events or for any other reason, other than as required by the JSE Limited Listings Requirements.

On behalf of the Board

SJ Davidson
Chairman

JP Montanana
Chief Executive Officer

IP Dittrich
Chief Financial Officer

25 May 2021

SJ Davidson^# (Chairman), JP Montanana^# (CEO), IP Dittrich (CFO), M Makanjee, JF McCartney^o, CRK Medlock^#, MJN Njeke, E Singh-Bushell^o
oAmerican  ^#British