corporate profile - sharedata · 2002. 8. 16. · corporate profile datatec annual report 2002 1...

268014 – (DATT) – DATATEC – 29/7/02 – Proof No 12 –

Corporate Profile

1Datatec Annual Repor t 2002

Datatec is an international networking and IT services group with operations in Europe, North America, South

America, Africa and the Asia Pacific region. The Group generates more than 95% of its revenue in foreign currency

outside South Africa.

The Group provides active management support to the strategic direction and operations of its subsidiaries and has

three principal lines of business:

• Westcon, a global distributor of advanced networking, security, data and voice communications and convergence

products, based in New York, United States of America (“US”) and the largest distributor worldwide of equipment

in this sector, with operations in many countries;

• Logical, an international professional services and IT network integration group headquartered in London, United

Kingdom (“UK”) and with operations in more than ten countries; and

• Mason, a strategic telecommunications consultancy headquartered in Manchester in the UK and focusing on

UK and European clients.

The Group also has similarly focused operations in South Africa (“SA”) under Other Holdings. These are Westcon

AME, Affinity Logic and RangeGate.

Value Drivers

to be ethical, honest andsocially responsible

to all stakeholders andacceptable corporate citizens

to provide a best in classportfolio of actively managed

businesses in the internationalIT networking sector

to deliver long-term,sustainable,above average returns throughinvesting, operating and value

realisation within the businesses

to be an employer ofchoice, attracting, developing

and retaining the bestand key talents

enhance and protectDatatec

shareholder value


Six Year Review

2 Datatec Annual Repor t 2002

%

2002 change 2001 2000 1999 1998 1997

In South African Rand (R million)

Revenue 20 677 3 20 158 11 524 6 641 1 374 464

Continuing operations 20 360 17 500 7 607 2 005 550 96

Acquisitions 202 1 537 2 572 4 179 680 302

Discontinued operations 115 1 121 1 345 457 144 66

Operating profit before

finance costs, depreciation

and amortisation (“EBITDA”) 846 (20) 1 059 708 479 92 26

Operating profit 646 (20) 807 553 406 74 19

Westcon 586 772 406 312 (9) 4

Logical (13) 25 148 78 44 –

Mason 6 34 4 – – –

Other Holdings 99 81 32 (11) 35 16

Discontinued operations (32) (105) (37) 27 4 (1)

Profit before exceptional items

and goodwill amortisation 547 (21) 690 515 399 67 16

(Loss)/profit before taxation (147) (111) 1 316 539 373 93 16

(Loss)/profit after taxation (325) (132) 1 015 388 219 68 10

Attributable (loss)/earnings (336) (135) 958 379 195 72 11

Headline earnings 346 (16) 410 364 225 44 11

Non-current assets 1 295 (1) 1 302 705 514 72 32

Current assets 8 420 (1) 8 466 5 670 4 191 800 252

Ordinary shareholders’ funds 3 726 16 3 205 1 403 897 161 44

Outside shareholders’ interest 199 (23) 260 138 84 6 9

Non-current liabilities 78 (3) 80 607 1 096 199 57

Current liabilities 5 712 (8) 6 223 4 227 2 628 506 175

Net cash inflow/(outflow) from

operating activities 1 687 715 207 (203) 38 92 32

Net cash (outflow)/inflow from

investing activities (520) (2 837) 19 (2 022) (3 569) (625) (180)

Net cash (outflow)/inflow from

financing activities (100) (168) 148 1 353 3 693 710 221

Net cash/(borrowings) 168 164 (262) (485) 405 256 79

In South African centsHeadline earnings per share 265 (18) 325 300 267 87 39

Basic (loss)/earnings per share (257) (134) 761 340 231 141 39

Tangible net asset value

per share 2 414 17 2 058 1 179 898 277 118



%

2002 change 2001 2000 1999 1998 1997

In US dollars (US$ million)

Revenue 2 198 (20) 2 763 1 859 1 145 292 105

Continuing operations 2 165 2 399 1 227 346 117 22Acquisitions 21 211 415 720 144 68Discontinued operations 12 153 217 79 31 15

Operating profit before finance costs, depreciationand amortisation (“EBITDA”) 88 (39) 144 114 83 20 6Operating profit 69 (38) 111 89 70 16 4

Westcon 62 106 65 54 (2) 1Logical (1) 3 24 13 10 –Mason 1 5 1 – – –Other Holdings 10 11 5 (2) 7 3Discontinued operations (3) (14) (6) 5 1 –

Profit before exceptional items and goodwill amortisation 58 (38) 95 83 69 14 4(Loss)/profit before taxation (14) (108) 180 87 64 20 4(Loss)/profit after taxation (33) (124) 139 63 38 14 2Attributable (loss)/earnings (35) (127) 131 61 34 15 3Headline earnings 36 (36) 56 59 39 9 3

Non-current assets 113 (30) 163 107 82 14 7Current assets 736 (30) 1 057 859 665 160 56Ordinary shareholders’ funds 326 (19) 400 213 142 32 10Outside shareholders’ interest 17 (46) 32 21 13 1 2Non-current liabilities 7 (32) 10 92 174 39 12Current liabilities 499 (36) 777 640 417 101 39

Net cash inflow/(outflow) from operating activities 175 522 28 (33) 7 20 7Net cash (outflow)/inflow from investing activities (45) (2 015) 2 (307) (567) (125) (40)Net cash (outflow)/inflow from financing activities (9) (147) 18 205 586 142 49Net cash/(borrowings) 15 145 (33) (74) 64 51 18

In US centsHeadline earnings per share 28 (38) 44 48 46 19 9Basic (loss)/earnings per share (27) (126) 104 55 40 30 9Tangible net asset value per share 211 (18) 257 179 143 56 26


Six Year Review continued


2002 2001 2000 1999 1998 1997

Summary of statistics

Stock exchange performance Total number of shares traded ('000) 130 566 127 537 79 297 43 721 20 471 13 559 Total number of shares traded as a percentage of total shares 95.0% 99.1% 66.7% 55.3% 40.0% 33.6%Total value of shares traded (R million) 2 199 6 212 7 405 3 780 772 222

Prices (cents)Closing 1 650 1 650 11 600 9 560 7 500 2 100 High 2 500 11 700 14 500 12 800 7 700 2 400 Low 880 1 450 5 530 4 600 2 000 925 Market capitalisation 2 267 2 124 13 798 9 551 4 364 782

Shares issuedIssued (million) 137 128 119 100 58 37 Weighted average (million) 131 126 112 84 51 31

RatiosReturn on total assets 6.6% 8.3% 8.7% 8.6% 8.4% 6.7%Return on ordinary shareholders' funds 14.7% 21.5% 36.7% 44.5% 41.6% 36.4%Debt/equity ratio 2.1:1 2.5:1 43.3:1 122.2:1 122.4:1 127.3:1Current ratio 1.5:1 1.4:1 1.3:1 1.6:1 1.6:1 1.4:1Interest cover 375.6% 322.8% 384.0% 624.6% 429.4% 316.7%SA Consumer Price Index 8.6% 5.7% 5.3% 5.2% 6.9% 8.6%

EmployeesNumber of employees 3 023 3 830 4 135 2 913 1 200 507 Revenue per employee (R’000) 6 840 5 263 2 787 2 280 1 145 915 Revenue per employee ($’000) 727 721 450 393 244 208

Exchange ratesRand/$ income statement translation rate 9.6 7.3 6.2 5.8 4.7 4.4Rand/$ balance sheet translation rate 11.4 8.0 6.6 6.3 5.0 4.5

Notes:– Westcon is consolidated into the Group’s results based on Westcon’s results for its financial year ended

28 February for the 2002, 2001 and 2000 periods. Westcon’s results are thus translated at a different Rand/$exchange rate, as set out on page 36 of the Finance Report.

– 1997 represents a thirteen month period.– Detailed segmental information is set out in note 26 of the annual financial statements on pages 89 and 90.– The SA Consumer Price Index sourced from Standard Bank of South Africa Limited.– Return on total assets is calculated utilising operating profit and return on ordinary shareholders’ funds is

calculated utilising profit before exceptional items and goodwill amortisation.– Debt includes all long-term liabilities including amounts due to vendors of a long-term nature.



ebitda — ongoing operations

2276

431

706

1 127

873

1997 1998 1999 2000 2001 20020

200

400

600

800

1 000

1 200

R Million

6 Year CAGR = 102%

0.91.1

2.3

2.8

5.3

6.8

1997 1998 1999 2000 2001 20020

1

2

3

4

5

6

7

R Million

0.41.2

5.8

10.2

19.0

20.6

1997 1998 1999 2000 2001 20020

5

10

15

20

25

revenue — ongoing operationsR Billion

6 Year CAGR = 120%

revenue per employee

39

87

267

300

325

265

1997 1998 1999 2000 2001 20020

50

100

150

200

250

300

350

Cents

6 Year CAGR = 47%

headline earnings per share

6 Year CAGR = 50%


Directorate


Executive Directors

> Jens Montanana

Chief Executive Officer, Age 41 (British)

Date of Appointment 6 October 1994.

Jens is the founder and chief architect behind Datatec

Limited, which he established in 1986. Between 1989

and 1993 Jens ran US Robotics' UK operations. In 1993

he co-founded US start up Xedia Corporation in Boston,

MA, an early pioneer of network switching and one of

the market leaders in IP bandwidth management, which

was subsequently sold to Lucent Corporation. In 1994

Jens returned to SA and listed Datatec on the JSE

Securities Exchange South Africa.

> Stephen Lawrence

Chief Executive Officer: Logical, Age 45 (British)

Date of Appointment 7 November 2000

Prior to joining Logical, Stephen was vice-president of

Arthur D Little, the Boston headquartered, technology

based management consultancy – where he was

responsible for the company's UK activities, which was

the company's largest operation outside the US. He was

also non-executive chairman of Mason, acquired by

Datatec in 1999.

> David Pfaff

Executive Director, Age 37 (South African)

Date of Appointment 1 July 2001

David is responsible for Datatec’s South African

interests, global investor relations and corporate

communications. From 1 June 2002, David succeeded

Robin Rindel as Chief Financial Officer and will remain

responsible for global investor relations and corporate

communications. Prior to joining Datatec, David was a

director of Anglo American Industrial Corporation.

> Robin Rindel

Executive Director, Age 40 (South African)

Date of Appointment 1 September 1995

Robin was the Datatec Finance Director and he heads

up a team responsible for the Group’s corporate finance

and acquisition activities. From 31 May 2002, Robin

relinquished his CFO role and will assume on 1 October

2002 operational responsibility for Westcon’s Asia

Pacific Operation.

> Alan Smith

Chief Executive Officer of Westcon Group, Inc., Age 39

(American) Date of Appointment 17 July 2001

Alan is the CEO and president of Westcon. He is the

former executive vice-president and chief operating

officer. He joined Westcon in 1997 as director of

business development and planning. Prior to joining

Westcon, Alan was manager of the business

management group at Bay Networks (now Nortel

Networks), and its predecessor, Synoptics Corporation,

from 1993 to 1997. From 1989 to 1993, he held the

position of manager of contracts at Oracle.

> Jens Montanana > Stephen Lawrence > Robin Rindel> David Pfaff > Alan Smith



Non-executive Directors

> Leslie BoydNon-executive Chairman, Age 65 (South African)Date of Appointment 6 December 2001In addition to his position as Chairman at Datatec,Leslie is chairman of Imperial Holdings and co-chair of the Millenium Labour Council. Leslie isalso a director of a number of other companiesincluding: ABSA Bank, Anglo American Corporation ofSouth Africa, Anglo American Platinum Corporation,Highveld Steel and Vanadium Corporation, and TheTongaat-Hulett Group, to name but a few. In the past,Leslie has also held chairman positions at several ofthese companies. In 1990, Leslie was the foundingpresident of the South African Chamber of Business.

> Colin BrayshawNon-executive Director, Age 66 (South African)Date of Appointment 6 December 2001Colin is currently chairman of Coronation Holdingsand a non-executive director on the boards of a numberof listed companies, including: African Harvest,AngloGold, Anglo Platinum Corporation, AECI,Johnnic Holdings, Highveld Steel and VanadiumCorporation. Previously he was chairman andmanaging partner of Deloitte & Touche and various ofits predecessor firms.

> Mendel KarpulNon-executive Director, Age 49 (South African)Date of Appointment 30 August 1996Mendel has over fifteen years experience in thesolution-driven software development industry andwas strategically involved in forming one of the first

commercial Internet Service Providers in SA, Internet Africa.

> John McCartneyNon-executive Director and Deputy Chairman, Age 49(American) Date of Appointment 11 May 1998John was formerly president and chief operatingofficer for US Robotics, as well as president of 3ComCorporation's Client Access Unit. He joined the executive management team of US Robotics in 1984. John is also a director of A.M. CastleCorporation, Quotesmith.com and Next LevelCommunications.

> Cedric SavageNon-executive Director, Age 63 (South African)Date of Appointment 6 December 2001Cedric has been appointed to the board of DatatecLimited as a non-executive director. In addition, he isnon-executive chairman of The Tongaat-HulettGroup, and a director of a number of companies,including AECI, ARM Gold and Delta MotorCorporation.

> Chris SeabrookeNon-executive Director, Age 49 (South African)Date of Appointment 6 October 1994Chris is executive chairman of Sabvest, which is alisted investment group with interests in SA and theUK. He is a director of seven JSE listed companies,including Primedia and Massmart, and is alsochairman of trade finance and financial servicesgroups in London and Luxembourg.

> Mendel Karpul > John McCartney> Leslie Boyd > Cedric Savage > Chris Seabrooke> Colin Brayshaw


Chairman’s Report


This is my first Chairman's Report since I became

non-executive Chairman of Datatec in December 2001.

The year under review has undoubtedly been the most

difficult in the relatively short history of the worldwide

IT industry. Despite this, progress has been made by

Datatec on a number of fronts and management has

responded well to the challenges.

> Corporate Governance

The Group has made good progress in corporate

governance and is in the process of reviewing the King

II Report in order to move to full compliance.

The Executive Chairman, Jens Montanana, decided to

step down from that role and to assume the role of Chief

Executive under an independent non-executive

Chairman. Jens deserves credit for taking that decision

and inviting someone with no previous contact with

Datatec to become Chairman.

At the same time, Colin Brayshaw and Cedric Savage

were made independent non-executive directors. I chair

the Remuneration and Nomination Committee, Colin

the Audit and Compliance Committee and Cedric the

Business Risk Committee. The Board now has a majority

of non-executive directors, with independent directors

chairing all the board committees.

The Business Risk Committee was set up during the

year and will introduce a set of standards and values to

guide the way business is done throughout Datatec's

operations. The Business Risk Committee will oversee

management and application of these processes.

Leslie Boyd Chairman


A tough market is the true test of any company and I ampleased to report that the Datatec Group has achievedsignificant advances despite a particularly difficultenvironment.

Leslie BoydChairman

17 July 2002


> Performance

It is important to note that over 95% of Datatec's

revenue is earned outside SA in foreign currencies,

making it a strong Rand hedge stock.

In the 2002 financial year, turnover from ongoing

operations of R20.6 billion increased by 8% from

R19.0 billion in 2001. Operating profit declined from

R807 million to R646 million as a result of weaker

trading conditions. Headline earnings per share

declined by 18% from 325 cents per share to 265 cents.

Cash flow showed a significant improvement through

the year and, at year end, the company moved from a

net debt position of R262 million to a net cash position

of R168 million.

Jens Montanana, the management team has, with some

resilience, weathered the storm. On behalf of all

shareholders, I would like to thank everyone for their efforts.

I would also like to thank Mark Lamberti and Jon James,

who resigned from the Board during the course of the

year, for their contribution to the affairs of the company.

At the same time I welcome to the Board

Colin Brayshaw, David Pfaff, Cedric Savage and

Alan Smith. I am sure they will contribute significantly

to the business.

> Prospects

The year ahead will remain challenging, but prospects

should improve in calendar 2003.

The past year has been extremely dif ficult and challenging. Led by Jens Montanana,the management team has, with some resilience, weathered the storm.

> Operating Environment

There are early indications of a recovery in the world

economy. The recovery is likely to be slow and will

depend on factors such as the oil price. The US seems to

be recovering from the recession and the terrible effects

of the September 11 attacks. However, this recovery is likely

to be delayed due to the uncertainties around the recent

US corporate governance and accounting failures.

The sectors in which Datatec's subsidiaries operate

are less predictable than most, and we expect margins

to remain under pressure during the ensuing

financial year.

> Appreciation

As I mentioned previously, the past year has been

extremely difficult and challenging. Led by


Chief Executive Officer’s Report


Jens Montanana Chief Executive Officer

> Overview and Market Conditions

The year saw Datatec successfully navigate a particularly

challenging environment in which the IT and

telecommunications sectors experienced significant

contraction, driven by a downturn in service provider

and corporate spending and faced with slowing

spending and lengthening sales and product life cycles.

The networking and telecommunications sectors have

become increasingly intertwined as a consequence of

digitalisation in communications, Internet networking

and voice/data convergence. Deregulation accelerated

this convergence but in the process also created

significant capacity “hangover” as a result of over-

investment during recent years.

Generally, our industry experienced exceptional

growth during 1999 and 2000, fuelled by the

telecommunications explosion. A new business

paradigm of “build before demand” took hold, in

preference to the previous philosophy of “build to meet

demand”. The catalysts to this dynamic were driven by

the Internet revolution, the e-business boom, the build-

up to Y2K, and fueled by deregulation.

These technology investment and planning

excesses became all the more evident as Datatec’s

suppliers, partners and competitors experienced

a sharp contraction in their businesses. The result

was an industry downsizing by, sometimes, as much

as 40%.



The Internet and e-business boom prompted many to draw

new parallels between “old” and “new” economies and

business, in which the Internet was often presented as the basis

of an alternative economy. The realisation that everything is

part of one economy has sobered the market considerably.

Those least affected by the downturn were the

organisations which did not over-invest in pioneering and

often over-promising technologies, who can now adopt

appropriate e-technologies and use communications

infrastructure at a fraction of the cost that early adopters

and evangelical e-businesses had to bear.

At an early stage, Datatec responded to the anticipated

downturn. It began restructuring and reshaping its

Consolidation in the sector occurred during the

market downturn. Datatec has been an active

consolidator during this period, taking advantage of

opportunities where appropriate, illustrated most

recently by the Group’s acquisition of the activities of

Landis Business Partners, giving Westcon a major boost

to its European presence.

We remain passionately committed to growth and

the enhancement of shareholder value. Throughout

our sixteen-year history we have continued to deliver

top-line growth and uninterrupted profitability, a

performance we would like to continue in the

long term.

Our early approach to rationalisation has enhanced the Group’s competitiveness andour businesses are positioned to exploit any market improvements.

operations and subsidiaries to assure itself a stronger

competitive position to adapt to changes in the

business environment.

This pro-active response helped us through a difficult

period and despite experiencing a decline in business

in all of our major operations, we were able to

out-perform many in our industry by falling less than

many others. This applies especially to the key

statistics and the ratios of our financial performance,

particularly in the areas of debt reduction and

significant improvements in working capital, resulting

in a positive cash inflow.

One consequence of the year’s disappointing market

conditions was to delay the possibility of a NASDAQ

stock exchange listing (IPO) of Westcon.

Datatec has come through this turbulent period with a

balance sheet in better condition than at any time

during its life as a public company. That is a tribute to

the quality of our people, our assets and our ability to

readily adapt in order to remain competitive and

profitable, while holding our position at the cutting

edge of our market.

> Operations and Strategy

Datatec operates as an integrated management services

group, providing active management of the Group’s

subsidiaries via strategic direction, business planning,

investment, financial control and risk management.

The Datatec Group was built on solid and fundamental

businesses in significant markets with proven growth


Chief Executive Officer’s Report continued


characteristics, not on high-risk exponential growth

opportunities. Our differentiation is the ability to

identify, select and exploit the “out-perform” sectors and

cyclical trends that drive our industry.

Today, these trends include the convergence of voice

and data, widespread adoption of the Internet, mobile

computing, broadband and high capacity

communications and considerably increased spending

on security as use of the Internet is “industrialised”.

Datatec’s operations comprise significant, focused

businesses providing IT networking products and

services to channels and enterprises all over the

to our market sector at various levels that are all

complementary.

Our individually distinguished and separately branded

subsidiaries are aligned with their own routes to market

and are all customer focused. This structural flexibility

improves our nimbleness and customer reach without

creating overlap or conflict. It delivers quality in service

through best practice.

Datatec has adopted successful, decentralised

management of its subsidiary divisions while creating

the right control and reporting mechanisms which instil

greater responsibility and accountability throughout the

Throughout our 16-year history we have continued to deliver top-line growth anduninterrupted profitability, a performance we would like to continue in the long term.

world. The Group’s international subsidiary

companies, Westcon, Logical and Mason, provide

value-added distribution, integration services and

strategic consulting respectively, to organisations

locally and globally.

We have established solid foundations for each of the

major operating divisions by focusing our businesses into

“pure play” operations at various levels of our industry

supply chain. We are able to operate and respond more

effectively to rapid changes in our industry vertical sector

– IT networking – and adapt accordingly.

Operating in these three principal areas of indirect

distribution, direct integration services and consulting,

we provide our shareholders with an aggregate exposure

Group. The Group’s reward system motivates and

encourages management individuals to retain their

entrepreneurial spirit.

Importantly, Datatec is not afraid of change. We cannot

be. We cannot afford to be complacent in ensuring we

remain in control of the growth drivers that make us

passionate about our business.

Our early approach to rationalisation has enhanced the

Group’s competitiveness and our businesses are well

positioned to exploit any market improvements.

> Financial Results

Difficult international market conditions and the

downturn in technology resulted in lower US Dollar



revenues and earnings, an adverse impact that was

mitigated somewhat by the weaker South African Rand

and significant reductions in operating costs and better

working capital management.

We experienced modest revenue growth from ongoing

operations of 8% in Rand terms but a decline, in US Dollar

terms, of 16%. Our operating profit in Rands fell 20%

and in US Dollars, approximately 38%. EBITDA profits

from ongoing operations fell to R873 million from

R1.127 billion.

The most notable feature of the year’s financial

performance resulted from improvements to the

balance sheet. Cash generated from operations was a

significant R2.1 billion, largely as a result of

improvements to working capital of R1.3 billion, driven

largely through a reduction in inventories.

The Group’s net debt at the year end was eliminated,

moving to a net cash position of R168 million from a

negative R262 million in the 2001 financial year – a year-

on-year improvement of R430 million.

> Prospects for the Group

The networking and telecommunications sector

remains subdued as a result of the over investment that

has occurred during recent years. The acquisition of the

Landis distribution activities, while providing a boost to

Westcon’s European revenues and geographical

footprint, will create a drag on profits in the year ahead

as increased investment and expenses in integrating

systems and infrastructure occur.

We anticipate that margin pressure on product sales will

continue to erode the operating profit performance of

the Group, especially in the Westcon division. We

further expect that this contraction in margin, which

has been exacerbated by the downturn in corporate

technology spending, will only start to improve once

the fundamental supply and demand characteristics

which drive our overall industry return to an

expansionary trend.

Steps have been taken to stabilise profitability over the

next year through lower operating costs and reductions

in personnel. However, although revenues appear to

have stabilised and confidence may be returning, the

Group believes that there will be no recovery in this

sector until at least calendar 2003.

Jens Montanana

Chief Executive Officer

17 July 2002


Westcon Divisional Report


>

Goods move. People move.Ideas move and cultures change. The difference now isthe speed of these changes.



Westcon Group, Inc. (“Westcon”) is the leading globaldistributor of networking and telecommunicationsequipment with multi-country operations spanningNorth and South America, Europe, Asia Pacific withservices in Africa and the Middle East. Its primary vendors are Cisco Systems, Nortel Networksand Avaya Communications. Westcon is a sales andmarketing channel for other leading vendors ofnetworking technology in the security, wireless andvoice-over-IP (VOIP) markets. Westcon adds value to itsdistribution activities by providing technical expertise,sales support and services.

Westcon targets sales opportunities that are solutions

based, thereby requiring a high degree of specialisation

and customisation. Its customers are value-added

resellers, systems integrators and service providers that

resell networking products and solutions to large

organisations and governments around the world. These

solutions include the design and configuration of data,

voice converged and wireless networks, as well as

extensions of a network such as video conferencing,

network storage and unified messaging.


Westcon Divisional Report continued


Our global services and training enable customers to

expand their technology offerings and geographic

presence, enter new markets and offer a more

comprehensive set of networking services.

> Structure

Westcon operates its global distribution business

throughout the Americas, Asia, Australia and Europe

and has separate operations under the Comstor, Voda

One and Westcon brands. The group delivers value to

its customers through its highly trained sales staff of

400 people, supported by over 100 certified technical

personnel.

The Comstor division provides a wide range of Cisco

products in the US, UK, Germany, Belgium, Australia,

Ireland and Singapore.

The US-based Voda One division provides Avaya

products for the rapidly-growing market for

convergence solutions, as well as unified messaging, call

centre applications, PABX and data networking

solutions. Voda One was created by combining the

operations of two distributors of Avaya voice products,

Inacom Communications and CCA Technologies, both

acquired in 2000.

The Westcon division of the group leads with Nortel

Networks solutions and also provides a wide range of

complementary voice and data networking equipment

and security products in the US, Canada, UK, Australia

and Brazil.

Westcon has developed significant technical competencies

and a wide array of support services, allowing it to

complement, or act as an extension of, its vendors’ sales

forces. In this way we provide Cisco, Nortel and Avaya with

a focused sales force that markets products and services

through our own three branded divisions.

> Alan SmithChief Executive OfficerWestcon

> John O’MalleyChief Financial OfficerWestcon

westcon revenue by vendorciscoavayanortelother

westcon revenue by regionnorth americauk and europesouth americaasia pacific

19%

57%12%

12%

29%

63%

7%1%



Our sales and technical personnel also assist customers

with network design and configuration consulting, pre-

and post-sales support, training, security monitoring,

technical consulting, professional services staff

augmentation, as well as the staging and configuration

of products.

The role of the distribution channel has continued to

remain a critical part of major networking vendors’

business models. Companies such as Cisco, Nortel,

Avaya, Checkpoint, Nokia and Alcatel rely on the

channel for contributing sales coverage, geographical

coverage, design and configuration skills, pre- and post-

sales product support, as well as professional services

and training.

During the year under review, networking vendors

increased their reliance on the channel for mission critical

functions as they looked to enhance their efficiencies in a

contracting market while also introducing new products

that are technologically complex.

Westcon serves nearly 9 500 customers who are primarily

value-added resellers and system integrators, with less

than 5% of the group’s revenues coming from service

providers or telco’s.

> MarketsThe economic and trading environment in the Americas

has improved slightly with indications of rising demand,

particularly in the retail and consumer sectors. However,

the technology sector deteriorated during the year. The

exceptions were modest growth in security, storage,

wireless and voice in IP segments of the market where

customers are stabilising, securitising and enhancing

their existing network infrastructures rather than

expanding them.

In Europe, the IT market was adversely affected by

shrinking consumer spending and significant corporate

debt, specifically in the service provider/telco markets.

This resulted in a more competitive market,

demonstrated by lower margins and volatile market share.

The global IT market contracted overall, punctuated by

increasing merger and acquisition activity in both

Europe and the US, as well as the bankruptcies and

reorganisations common in a contracting market.

> Financial Performance

During the year, Westcon’s revenue declined 19% from

$2.056 billion in fiscal 2001 to $1.670 billion due to

softening demand for voice and data networking

products, particularly among telecommunications

companies and service providers.

Gross margins decreased from 11.2% in 2001 to 10.4%

in this financial year, primarily due to a reduction in

global channel margins associated with sales of Cisco

products, as well as the highly competitive nature of a

contracting market and the reduction or elimination of

margin-enhancing programmes previously offered by

many significant vendors.

We responded with several cost-cutting and control

measures such as reductions in staffing and certain

employee benefit programmes, modifications to

compensation plans and freezes on the hiring of new

staff and capital spending. These initiatives successfully

contained selling and general administration expenses,

bringing them into line with our current levels of

operation.

For the year ended 28 February 2002, Westcon’s

EBITDA decreased by 36% from $115.2 million (2001)

to $73.3 million, after making provision during the year

in respect of the Lucent litigation, as detailed in note 23

of the annual financial statements.

Substantial operating cash flows generated during

the year allowed Westcon to reduce debt

substantially, specifically when combined with

steadily declining interest rates, which resulted in

lower financing costs.

During the year, we maintained our focus on managing

key elements of working capital. These disciplines

reduced the outstanding aggregate accounts receivables

by 14% from $311 million (2001) to $267 million.

Inventories declined by 51% from $363 million (2001)

to $178 million at the year end.


Westcon Divisional Report continued


This positive cash flow was utilised to improve the

Westcon balance sheet. During the year, lines of credit

and acquisition debt were reduced by 43% from

$246 million (2001) to $139 million, while cash on hand

increased by 30% from $76 million (2001) to

$99 million.

During the year ended 28 February 2002, the Comstor

division sold Cisco products worth $947 million and was

responsible for generating 57% of Westcon’s revenue.

The Americas accounted for 50% of the Comstor

division’s net sales, while Europe and the Asia-Pacific

region accounted for 40% and 10% respectively.

Most of the Westcon division’s net sales occurred in the

US (82%) while Europe accounted for 17% and the

Asia-Pacific region accounted for the remaining 1%.

Sales of Nortel products represented 46% of this

division’s total sales in fiscal 2002.

> Ongoing Strategy

In its exceptionally competitive environment, Westcon

maintained its differentiation among customers by

continuing to evolve its value proposition. During the

year under review, we took the following actions:

• began the process of changing our organisational

structure to reflect our divisional approach

globally;

• continued our growth strategy in Europe through

planned acquisitions and green-fielding (new locations

include Comstor Belgium and Comstor Ireland);

• diversified our overall product portfolio to include

more IP Telephony and Convergence products from

vendors such as 3Com, Siemens and Polycom; and

• enhanced our security and networking product

range through strategic vendor agreements with ISS,

WatchGuard, Aladdin, Netscreen and Secure

Computing Corporation.

> People

A primary asset of Westcon is its staff worldwide.

Westcon’s recruitment philosophy is to hire the most

experienced and capable management team in each of

the markets in which it operates. We recruit the best

local talent from every part of the globe, including

certified engineers, product specialists and sales

representatives. These local employees are best suited to

understanding their individual markets and uncovering

new sales opportunities.

Westcon offers training and career development

programmes to its employees throughout the world.

Many are given Datatec and Westcon stock options and

other incentives designed to increase productivity and

enhance business performance.

> Landis

On May 15, 2002, Westcon completed a transaction to

absorb the employees and the fixed assets of the former

Landis Business Partner organisation operating in nine

European countries: Austria, Belgium, Denmark, France,

Germany, Norway, Spain, Sweden and The Netherlands.

Westcon’s executive management team, combined with

the Business Partner management teams, have

commenced an aggressive integration schedule to re-

start the operations of the former Business Partner

organisations in these countries. The integration process

includes merging the “best practices” of both

westcon ebitdaR million

westcon revenueR million

20020

2 0004 0006 0008 000

10 00012 00014 00016 000

2001 2002 2001

900800700600500400300200100

0

15 595($1 670) 14 871

685($73)

830



organisations, while bringing to the new Westcon

subsidiaries an enhanced value-added business model

that has been the cornerstone of Westcon’s success. It is

expected the first phase of the integration will be

completed within three to four months and the full

integration completed within six to eight months. As part

of the integration process, the company will be actively

“right-sizing” the former Business Partner operations,

inclusive of staff reductions, to appropriate levels based

on the Westcon operating model and current economic

trends for our industry in the respective geographies.

The current integration plans call for the new business

operations to turn profitable late in the last quarter of

our current fiscal year.

Cisco, Nortel, Avaya, Extreme Networks, Siemens, as well

as other major networking and communications vendors,

have agreed to continue their relationship with the new

Westcon and Comstor subsidiaries in Europe. While the

integration process is progressing, it should be noted that

due to the rapid support of Westcon’s vendors and the

timely re-branding of the new business entities, within two

weeks of the close of the transaction the new Westcon

subsidiaries re-entered the market and are currently

working with customers, taking orders and shipping

product.

> The Coming Year

In the year ahead, we intend extending Westcon’s

leadership as a networking and telecommunications

distributor by expanding into Europe through the

acquisition of the Landis businesses and by enhancing

the group’s value offering through providing the most

innovative products available, all supported by our

expertise, product training and networking insight.

The route will include:

• continuing sales of complete network solutions in

preference to simply shipping products;

• offering value-added solutions in the developing

convergence and telecommunications market place,

supported by sales support and training;

• increasing market penetration by streamlining

global operations, expanding our geographic

presence and enhancing our technology offerings;

• pursuing strategic acquisitions by creating greater

demand for Westcon’s style of value-added sales and

support services; and

• realising the benefits of the significant cost

and operational efficiencies of Compass,

Westcon’s recently-implemented processing and

information system.


Logical Divisional Report


>

Unless you do somethingbeyond what you’ve masteredyou will never grow



Logical Group Limited (“Logical”) is an international

professional services and IT network integration group

with specific skills in next generation technologies such

as convergence and mobility.

We take a consulting-led approach to help our clients

leverage these technologies to gain competitive

advantages for their businesses, using our core

competencies in four key areas:

• shaping business strategies within the context of the

impact of new technology;

• developing and integrating custom applications

and web-enabled solutions to drive process

efficiency;

• designing and deploying the networks and

advanced IT infrastructures that underpin the

enterprise; and

• monitoring and maintaining enterprise networks,

systems and applications to enable our clients to

outsource routine operational management of

mission critical technologies.

> Structure

Logical’s business is structured geographically with a

small head office function in London that provides

strategic direction, financial control and standards-

setting. We aim to make our country operations part of an


Logical Divisional Report continued


integrated network of businesses, creating synergies that

enhance the overall value of Logical to our shareholders.

As part of the restructuring of the business during the

year under review, we narrowed the focus of the

organisation around networking solutions and we exited

the loss-making operations in Switzerland (e-business)

and France (systems) and acquired 100% ownership of

the French networking operation and Secure24, our

managed services’ security product.

Overall, the emphasis has shifted from business

transition to business integration and activity has been

focused on managing earn-outs, integrating the

remaining business units, developing consistent

marketing collateral to support our value proposition

and exploiting proprietary technologies.

Difficult market conditions in all our key markets

meant that we focused heavily on operational cost

containment with the aim of ensuring ongoing monthly

profitability in all regions. To this end we reduced our

headcount by 25% over the year, as well as substantially

improving working capital management to improve our

cash position.

> Markets

Trading conditions affected Logical’s financial

performance during the year. Our business suffered

most in the US and Europe, where the general

slowdown in IT expenditure affected both revenue

and gross margins.

Our business in Australasia held up well, largely driven

by strong domestic demand. Economic growth

forecasts for this region remain strong for 2002/03. In

Argentina, the economic crisis and the devaluation of

the Peso made growth particularly difficult and our

focus here has been on minimising risk in a highly

volatile market. We do not expect to see a significant

improvement in the US and European markets until

calendar 2003.

> Financial Performance

The net effect of Logical’s cost cutting and

reorganisation during the year was an improvement in

overall levels of profitability, reflected in a positive

EBITDA of $1.9 million for the second half, compared

with $1.1 million in the first half.

Revenue fell markedly from the previous year’s levels,

largely due to exiting operations in Switzerland and

France, the Peso devaluation in Argentina and declining

market conditions in our key US and European markets.

Logical ended the year with an overall positive EBITDA

of $3.1 million ($5.3 million in continuing operations).

The cash position improved by 381% to $16.0 million

from a net debt position of $5.7 million (2001).

> Stephen LawrenceChief Executive OfficerLogical

> Nigel Drakeford-LewisChief Financial OfficerLogical



> StrategyThere are growth forecasts for network-related professional

services, driven by the increased availability of low-cost

bandwidth (and subsequent new business applications),

the convergence of voice, video and data and increasing

demand for mobile access to the enterprise.

We expect growth in four key areas over the next three

years: storage solutions, wireless LANs, converged

networks and security. Logical will invest in technical

skills and vendor accreditations accordingly.

We are also continuing to develop relationships with

providers of higher margin niche products that

complement our core product business. We will

maintain our focus on Cisco for networking products

and on HP for servers, but we will also take on new

vendors in related value-adding areas such as security,

storage, mobility and service assurance.

We will also concentrate on exploiting our own

proprietary technologies across all our operations,

since these proprietary products have a high services

component and carry higher margins than third

party products.

> People

The integration process and the successful development

of Logical is dependent on the commitment of our

people and we acknowledged this by issuing Datatec

share options to all our employees so that they can have

a stake in the future performance of the Group.

We recognise that major organisational restructuring

and downsizing can create instability and uncertainty

among employees and we have taken steps to address

this with a series of regular communication meetings

and newsletters to explain the business strategy and the

actions required of our staff.

In addition, we instituted a comprehensive employee

opinion survey to obtain feedback from all levels of

the organisation. The survey showed significant

improvements from a similar project twelve months ago.

The survey also highlighted a number of areas to

address, specifically in the area of knowledge sharing

across business units. We will take steps to address this in

the coming months.

> The Coming Year

Logical has achieved stability and focus and having

completed its transition and integration, it is set to show

profitable, ongoing growth. It will continue to develop

as a focused value-player around leading-edge

technology solutions that help our clients identify and

exploit the many business opportunities offered by

advancing technology.

We have deep technical skills and vendor recognition

in high growth areas such as converged technologies

and we have defined a “battleground” that allows us to

add value to our clients and differentiate ourselves

from our competition.

We have already achieved some significant international

successes in the convergence area, particularly in IP

Telephony, that highlight our expertise and positioning

as a leading solutions provider.

Our focus in the year ahead will be on building on

this foundation.

logical revenueR million

2002

0500

1 0001 5002 0002 5003 0003 5004 000

logical ebitdaR million

160140120100806040200

2001 2002 2001

3 799($395m)

3 381

52($5m)

151


Mason Divisional Report


>

… don’t predict the future,create it



Mason Group Limited (“Mason”) is a pure-play

telecommunications and IT convergence consultancy. As

such it provides fee-based expertise rather than hardware

or software. Mason’s activities occur primarily in the UK

and Ireland, although approximately 6% of its revenue

comes from Continental Europe. Mason’s UK-based

consultants have also served clients in more than

thirty countries around the world.

Mason’s services, operating under an ISO9001

accredited quality system, include solutions strategies,

business planning, engineering and design,

procurement on behalf of clients, programme and

project management and network optimisation.

The majority of Mason’s clients are large organisations

in telecommunications, enterprise and government and

include 30 of the FTSE 100 companies.

> Markets

The collapse of technology stock prices and turmoil in

the telecommunications industry had a major effect on

Mason. Many of our clients suffered financially and

consequently reduced their spending on external

consultancy.

The roll-out of third generation (3G) mobile telephony

was also delayed due to financial constraints and delays

in handset development.


Mason Divisional Report continued


The downturn in the enterprise market was less severe

and government work continued apace. Difficult market

conditions continued past the year end and although

there are large numbers of enquiries for new work, it was

difficult to close new contracts.

Catalyst, the contact centre consultancy acquired by

Mason in March 2001, was successfully integrated into

our finance, IT/IS and human resources systems,

achieving a high degree of cross-selling.

The gloomy mood in the marketplace was lifted in part

by some accolades. Mason was ranked as the UK’s

leading “Telecoms and IT Convergence Consultancy” by

an Industry Research Group survey conducted for

Management Consultancy magazine.

Mason was also ranked 36 in the UK Sunday Times “100

Best Companies to Work For”, based on staff surveys, as

well as being listed as one of the UK’s most visionary

companies in the BT/Guardian “Vision 100” awards.

> Financial PerformanceAs a consequence of the stalling market, our revenue

from fixed and mobile telecommunications operators

dropped by 27%, a fall softened by the fact that less

than half of Mason’s revenue comes from the

telecommunications operators. During the year,

government work grew by 15%.

Catalyst performed very well in a strong market andincreased its revenue by 46%.Geographically, revenue came from the UK (88%),Ireland (5%), the rest of Europe (6%) and other partsof the world (1%).Mason has achieved an average annual revenue growthrate over the last five years of 27%. The level of repeatbusiness from existing clients represented 76% of totalrevenue.

Revenue for the year under review was level at

£20.4 million. Having been prompted by market

conditions to reduce our staff complement from 260 to

200 and abandon the planning of an IPO for Mason,

both developments generated substantial exceptional

costs that negatively affected profits.

Before exceptional costs, EBITDA was down 74% to

£1.0 million and earnings before tax was down 116% to

a loss of £0.5 million after exceptional costs.

> Strategy

Mason has altered its strategies to reflect important

issues being faced in each of the group’s principal

markets. In the telecommunications sector, debt

reduction, customer retention, mergers and

acquisitions, network optimisation and infrastructure

sharing are key issues.

> Dave MasonChief Executive Officer Mason

> Alex SmithFounding DirectorMason

> Terry FlaniganFounding DirectorMason

> Bill MooreFinance Director Mason



In the enterprise sector the issues are cost-savings,

exploitation of broadband infrastructure for business

advantage, information security, IP telephony, wireless

LANs and mobile data.

Key issues in the government sector are implementation

of e-government and e-policing initiatives, regional

promotion of broadband infrastructure, the

introduction of secure digital mobile communications

for emergency services and information security.Our strategy is to enhance our differentiation and sellmarket-focused services that help clients in thoseenvironments resolve these issues. Mason’s keydifferentiators are that:• it comprises specialist consultancies that are able to

compete with larger, more generalised consultancies;• it is independent of vendors and can act impartially

in the best interests of customers;• it provides a “concept to reality” service that takes

clients from initial strategic thinking to a workingsolution;

• the group has expertise across all of the convergingtechnologies; and

• it adopts a collaborative approach to working withits clients.

In the longer term, we see many opportunities forMason to expand geographically through establishmentof new offices and through acquisitions.

> People

As a result of the market downturn during the year, we

reduced our staff complement, for the first time, from

260 to 200. Redundancies were mainly among support

staff, consultants and managers. Although the

redundancies were traumatic for all concerned, all those

involved felt they were treated fairly and with sensitivity

and no industrial tribunal claims arose.

Mason retains its strong people-based culture

centred on customer service, teamwork, personal

development, professionalism and fun. Each member

of our team is appraised annually and a career

development and training plan is in place for

each individual.

We also operate a profit-related bonus scheme based on

agreed objectives. Most of the people hold Datatec

share options.

> The Coming Year

Prospects for Mason are looking positive. Its reputation

is growing in Continental Europe and demand for its

services is being driven by deregulation, the

convergence of IT and telecommunications, new

technology, mergers and acquisitions, e-business,

m-commerce and changes in business practices.

The competition in Mason’s market is fragmented and

we expect to see some consolidation among Mason’s

competitors and, as the UK’s market leader, Mason

expects to play a leading role in this consolidation.

mason ebitda

R million

4035302520151050

mason revenue

R million

20020

50

100

150

200

250

300

2001 2002 2001

282($29m)

222

13($1m)

40


Other Holdings’ Divisional Report


Datatec’s operations in SA focus in three core areas:

• RangeGate, a mobile technology systems integrator;

• Affinity Logic, an IT outsource services company;

and

• Westcon AME (Africa Middle East), a value added

networking distributor whose operations mirror

those of the Westcon Group.

For all three, the year was one of consolidation and cost

cutting through staff reductions and rationalisation of

back-end office functions.

> RangeGate

RangeGate represents the Group’s mobile technology

systems integration business located in SA and the UK.

It sells mobile solutions into specific market sectors

such as retail, industrial, manufacturing, transport

and logistics.

RangeGate grew revenues to R83 million during the

year, but experienced an operating loss of R24 million.

During the year the business cut substantial costs and

readied itself for an increasing demand for mobile

technology as organisations sought enhanced

efficiencies through “anytime, anywhere” access for

managers, customers and suppliers.

The proposed merger of RangeGate with Versatile

Mobile Systems did not proceed, as not all

regulatory approvals had been received. RangeGate

will, however, continue to work together with

Versatile on opportunities where both companies

can add value.

In the year ahead, revenues are expected to increase and

the operating performance should improve to a near

break-even situation.

> Affinity Logic

Affinity Logic’s core business is the provision of

outsource services for the delivery of computing

infrastructure and application solutions to the retail and

consumer goods sector. It has been developing an

integrated computing platform that will be outsourced

on a capacity on demand basis.

At the start of the year the company made a

significant investment to develop its core outsourcing

services platform. As part of this refocusing, it was

decided to exit all the non-core investments and

service offerings.

The increased expenditure associated with the

change in the company’s strategy contributed to

Affinity’s significant loss during the year of R29

million for the Group. Turnover from continuing

operations was flat, however, the company generated

positive cash flows from operations.

The balance sheet ended the year well capitalised and

expenditure on the development of the core platform is

now substantially complete. More than 70% of turnover

is annuity based.

During the year it was proposed that Wooltru’s stake be

bought out by management and Datatec, increasing

Datatec’s shareholding from 47.5% to 55.2%. This

transaction was finalised in June 2002 subject to

Competition Commission approval for the increase in

the Datatec shareholding.

After investing substantially in upgrading its service

offering and developing a comprehensive growth and

marketing strategy, Affinity Logic looks forward to a year

of increased revenues and close to break-even

profitability.

> Westcon AME

Westcon AME, created by merging the South African

operations of Westcon, Scantec and Datanet, maintained


its focus on territorial expansion and successfully

concluded the acquisition of Dubai-based OnLine on

30 June 2001.

The back offices of the SA businesses (Westcon, Datanet

and Scantec) were consolidated, resulting in significant

cost reductions. The company has now realigned all the

businesses to match the strategy of leveraging Westcon’s

global competitive advantage.

Revenue for the year increased by 56% to R713 million

and operating profits rose by 325% to R17 million.

We expect the year ahead to show both increased

revenues and operating profit.


other holdings revenue

R million

other holdings ebitda

R million

140

120

100

80

60

40

20

02002

0100200300400500600700800900

2001 2002 2001

886

563

123106


Finance Report


GROUP ACCOUNTING POLICIES

The annual financial statements have been prepared in accordance with the Group's published and materially

consistently applied accounting policies that comply with South African Statements of Generally Accepted

Accounting Practice, and with International Accounting Standards (other than goodwill which has previously been

written off against share premium).

Westcon is consolidated into the Group’s annual financial statements based on Westcon’s results for its financial year

ended 28 February. This is consistent with the previous years’ annual financial statements.

REVENUE

The Group's financial results for the year ended 31 March 2002 reflected revenue from ongoing operations of

R20.6 billion compared with revenue in the previous year of R19.0 billion, an increase of 8%. However, in US Dollars

revenue decreased from $2.6 billion in 2001 to $2.2 billion in 2002, a decrease of 16%. Revenue from ongoing

operations per division is as follows:

2002 2001 2002 2001

Revenue (million) Rand Rand $ $

Westcon 15 595 14 871 1 670 2 043

Logical 3 799 3 381 395 460

Mason 282 222 29 30

Other Holdings 886 563 92 77

Total 20 562 19 037 2 186 2 610

Westcon achieved revenue from ongoing operations of R15.6 billion ($1.67 billion) in 2002 compared to revenue of

R14.9 billion ($2.04 billion) in 2001, a decline of 18% in US Dollars reflecting the weak economic trading conditions

and the effects of the September 11, 2001 events. Gross margins decreased from 11.2% in 2001 to 10.4% for 2002, a

decline of 7.1%. This decline is due mainly to the reduction and elimination in the second half of the year of margin

enhancing programmes associated with the sales of Cisco products and the provision made during the year in respect

of the Lucent litigation.

Logical achieved revenue from ongoing operations of R3.8 billion ($395 million) in 2002 compared to revenue of

R3.4 billion ($460 million) in 2001, a decline of 14% in US Dollars. This decline is primarily a result of the weak

economic conditions together with customers in the US and Europe postponing IT projects in a climate of reduced

confidence in the economy. Gross margins decreased from 27.8% in 2001 to 24.4% in 2002 as product margins

declined under increasing competition and the declining use of professional services.

Mason achieved revenue of R282 million (£20 million) in 2002 compared to R222 million (£21 million) in 2001

despite the inclusion for the first time in 2002 of revenue of £5 million from Catalyst, which was acquired by Mason

in March 2001. The collapse of technology stock prices and the turmoil in the telecommunications industry had a

major effect on Mason, with many of Mason's telecommunication customers suffering financially and consequently

reducing their spending on external consultancy. This resulted in revenue reducing from £11.7 million in the first six

months to £8.7 million in the second six months, a reduction of 26%.



Other Holdings’ revenue increased mainly through the inclusion for the first time of revenue of R202 million from

OnLine, acquired by Westcon AME on 30 June 2001.

OPERATING PROFIT BEFORE FINANCE COSTS, DEPRECIATION AND AMORTISATION (“EBITDA”)

EBITDA from ongoing operations amounted to R873 million compared with the prior year of R1.127 billion. This

decline is largely the result of the difficult economic trading conditions, disappointing results achieved by Logical and

an increase in provisions in Westcon. EBITDA from ongoing operations per division is as follows:

2002 2001 2002 2001

EBITDA (million) Rand Rand $ $

Westcon 685 830 73 114

Logical 52 151 5 21

Mason 13 40 1 5

Other Holdings 123 106 13 14

873 1 127 92 154

EBITDA margin on ongoing operations 4.2% 5.9% 4.2% 5.9%

Included in EBITDA are foreign exchange gains of R136 million (2001: R49 million) attributable to the substantial

decline in the value of the Rand against the Group's trading currencies in the latter part of the year and an amount

of R39 million relating to the refund of customs duty paid, to be received by Westcon from the taxation authorities in

the UK.

As noted in the Group's 2001 annual report, Westcon held $24 million of inventory purchased from Lucent

Technologies, Inc. (“Lucent”) and in July 2001 commenced litigation to require Lucent to abide by the distribution

agreement between the parties and accept return of this inventory. Westcon management believes that Westcon has a

meritorious case against Lucent and is continuing with the litigation. Management has, however, decided to adopt a

prudent approach and, accordingly, Westcon during the year has provided an amount of $13 million (R123 million)

against its remaining Lucent inventory of $16 million.

Logical charged an amount of R86 million against the restructuring provisions created during the financial

year ended 31 March 2001. At the end of the year, R24 million of the restructuring provisions remained, which

provisions are considered adequate to meet restructuring costs mainly relating to future rentals on premises

vacated.

FINANCING COSTS

Financing costs decreased during the year due to the reduction in interest rates in the US and the operating cash flows

generated in Westcon and Logical that lowered the levels of working capital.

GOODWILL AMORTISATION

Goodwill is amortised in the Group's financial statements over a period of seven years and amounted to R133 million

in 2002 compared to R80 million in 2001. This increase is due to goodwill being recorded during the year of

R421 million in respect of payments made for amounts still outstanding to vendors that were subject to earnouts.


Finance Report continued


EXCEPTIONAL ITEMS

The following exceptional items were recorded during the year under review:

(R million) 2002 2001

Impairments of property, plant and equipment (1) (109)Net (loss)/surplus on disposal of operations and investments (1) 1 068Write-down of carrying value of investments (58) (161)Loss on disposal and closure of discontinued operations (64) (92)Proposed subsidiary listing costs (40) –

(164) 706Goodwill impairment (397) –

Exceptional items per the Income Statement (561) 706Tax effect 11 (65)Attributable to outside shareholders 2 (5)

Net effect of exceptional items (548) 636

Exceptional items, excluding impairment of goodwill, of R164 million were incurred during the year, which relatedpredominantly to the net loss realised on disposal of certain operations, the write down in the carrying value ofinvestments and the write off of costs relating to Westcon's proposed listing previously included in the balance sheet.

The Group reviewed the value of goodwill carried on its balance sheet at the end of the year. Given the historicaltrading losses of Logical and certain of its Other Holdings, the Group has written off the remaining amounts ofgoodwill totalling R397 million relating to those loss-making operations. The remaining goodwill carried on theGroup's balance sheet of R419 million relates to Westcon, Mason and Westcon AME and management believe thatthere has been no impairment to this goodwill.

TAXATION

The effective rate of ordinary taxation on profit before exceptional items and goodwill decreased from 34.2% in 2001to 30.6% in 2002. This decrease is a result of a shift in Westcon's profit to non-US territories that are subject to lowerrates of tax, compared to the previous year, together with the increased impact on the rate of tax deductions foracquired goodwill of $10 million in the US arising from this spread of profits, a reduction in US state taxes in Westcon,prior year tax credits in Logical, and the recognition of certain deferred tax assets on a prudent basis wheremanagement believes that their recovery is probable.

No provision has been made in Westcon for US Federal deferred income taxes on approximately $108 million ofaccumulated and undistributed earnings of Westcon’s foreign subsidiaries at 28 February 2002 (Westcon’s year end)as it is the present intention of the Group to continue reinvesting such earnings in the foreign subsidiaries indefinitely.The Group has not calculated the amount of the potential US Federal deferred income taxes, which amount will beless than the US statutory rate of taxation after taking into account credit for foreign taxes paid.

MINORITY INTERESTS

Minority interests relate to the 7.5% in Westcon, 25% in Logical Softnet (in Argentina), 25% in Mason and 20.9% inRangeGate not owned by the Group. The decline in profit attributable to the outside shareholders of R57 million in2001 to R11 million in 2002 is due to the general decline in the overall Group profitability, the increase in the Group’sinvestment in Westcon from 85.3% to 92.5% during the year and the allocation to the outside shareholders of theirshare of the losses in RangeGate and Logical Softnet.



HEADLINE EARNINGS PER SHARE

Headline earnings per share decreased by 18% from 325 cents in 2001 to 265 cents in 2002. Basic earnings per sharedeclined from 761 cents in 2001 to a loss per share of 257 cents in 2002 due primarily to the charge for impairment ofgoodwill amounting to R397 million (2001: Nil) and the losses from other exceptional items of R164 million (2001: profitof R706 million). Diluted earnings per share was slightly lower than basic earnings per share at a loss per share of 253cents reflecting the notional additional shares in issue necessary to fund the difference between the number of sharesissued and the number of shares that would have been issued at fair value in respect of the share options granted but notexercised. Diluted headline earnings per share of 260 cents in 2002 was 20% lower than the 325 cents in 2001.

The weighted average number of shares in issue for the year was 131 million which increased from last year's126 million due to the additional shares in issue arising predominantly from the issue of shares for cash concluded inthe latter part of the year.

DIVIDEND POLICY

The Group continues to pursue attractive investment opportunities that are synergistic to existing operations.Accordingly, the Group's policy of retaining attributable income for future growth without a dividend distribution toshareholders remains in place.

BALANCE SHEET

Ordinary shareholders' funds increased from R3.2 billion in 2001 to R3.7 billion in 2002, an increase of R0.5 billion.This increase is after the charge for impairment of goodwill of R397 million and partly reflects the fall of the Rand onthe historic cost asset base.

BORROWINGS

Long-term liabilities relate primarily to the Group's proportional share of debt raised in Affinity Logic to fund thedevelopment of operations in that business, as well as capitalised finance leases in respect of property, plant andequipment in other subsidiary companies.

During the year under review the Group reduced its net borrowings mainly through the cash generated fromoperations. As at 31 March 2001, Westcon had a senior acquisition loan facility of $75 million of which $50 million wasrepaid in April 2001. The balance of $25 million was repaid by an instalment of $10 million on 31 December 2001,with the balance of $15 million repayable in six monthly instalments of $2.5 million through June 2002. In addition,as at 31 March 2002, Westcon had a $225 million senior revolving credit facility, expiring on 31 December 2002.Westcon is in the process of interviewing prospective finance companies, which include its current lender, with a viewto selecting a syndicate of financiers to replace this current senior revolving credit facility in January 2003.

The Group is dependent on its bank overdrafts, working capital line of credit and trade finance facilities to operate.These facilities generally consist of either a fixed term or a fixed period but repayable on demand, are secured againstthe assets of the company to which the facility is made available and contain certain covenants which include financialcovenants such as minimum liquidity, maximum leverage and pre-tax earnings coverage. If these covenants areviolated and a waiver is not obtained for such violation, this may, amongst other things, mean that the facility may berepayable on demand.

Datatec has no restrictions on its borrowing powers in terms of its Memorandum and Articles of Association.

CAPITALISED DEVELOPMENT EXPENDITURE

Westcon

Westcon has developed internally an enterprise resource planning system known as Compass which is based on aJ D Edwards application running on an Oracle platform. Compass has been installed in Westcon UK, Westcon, Inc.,Westcon Canada, Comstor US, Comstor Germany and Voda One, which operations amount to 77% of Westcon’s totalrevenue. Westcon will, over the next eighteen months, implement this system over its remaining material operations.The capitalised costs associated with the development of Compass to date amount to R87 million (2001: R24 million)and further costs of approximately $2 million will be capitalised over the next eighteen months.

Development costs are amortised over a maximum of seven years with R13.2 million amortised in the year under review.




Logical

Capitalised development costs consist mainly of R26 million (2001: R19 million) for the EBOC (e-business operationscentre) and R11 million (2001: R6 million) for Secure24. The EBOC costs relate to the costs incurred in developingthe network management centres in the US and UK, which provide outsourced network infrastructuremanagement for customers. Secure24 costs relate to a service, developed in New Zealand, which providesmonitoring, management and reporting of security related events within a customer environment with a unique setof software tools.

Development costs are amortised over a maximum of three years commencing when the development project isbrought to market. During the year under review an amount of R7.0 million was amortised.

Affinity Logic

Capitalised development costs comprise systems development in progress amounting to R2.5 million(2001: R7.9 million), which consists of a wide variety of projects that are under development, including extendedenterprise application integration projects, web based development and planning systems. The majority of theseprojects are SAP based.

When development of a project is completed the development costs are transferred from systems development inprogress to either software or computer equipment and depreciated over the useful life of the project. During the2002 financial year amounts of R20.4 million and R0.6 million were transferred from systems development in progressto software and computer equipment respectively (2001: R9.3 million and R14.1 million respectively).

All amounts above reflect Datatec’s proportional share of such amounts.

AMOUNTS OWING TO VENDORS

Amounts owing to vendors represent purchase considerations owing in respect of acquisitions. Amounts owingare recognised once there is sufficient assurance that the suspensive conditions will be met and the amounts canbe measured reliably. Amounts owing where the suspensive conditions have not been met are disclosed ascontingent liabilities.

Amounts owing to vendors decreased during the year from R413 million included in the balance sheet andR395 million reflected as the maximum contingent liability in 2001 to R90 million included in the balance sheet andR65 million reflected as the maximum contingent liability in 2002.

During the year the following amounts were paid to vendors out of the Group's internal cash resources:

Million R $

Westcon 105 11Logical 461 55Other Holdings 66 8

632 74

The Westcon payments to vendors relate mainly to the acquisitions of Loginet in Germany, Technocraft in Singaporeand CCA Technologies in the US. The Logical payments to vendors relate mainly to the acquisitions of PSSG and BCSin the US, and Satelcom in the UK. The Other Holdings payments relate mainly to the payment to Wooltru Limitedin respect of Affinity Logic.



The amounts owing to vendors at 31 March 2002 are made up as follows:

Softnet SA

An amount of R36 million ($3 million) is still owing to the vendors of Softnet. During June 2002 it was agreed thata maximum further amount of $1.7 million would be paid to the vendors, with an amount of $1.5 million to beadvanced to Softnet on loan account by Logical. The minority shareholder of 25% has agreed to advance $0.5 million, his pro rata share of the loan.

Catalyst IT Partners

An amount of R98 million ($9 million) is still owing to the vendors of Catalyst IT Partners (a company previouslyacquired by Mason). Of this amount R33 million ($3 million) is expected to be paid during the 2003 financial year inrespect of the 2002 financial year and is dependent on the level of profitability achieved for such year. The remainingR65 million ($6 million) has been included in contingent liabilities and is payable in respect of the 2003 financial yearand is dependent on the level of profitability achieved for such year.

Online Distribution

An amount of R21 million ($2 million) was provided to be paid during the 2003 financial year to the vendors ofOnline Distribution (a company acquired by Westcon AME) and was dependent on the level of profitability achievedfor the 2002 financial year. This amount was finalised during May 2002 and an amount of R15 million ($1.3 million)was paid to the vendors.

CASH FLOW

Cash generated from operations of R2.1 billion was driven by improvements in working capital of R1.3 billion mainlyas a result of a reduction in inventories. This is particularly reflected in Westcon where inventories reduced by$185 million, a decline of 51% from the previous year. At year end the Group's balance sheet had improved to a netcash positive position of R168 million compared with net debt of R262 million in the prior year, an improvement ofR430 million. These cash flows allowed Westcon to reduce its net debt by $131 million including a repayment of$65 million of its original $75 million acquisition facility.

OPERATING LEASE COMMITMENTS

Operating lease commitments increased from R788 million to R1.046 billion, due to the deterioration of theR/$ exchange rate during the 2002 financial year. In US Dollars operating lease commitments have reduced from$99 million in 2001 to $92 million in 2002.

Operating lease commitments are made up per division as follows:

2002 2001 2002 2001Million R R $ $

Westcon 378 318 33 41Logical 569 380 50 47Mason 57 58 5 7Other Holdings 42 32 4 4

Total 1 046 788 92 99

More detail on operating lease commitments can be found in note 22 of the annual financial statements.

The operating lease commitments in Westcon relate mainly to future property rentals of warehouses and officeproperties. The balance relates to future rentals in respect of office equipment and computer equipment.

The vast majority of the operating lease commitments in Logical relate to property rentals. Included in these rentalsis an amount of $36 million which relates to the Logical Group and Logical UK premises in Slough, where a twentyfive year lease was entered into in April 2000. Approximately 30% of the building has been sublet for a period of five




years (with two break clauses after eighteen months and thirty six months) from January 2002, although this futurerental has not been applied to reducing the operating lease commitments. The balance of the operating leasecommitments relate to future rentals on vehicles and computer equipment.

The operating lease commitments for Mason and Other Holdings relate predominantly to future property rentals ofwarehouses and office properties.

FOREIGN CURRENCY

The Group publishes its financial statements in South African Rands. The Group, however, earns over 58% of itsrevenues in US Dollars although over 94% of its revenues are denominated in US Dollars as Westcon and Logicalreport their consolidated results in US Dollars. As a result a similar proportion of the Group's balance sheetincluding net debt and cash deposits are denominated in US Dollars.

However, the Group conducts business in many foreign currencies and, as a result, is subject to currency risks owingto exchange rate movements which will affect its costs and translation of the profits of subsidiaries whose functionalcurrency is not the South African Rand. The most significant other currencies in which the Group trades are Sterling,the Euro and the Australian Dollar.

During the year the Group was exposed to significant currency risk with the devaluation of the Argentinian Peso. Since1991, the conversion rate of the Argentinian Peso has been 1:1 with the US Dollar. On 20 December 2001, theArgentinian government announced that exchange transactions would be temporarily suspended. On 2 January 2002,the government then announced that the 1:1 ratio would no longer be maintained and instead a dual system with afree market foreign currency exchange was established for most transactions. In February 2002, the dual system wasreplaced by the current single floating rate for all transactions.

The exchange rate at the year end was 2.85 Pesos to the US Dollar. Significant exchange movements have arisen wherebalances have been translated from the previous 1:1 rate to the current market rate.

The majority of Logical Argentina's revenues are with local customers, invoiced in US Dollars and expected to becollected in US Dollars at the floating rate prevailing at the time of collection. Revenues that were made before31 December 2001 and not yet collected were therefore caught by the change in legislation which requires thesebalances to be translated at the old 1:1 rate and not the market rate. This resulted in Logical Argentina incurringsignificant exchange losses in respect of its receivables.

In addition, suppliers, which were mainly outside Argentina, still had to be paid in US Dollars, at the market rates.However, Logical management successfully negotiated payment relief with the major supplier, who also agreed to anextended repayment plan in respect of its debt. The net effect of the payment relief and exchange losses in respect ofreceivables was not material to the Group accounts.

The following table reflects the average and year end exchange rates against the South African Rand of US Dollarsand Sterling:

Year ended Year ended31 March 2002 31 March 2001

Average Closing Average Closing

US Dollar (Westcon – February) 9.3405 11.4450 7.2759 7.7100US Dollar (Group) 9.6251 11.4452 7.3492 8.0300Sterling 13.8069 16.3276 10.8192 11.4588

POST-RETIREMENT BENEFITS

The Group's retirement benefit funds comprise a number of defined contribution funds throughout the world. TheGroup has no liability to these funds other than the monthly payment of staff contributions. The Group has no liabilityin terms of post retirement medical aid contributions for staff.



Corporate Governance

The Group and its directors are fully committed to good corporate governance and to the principles of openness,

integrity and accountability in dealing with shareholders and all other stakeholders. All directors endorse the Code of

Corporate Practices and Conduct recommended in the King Report on Corporate Governance in South Africa 2002

(“King II report”).

BOARD OF DIRECTORS (“THE BOARD”)

The Board consists of eleven directors, six of whom are non-executive and five of whom are independent, as defined

by the King II report. This is the first time in the history of the Group that the number of non-executive directors

exceeds the number of executive directors. The Remuneration and Nomination Committee is seeking to appoint an

additional independent non-executive director. The non-executive directors, drawing on their skills and business

acumen, ensure impartial and objective viewpoints in decision making processes and standards of conduct.

The roles of the Chairman and the Chief Executive Officer do not vest in the same person. Leslie Boyd was appointed

as non-executive Chairman of the Group during the year. Jens Montanana continues in the separate role of Chief

Executive Officer.

The directors consider the mix of technical, entrepreneurial, financial and business skills of the directors to be

balanced, thus enhancing the effectiveness of the Board.

The Board retains full and effective control over the Group and monitors the executive management and decisions

in the subsidiary companies. While the Group's executive directors are on the boards of the Group’s subsidiaries,

effective day-to-day executive management of these subsidiaries resides at the divisional level. Logical and Westcon

have executive representation on the main Datatec Board through their Chief Executive Officers.

The Board is responsible for the adoption of strategic plans, monitoring of operational performance and

management, determination of policy and processes to ensure the integrity of the company’s risk management and

internal controls, communications policy, and director selection, orientation and evaluation. These responsibilities

will be set out in the board charter that will be formalised during the 2003 financial year. To adequately fulfil their

responsibilities, directors have unrestricted access to timely financial information, all company information, records,

documents and property. Directors are provided with guidelines regarding their duties and responsibilities as directors

and a formal orientation programme has been established to familiarise incoming directors with information about

the company’s business, competitive position and strategic plans and objectives.

The Board meets at least four times a year and additional meetings are held when non-scheduled matters arise. At all

Board meetings directors declare their interests in contracts where applicable. Full details of the directorate are set

out on pages 6 to 7 and page 101.


Corporate Governance continued


DIRECTORS’ ATTENDANCE AT BOARD MEETINGS — 2002 FINANCIAL YEAR

17 May 23 August 10 October 14 November 15 March

2001 2001 2001 2001 2002

L Boyd NAD NAD NAD NAD P

C B Brayshaw NAD NAD NAD NAD P

J S James P P A P NAD

M Karpul P P P P P

M J Lamberti A P P NAD NAD

S F Lawrence P P A P P

J F McCartney P P P P P

J P Montanana P P P P P

D B Pfaff NAD P P P P

R S Rindel P P P P P

C M L Savage NAD NAD NAD NAD P

C S Seabrooke P P P P P

A M Smith NAD P A P P

A = Absent P = Present NAD = Not a director at that time

The Board has the following committees to assist it with its duties:

• Audit and Compliance Committee

• Remuneration and Nomination Committee

• Business Risk Committee

Audit and Compliance Committee

For the period from 1 April 2001 to 6 December 2001, the Audit Committee consisted of the following members:

C S Seabrooke (Chairman)

M J Lamberti*

J S James

R S Rindel

* M J Lamberti was a member of the Audit Committee until 22 October 2001, the date of his resignation from the

Board.

With the appointment of additional non-executive directors on 6 December 2001, the composition of the Audit

Committee was amended as follows to include only independent, non-executive directors:

C B Brayshaw (Chairman)

C M L Savage

C S Seabrooke



The name of the Committee was changed to the Audit and Compliance Committee.

The Committee operates within defined terms of reference and authority granted to it by the Board and meets at least

three times a year, when the external auditors and Group Financial Director are invited to attend. The external

auditors have unrestricted access to the Audit and Compliance Committee.

The principal functions of the Committee are to review the interim and annual financial statements and accounting

policies, monitor the effectiveness of internal controls, assess the risks facing the business and to discuss the findings

and recommendations of the auditors.

In line with the increasing independence of Datatec's subsidiaries, separate Audit Committees have been established

for all the subsidiary companies. Full reports from these sub-committees are submitted to, and form part of, the

documentation made available to the Datatec Audit and Compliance Committee.

The Audit and Compliance Committee ensures that there is appropriate independence relating to non-audit services

provided by the external auditors.

Remuneration and Nomination Committee

From 6 December 2001, the Remuneration and Nomination Committee consists of the following members, all being

independent non-executive directors:

L Boyd (Chairman)

J F McCartney

C S Seabrooke

Details of the composition of the Committee prior to 6 December 2001 are set out in the Remuneration Report on

pages 45 to 53.

The Committee operates within defined terms of reference and authority granted to it by the Board and meets at least

twice a year. The Chief Executive Officer and Group Financial Director may be invited to attend these meetings, but

neither may take any part in decisions regarding their own remuneration.

The Committee is responsible for making recommendations to the Board on the company’s framework of executive

remuneration and to determine specific remuneration packages for each of the executive directors and certain senior

managers of the Group. The Committee is also responsible for the Group's remuneration policies and the allocation

of share options in terms of the Group’s share option scheme. The Committee makes recommendations to the Board

regarding the appointment of new executive and non-executive directors and makes recommendations on the

composition of the Board generally.




Business Risk Committee

The Business Risk Committee consists of the following members:

C M L Savage (Chairman)

S F Lawrence

J F McCartney

J P Montanana

D B Pfaff (Chief Risk Officer)

R S Rindel

A M Smith

The Committee was formed during December 2001 and operates within defined terms of reference and authority

granted to it by the Board. At least three meetings are held annually.

The Board appointed the Business Risk Committee to assist it in reviewing the risk management process and review

significant risks facing the Group. The Committee sets the Group’s risk strategy in liaison with the executive directors

and senior management, making use of generally recognised risk management and internal control models and

frameworks in order to maintain a sound system of risk management and internal control.

Management is accountable to the Board for designing, implementing, monitoring and integrating the process of risk

management into the day-to-day activities, but the Board retains overall accountability for risk management. The

Board views risk management in a positive light, as it may identify business opportunities.

The Committee has commissioned the services of Ernst & Young to design and facilitate a formal strategic risk

assessment for Datatec at the Group level. This will result in dynamic risk identification, commitment by management

to the risk management process, risk mitigation activities, documented risk communications, alignment of assurance

to the risk profile and a register of key risks. The Board will set the risk strategy policies with senior management and

decide the Group’s tolerance for risk.

The committee will identify and monitor, at least annually, key performance indicators and key risks, including

operational, physical, human resources, technology, continuity, credit, market and compliance risks.

The Business Risk Committee maintains a close relationship with the Audit and Compliance Committee. The chairman

of the Business Risk Committee is a member of the Audit and Compliance Committee.

COMPANY SECRETARY

All directors have access to the advice and services of the Company Secretary and are entitled and authorised to seek

independent and professional advice about affairs of the Group at the Group’s expense. The Company Secretary is

responsible for the duties set out in Section 268G of the Companies Act. The certificate required to be signed in terms

of subsection (d) of the Companies Act (Act 61 of 1973), as amended, appears on page 55.



FINANCIAL AND INTERNAL CONTROL

The Group’s internal control and accounting systems are designed to provide reasonable, but not absolute, assurance

as to the integrity and reliability of the financial information and to safeguard, verify and maintain accountability of

its revenue and assets. These controls are implemented by skilled company personnel.

The Group has implemented a system of control self-assessment across all Group companies. Local management is

required to complete and submit control self-assessment programmes bi-annually. Local management is monitored

against internal control norms in other Group companies and action is taken where ratings are considered to be

inadequate.

The external auditors review the self-assessment programmes to ensure objectivity and consistency of rating across the

Group. Ratings are also reviewed by the Audit and Compliance Committee.

Nothing came to the attention of the Board or arose out of the internal control self-assessment process or year end

external audits to indicate that any material breakdown in the functioning of the Group’s internal controls,

procedures and systems had occurred during the course of the year.

The Board is considering implementing an internal audit function during the year ahead to provide ongoing

assurance on effectiveness of internal controls.

MANAGEMENT REPORTING

The Group has established management reporting disciplines which include the preparation of annual budgets by

operating entities. Monthly results and the financial status of operating entities are reported against approved

budgets. Profit projections and cash flow forecasts are reviewed regularly, while working capital and borrowing levels

are monitored on an ongoing basis.

EMPOWERMENT AND EMPLOYMENT EQUITY

Datatec places particularly high value on the abilities and contributions made by employees in the development and

achievements of its businesses.

The Group is open to new partnerships that will increase shareholder value as well as plough back skills and resources

into the South African community.

Around the globe, the Group is an equal opportunities employer. In terms of the South African Employment Equity

Act, the Group strives to afford all staff members opportunities to realise their full potential and advance their careers.

The Group is committed to a working environment that is free from any discrimination and seeks to develop skills and

talent inherent in its work force.

The Group's social responsibility activities are detailed on pages 43 to 44.




ORGANISATIONAL INTEGRITY

The Group operates on a basis of decentralised management across numerous countries. All employees are

required to maintain the highest level of ethical standards in ensuring that the Group’s business practices are

conducted in a manner that, in all circumstances, is above reproach. A formal code of ethics will be implemented

during the 2003 financial year.

Datatec is actively enhancing its performance-driven culture of full disclosure and transparency in which individual

employees assume responsibility for the actions of the business. The integrity of new appointees in the selection and

promotion process is continuously assessed.

ENVIRONMENT

Datatec operates in an office based environment and is committed to conduct its operations in an environmentally

responsible manner in all the countries in which it operates.

The Group encourages recycling of paper and other materials and is mindful to save electricity, water and other

resources.

In light of the King II report, a formal environmental policy will be implemented during the 2003 financial year.

SHARE DEALINGS

No Group director or employee may deal, directly or indirectly, in Datatec shares or warrants on the basis of previously

unpublished, price-sensitive information.

Restrictions are imposed upon directors and senior management in the trading of Datatec shares and warrants and

upon all employees regarding the exercising of Datatec share options during certain “closed periods”. These closed

periods include those between the interim and financial year end dates (30 September and 31 March) and the interim

and financial year end reporting dates, when the financial results are published in the press.

SHAREHOLDER RELATIONS

Datatec’s investor relations programme includes communications with shareholders through interim and annual

reports, meetings and presentations.

GOING CONCERN

The directors’ assessment on the Group as a going concern is set out on page 55.



Corporate Social Investment

WESTCON

Westcon’s policy is to make charitable donations in support of various causes for others in need. During fiscal 2002,

Westcon contributed to the American Red Cross, as well as making contributions to support the advancement of

treatments for conditions such as breast cancer and autism.

Each year, Westcon contributes to the Community Fund, a US local non-profit corporation that provides funding

and support for the health, education and welfare needs of its residents. The Community Fund provides support

to over twenty agencies concerned with health care, substance abuse, community services, mature adults,

counselling and youth.

Westcon also makes regular contributions to local police and firefighters. In Westchester County, New York, Westcon

employees are currently participating in projects of Habitat for Humanity, an American volunteer organisation that

provides housing assistance for under-privileged families.

LOGICAL

As a member of the Information Systems Research Centre at Cranfield School of Management, Logical is

working with leading IT companies and academics to co-sponsor research on success factors in technology-led

business change.

In addition, Logical's CEO makes presentations to assist numerous MBA students, while the company plays an active

part in a number of professional institutions in the Thames Valley area, participating in meetings and speaking at

conferences.

MASON

Mason participated in numerous events such as the Manchester to Blackpool Bike Ride and various marathons,

managing to raise several thousand pounds for charities. Mason also awarded a scholarship to an MSc graduate at

Salford University.

OTHER HOLDINGS

All the South African operations have committed themselves to a transformation process designed to minimise

barriers to employment equity. Plans were submitted to the Department of Labour during 2001. Significant progress

has been made towards achieving the plans' goals. Since most of our business interests exist outside SA, employment

equity plans are established on an individual entity basis.

The Datatec Education and Technology Trust was established in March 2000 with an initial grant allocation from the

Group of R10 million. The principal ideal of the Trust is to grow SA’s mathematics, science and technology talent,

with a primary focus on providing sustainable infrastructure dedicated to developing these skills. The Group believes

that this development, at grassroots level, provides a platform from which SA can build its expertise in fields such as

medicine, science and technology.


Corporate Social Investment continued


The Trust invested in three community-based projects:

• The Centre for Innovation, established at Hilton College in the Kwa Zulu-Natal Midlands, provides the

surrounding community with computer skills training and is utilised by Protec, a national organisation involved in

technology skills training within disadvantaged communities.

• The Maths Centre, a national initiative to improve mathematics education in state schools. It serves as a resource

base for the empowerment of teachers of mathematics and equips them with the necessary skills to improve their

profession.

• The Siyakhula Bridging School, situated in an economically depressed area between Ivory Park and Ebony Park,

aims at teaching basic computer literacy skills to local area residents, many of whom are unemployed.



Remuneration Report

REMUNERATION AND NOMINATION COMMITTEE (“REMUNERATION COMMITTEE”)

The Board has delegated responsibility for the remuneration policy to the Remuneration Committee. The role of theRemuneration Committee is to establish the overall principles that determine the remuneration of the Group'smanagement and to determine the remuneration of the Group's executive directors. In compiling this report, theCommittee has taken into account the provisions and recommendations outlined in the King II Report.

The composition of the Remuneration Committee was amended during the year under review as follows:

For the period from 1 April 2001 to 6 December 2001, the Remuneration Committee comprised the followingmembers:

J F McCartney (Chairman)M J Lamberti*C S SeabrookeJ P Montanana

* M J Lamberti was chairman of the Remuneration Committee until 22 October 2001, the date of his resignation fromthe Board.

With the appointment of additional non-executive directors on 6 December 2001, the composition of theRemuneration Committee was amended as follows:

L Boyd (Chairman)J F McCartneyC S Seabrooke

The Chief Executive Officer and Group Financial Director may be invited to attend meetings of the RemunerationCommittee but neither may take any part in discussions regarding their own remuneration. External advisers are usedto provide information and advice as required.

REMUNERATION POLICIES

The Remuneration Committee operates a framework of policies, within which it has set the remuneration package foreach executive director.

The overall strategy of the Remuneration Committee is to ensure that executive directors and senior managers arerewarded for their contribution to the Group's operating and financial performance at levels which take account ofthe international IT industry, market and country benchmarks. In order to promote an identity of interest withshareholders, share incentives are considered to be critical elements of executive incentive policy.

The basic objective of the policies is that the executive directors should receive remuneration which is appropriate totheir scale of responsibility and performance and which will attract, motivate and retain individuals of the necessarycalibre. The underlying philosophy of the Remuneration Committee is to provide base pay at median levels bycomparison with relevant comparator companies internationally and to provide the potential for upper quartileearnings when corporate and individual performance justify it. In the application of its policy, the RemunerationCommittee has regard to the necessity of being competitive in the different parts of the world in which the Groupoperates, particularly the US and the UK.

SUMMARY OF REMUNERATION

The remuneration of the executive directors is made up of three main elements designed to balance long- and short-term objectives: a base salary, annual bonus plan with performance targets and a long-term incentive in the form ofan executive share option scheme. The last two elements are designed to encourage and reward superior performance


Remuneration Report continued


and to align the interests of the executive directors as closely as possible with the interests of the shareholders. Inaddition to these main elements, the executive directors also receive retirement and other benefits as outlined below.

Base salary

The base salary of the executive directors is subject to annual review and is set with reference to external market datarelating to comparable international companies based in the US and the UK, and individual performance is also takeninto consideration.

Annual bonus plan

All executive directors are eligible to participate in an annual bonus plan based on the achievement of short-termperformance targets set for each executive director. These targets include measures of corporate performance anddivisional performance (where applicable) and the achievement of individual objectives. These targets are reviewedannually by the Chief Executive with the Remuneration Committee. The bonus will not normally exceed 100% ofannual base salary.

Other benefits

Executive directors are entitled to pensions, the provision of car allowances or a fully-maintained car, medicalinsurance, death and disability insurance and reimbursement of reasonable business expenses. The total value ofbenefits received by each director is shown on page 50.

The Group contributes an amount of 10% of the executive directors' salary package for J P Montanana, R S Rindeland D B Pfaff in respect of retirement funding contributions. Westcon contributed an amount of $2 000 for A M Smithto the US Statutory 401K Retirement Savings Programme. Logical contributes an amount of 25% of S F Lawrence'sbase salary in lieu of all benefits.

SHARE OPTION SCHEMES

The Group operates a number of share option schemes as follows:

• The Datatec Share Option Scheme

• The Westcon Group, Inc. Share Option Plan

• The Logical Group Senior Management Share Option Scheme

• The Mason Employee Benefit Trust

The Datatec Share Option Scheme (“the Datatec Scheme”)

The Datatec Scheme is available to all employees and directors of the Group. The Remuneration Committee, with theapproval of the Board, grants options to employees and directors of Group companies at a price equal to the 30 dayclosing market price prior to the date of such grant less a 15% discount (always subject to a minimum price of 200 cents).

The number of options available in terms of the Datatec Scheme amounts to 18 000 000 (approximately 13.1% of theissued share capital), with the maximum number of share options available to any one participant being limited to1 000 000 (approximately 0.7% of the issued share capital). Options vest over a period of four years from the date onwhich the option is granted, at the rate of 25% per annum at each anniversary of the date of grant. Options are eligibleto be exercised within five years of being granted, unless such option lapses through the death or termination ofemployment of the option holder.

Various amendments to the Datatec Scheme are to be proposed at the Annual General Meeting, the details of whichappear in the Notice to Members on pages 96 to 100.



As at 31 March 2002, 5 013 433 (2001: 4 437 487) share options had been exercised since the original grants and11 626 398 (2001: 10 963 876) share options had been granted but not yet exercised as follows:

Number of Option priceNumber of holders options per share

1 494 7 564 448 R10 – R20114 616 543 R20 – R30370 1 325 082 R30 – R40452 1 799 350 R40 – R5054 123 425 R50 – R6026 46 400 R60 – R7027 43 800 R70 – R8030 102 350 R80 – R901 5 000 R90 – R100

2 568 11 626 398

As set out in the 2001 annual report (after consultation with major shareholders) the Board agreed, in terms of theauthority granted to them in the Datatec Scheme, to allow employees to elect to either have their existing optionslapse and receive new options at a new grant price based on the formula in the Datatec Scheme rules for the samenumber of options, or to remain with their existing options. This process was completed during January 2002, and718 employees elected to allow their existing options to lapse and received 3 296 673 new options at a grant price ofR10.96 per option. 263 employees elected to retain their existing 1 206 089 options at various grant prices. Thecancellation and re-issue did not apply to Westcon employees, certain of the SA subsidiaries disposed of and to Datatecdirectors other than S F Lawrence.

Westcon Group, Inc. Stock Option Plan (“the Plan”)

As noted in the 2000 and 2001 annual report, Westcon was in the process of implementing an executive shareincentive scheme.

The Plan provides for grants of incentive stock options and non-qualified stock options and is available to all directors, officers, employees, consultants, contractors and advisors of Westcon and its subsidiaries. The Plan isadministered by Westcon’s Compensation Committee, which is appointed by the board of directors of Westcon andconsists of three members of the board of directors. The current Compensation Committee members areJ P Montanana, D B Pfaff and C S Seabrooke, all non-executives of Westcon. Pursuant to the Plan, the CompensationCommittee is empowered to determine: the option recipients, the option price (provided it is at least fair market valueon the grant date), the number of shares subject to the option and the option term.

The number of shares that may be issued under the Plan is 4 660 000 shares of common stock of Westcon(approximately 10% of the issued share capital). Options are eligible to be exercised within ten years of the grant dateunless such option lapses through the death or termination of employment of the option holder.

454 350 non-qualified options (approximately 1% of the issued share capital) were granted on 1 July 2001 to A M Smith pursuant to the following terms: option price – $6.40 (a valuation of Westcon of approximately $300 million);option term – maximum of ten years; option vests – (i) on the date of issuance with respect to 33% of the shares subjectto the Option; and (ii) at the expiration of each three month period thereafter with respect to 9% of the shares subjectto the Option until the Option may be exercised in full; provided however, that in the event of a change in control ofWestcon, on the date immediately preceding such change in control 100% of the shares subject to the Option may beexercised. For purposes of the Plan, “change in control” is defined as the sale of substantially all the assets of Westcon




or its parent to a bona fide unaffiliated third party or a change of 35% of the shareholders of Westcon or 40% of theboard of directors of Westcon. In the event that the Optionee’s employment or service is terminated earlier by death,the Option will be exercisable immediately in accordance with the Plan.

The Compensation Committee has approved the granting of 2 211 400 share options to 310 employees(approximately one third of Westcon’s current workforce) pursuant to the following terms: option price – $6.40 (a valuation of Westcon of approximately $300 million); option term – maximum of ten years; option vests over a threeyear period as to 33% one year after the date of grant and at the expiration of each three month period thereafter withrespect to 9% of the shares subject to the option. Options are only exercisable in the event of an IPO and terminatewithin three years of grant in the event that an IPO does not occur. These options have a grant date of October 1, 2001.A M Smith was granted a further 250 000 options in respect of this grant and J F McCartney is to receive 200 000 options.

The Logical Group Senior Management Share Option Scheme (“the Logical Scheme”)

As noted in the 2000 and 2001 annual report, an executive share incentive scheme was in the process of beingimplemented in Logical. This scheme amounted to 10% of the capital of the Logical group of companies of whichabout 7.5% was to be issued. With the introduction of new management in Logical and the creation of a holdingcompany, Logical Group Limited (“LGL”), the Logical Scheme has been amended through the introduction of anEmployee Benefit Trust which is administered by independent Trustees in Jersey.

In terms of the Logical Scheme, LGL is to issue to the Trust 7 200 000 Logical shares (equal to 10% of the issued sharecapital of Logical) at a valuation of Logical of $100 million. The Trust will grant options over these shares to thevarious participants.

The Logical Scheme is available to the top forty or so of the senior managers (on a worldwide basis) within Logical.The Datatec Remuneration Committee recommends to the Trustees the identities of the grantees and the prices atwhich options are exercisable. Options amounting to 5% of the issued capital are to be granted at an exercise priceof $1.39 (equivalent to a valuation of Logical of $100 million). 1 080 000 options (approximately 1.5% of the issuedshare capital) are to be issued to S F Lawrence at a price of $1.39 per ordinary share.

Options vest over a period of two years from the date of grant, with 33.33% vesting on the date of grant and a further33.33% vesting on each of the two subsequent anniversaries of such date of grant. Any further grants of options willbe done at market value at the time, subject to a minimum valuation of $100 million, such market value to bedetermined by the auditors.

Options are exercisable in the event of a trade sale of the Logical business, the flotation of Logical, the sale by Datatecof the majority of its shares in Logical (only a similar proportion as sold by Datatec), the occurrence of certainstatutory events in relation to Logical and a long-stop date being reached (30 June 2005). In the event that the long-stop date is reached, the options are to be exercised and subsequently converted into Datatec shares according to apre-determined formula (subject to the approval of, inter alia, the JSE Securities Exchange South Africa andshareholders in general meeting, to the extent required). This pre-determined formula is based on an independentvaluation of Logical, which valuation is limited to the P:E multiple of Datatec at the time. In the event that the P:Emultiple is zero or less than zero, an independent valuation of Datatec will be performed.

Options lapse through the termination of the employment of the relevant option holder. Vested options may beexercised by a personal representative in the case of the death of the option holder.

The Mason Employee Benefit Trust (“the Mason EBT”)

The Mason EBT is available to all employees of the Group and was established on 13 March 1998, prior to theacquisition of Mason by the Group.

Options are granted at the discretion of the board of Mason as a means of retaining key members of staff andrewarding good performance.



The options are held in an Employee Benefit Trust which is administered by the Royal Bank of Canada, anoffshore trust.

The number of options available in terms of the Mason scheme amounts to 1 103 000 (approximately 10% of theissued share capital).

Options are eligible to be exercised within ten years of being granted, or on either the 100% sale of Mason or as aresult of a public listing of the company, unless such option lapses through the death or termination of employmentof the option holder.

At present, 835 515 share options have been granted but not yet exercised as follows:

Number of holders Number of options Option price per share

25 59 436 £0 – £0.5038 372 100 £0.51 – £1.0086 403 979 £2.00 – £2.50

149 835 515

The collapse of technology stock prices, specifically in the telecommunications sector and Mason’s peer companies,has resulted in the value of Mason falling dramatically. Based on an independent valuation performed, the Masonboard and the Datatec Remuneration Committee approved the repricing of the 403 979 options, originally granted ata price of £2.30, to a new grant price of £1.32. In addition, Datatec is in discussions with the Trustees of the EBTregarding a realisation mechanism for the EBT. Details of these discussions are set out in the commitments note (note22 of the annual financial statements on page 85).

NON-EXECUTIVE DIRECTORS

L Boyd was appointed non-executive chairman on 6 December 2001 and receives a fee of $75 000 per annum.

J F McCartney is the non-executive deputy chairman and will be appointed the non-executive chairman of Westconduring the 2003 financial year, and receives a fee of $62 000 per annum.

With effect from 6 December 2001, each other non-executive director is paid a fee of $40 000 per annum. Non-executive directors, who are members of a committee of the Board, are paid an additional sum of $5 000 per annumin respect of each committee of which they are members.

The remuneration of the non-executive directors is determined by the board of directors as a whole, and is subject tothe approval of shareholders at the Annual General Meeting.

EXTERNAL APPOINTMENTS

Subject to the approval of the Board, executive directors are permitted to hold a directorship in one non-group listedcompany and to retain the fees payable from this appointment.

DIRECTORS’ SERVICE CONTRACTS

In order to properly reflect their spread of responsibilities, J P Montanana, R S Rindel and D B Pfaff have contractswith Datatec International Holdings Limited and Datatec Management Services (Pty) Limited. Other than is set outhereunder, the employment contracts of all executive directors are terminable at three months notice by either party. A M Smith has a contract with Westcon Group, Inc. with a fixed term expiring on 31 December 2004 exclusive of a sixmonth notice provision. S F Lawrence has a contract with Logical Group Services Limited that is terminable at sixmonths notice by either party.

All the non-executive directors have letters of appointment with Datatec and/or Datatec International Holdings fora period of three years from their date of appointment.




DIRECTORS’ EMOLUMENTS

The following tables set out an analysis of the pre-tax remuneration, including bonuses for individual directors whoheld office during the years ended 31 March 2001 and 2002 in the Group. The Remuneration and NominationCommittee has approved the directors’ emoluments.

Basic salary Bonus Fees Benefits Total Total#2002 $ $ $ $ $ Rand

Executive directorsJ P Montanana 623 081 311 296 – 127 311 1 061 688 10 218 853R S Rindel 284 522 142 260 – 44 887 471 669 4 539 861J S James* 113 410 51 948 – 17 138 182 496 1 756 542S F Lawrence 358 617 80 689 – 89 654 528 960 5 091 293D B Pfaff~ 111 149 29 732 – 12 790 153 671 1 479 099A M Smith~ 308 712 125 000 – 4 951 438 663 4 097 332†

Total executive directors 1 799 491 740 925 – 296 731 2 837 147 27 182 980

Non-executive directorsL Boyd ~ – – 24 000 – 24 000 231 002C B Brayshaw ~ – – 13 500 – 13 500 129 939C M L Savage ~ – – 15 000 – 15 000 144 377M J Lamberti* – – 13 091 – 13 091 126 002M Karpul – – 49 870 – 49 870 480 004C S Seabrooke – – 49 870 – 49 870 480 004J F McCartney – – 72 000 – 72 000 693 007

Total non-executive directors – – 237 331 – 237 331 2 284 335

Total directors’ emoluments 1 799 491 740 925 237 331 296 731 3 074 478 29 467 315

# converted at a weighted average rand/dollar exchange rate of R9.6251 for the year ended 31 March 2002* resigned during the 2002 financial year~ appointed during the 2002 financial year† converted at a weighted average rand/dollar exchange rate of R9.3405, being the Westcon conversion rate

Westcon entered into a restraint of trade agreement with A M Smith on 1 July 2001. In terms of this agreement the restraint is for aperiod of eighteen months after the last day of A M Smith’s employment with Westcon and an amount of $2 million is to be paid tohim over a period of time, as follows: the first payment of $500 000 was made during July 2001, and the second payment of$214 286 was made to him during September 2001. Thereafter payments of $214 286 will be made to him in March and Septembereach year, with the last payment due on 1 September 2004. The amount of $714 286 paid to him during the 2002 financial year isnot included in the table of emoluments above.

Where a director was a director for part of the financial year, only the portion of his salary or fees for the time that he has been adirector has been included in the table above. A M Smith was appointed on 17 July 2001 and D B Pfaff was appointed on 1 July2001. L Boyd, C B Brayshaw and C M L Savage were appointed on 6 December 2001. J S James resigned on 6 December 2001 andM J Lamberti resigned on 22 October 2001.

All directors’ emoluments have been paid by subsidiaries of Datatec Limited.

J P Montanana received a relocation allowance of $70 000 during the year to assist in his relocation from the US to the UK. Thisallowance is not included in the table of emoluments above.

Fees paid to M J Lamberti, C S Seabrooke and M Karpul were paid to Ratelimb (Pty) Limited, Sabvest Financial Services (Pty)Limited and Korbitec (Pty) Limited (50% of the fees) respectively.



Basic salary Bonus Fees Benefits Total Total#

2001 $ $ $ $ $ Rand

Executive directors

J P Montanana 624 798 616 877˜ – 64 527 1 306 202 9 599 540

R S Rindel 265 740 548 360˜ – 28 948 843 048 6 195 728

J S James * 244 472 33 418 – 14 930 292 820 2 151 993

M Karpul 32 657 1 234 638˜ – – 1 267 295 9 313 604

S F Lawrence 153 350 168 685 – 38 338 360 373 2 648 453

D B Pfaff = – – – – – –

A M Smith= – – – – – –

Total executive directors 1 321 017 2 601 978 – 146 743 4 069 738 29 909 318

Non-executive directors

L Boyd = – – – – – –

C B Brayshaw = – – – – – –

C M L Savage = – – – – – –

M J Lamberti * – – – – – –

C S Seabrooke – – 21 771 – 21 771 160 000

J F McCartney – – 100 000 – 100 000 734 920

Total non-executive

directors – – 121 771 – 121 771 894 920

Total directors ‘

emoluments 1 321 017 2 601 978 121 771 146 743 4 191 509 30 804 238

# converted at a weighted average rand/dollar exchange rate of R7.3492 for the year ended 31 March 2001

˜Special incentive bonuses relating to the sale of UUNET SA are included in these amounts as follows:

J P Montanana $544 277

R S Rindel $517 063

M Karpul $1 224 623

* resigned during the 2002 financial year

= appointed during the 2002 financial year

The 2001 emoluments only reflect the emoluments of directors that were directors of the company during the 2002 financial year.

For this reason the total remuneration above does not agree to the directors’ emoluments for 2001 on page 72.

Where a director was a director for part of the financial year, only the portion of his salary or fees for the time that he has been a

director has been included in the table above. S F Lawrence was appointed on 7 November 2000.

All directors’ emoluments have been paid by subsidiaries of Datatec Limited.

Fees paid to C S Seabrooke were paid to Sabvest Financial Services (Pty) Limited.




DIRECTORS’ SHARE INTERESTS

The interests of directors who held office at 31 March 2002 in ordinary shares of the company were as follows:

Direct Indirect 2002 Beneficial Beneficial Non-beneficial Total

Executive directors

J P Montanana 5 249 955 345 000 – 5 594 955R S Rindel 44 500 – 62 057 106 557J S James* – – – –

S F Lawrence 45 000 – – 45 000D B Pfaff – – – –

A M Smith – – – –


L Boyd – – – –

C B Brayshaw – – – –

C M L Savage – – – –

M J Lamberti* – – – –

M Karpul 355 200 – – 355 200C S Seabrooke – 300 000† – 300 000J F McCartney 233 000 – – 233 000

5 927 655 645 000 62 057 6 634 712

2001Executive directors

J P Montanana 1 149 955 4 370 000 – 5 519 955R S Rindel 44 500 – 62 057 106 557J S James* 5 200 – – 5 200M Karpul 355 200 – – 355 200S F Lawrence 45 000 – – 45 000D B Pfaff – – – –

A M Smith – – – –


L Boyd – – – –

C B Brayshaw – – – –

C M L Savage – – – –

M J Lamberti* – – – –

C S Seabrooke – 300 000 – 300 000J F McCartney 233 000 – – 233 000

1 832 855 4 670 000 62 057 6 564 912

* resigned during the 2002 financial year

†The only movement in the interests of directors since the year end was the disposal of these shares on 23 and 24 May 2002.



DIRECTORS’ DATATEC SHARE OPTIONS

Optionsheld at Granted Exercised Options

Issue beginning during and held atDirectors at year end date of year the year Price paid year end

J P Montanana 1997-04-15 100 000 – 15.56 – 100 000 2000-11-12 200 000 – 35.46 – 200 000 2001-12-10 – ~ 700 000 10.96 – 700 000

300 000 700 000 – 1 000 000

R S Rindel 1997-04-15 17 500 – 15.56 – 17 500 1997-10-29 35 000 – 14.25 – 35 000 2000-11-12 70 000 – 35.46 – 70 000 2001-12-10 – ~ 410 000 10.96 – 410 000

122 500 410 000 – 532 500

S F Lawrence ^ 2001-12-10 228 000 – 10.96 – 228 000

228 000 – – 228 000

D B Pfaff 2001-12-10 – 200 000 10.96 – 200 000

– 200 000 – 200 000

A M Smith 1998-12-01 30 000 – 31.40 – 30 000 1999-07-08 30 000 – 42.85 – 30 000

60 000 – – 60 000

M Karpul 1997-04-15 37 500 – 15.56 – 37 500 1999-09-28 50 000 – 28.75 – 50 000 2000-11-12 40 000 – 35.46 – 40 000

127 500 – – 127 500

C S Seabrooke 1997-10-29 40 000 – 14.25 – 40 000 2002-03-14 – √80 000 18.06 – 80 000

40 000 80 000 – 120 000

J F McCartney 2002-03-14 – √125 000 18.06 – 125 000

– 125 000 – 125 000

Total 878 000 1 515 000 – 2 393 000

^ These options were cancelled and re-issued during the 2002 financial year as set out on page 47.~ These options were granted to such directors during the year as a result of the conversion of their interests in the Westcon, Logical

and Mason share schemes into Datatec options as set out in the press announcement dated 18 October 2001.√ The granting of these options is subject to ratification by shareholders at the Annual General Meeting.


Index to the Annual Financial Statements


Board Approval 55

Certificate by Secretary 55

Report of the Independent Auditors 56

Directors’ Report 57

Group Accounting Policies 62

Income Statements 66

Balance Sheets 67

Statements of Changes in Equity 68

Cash Flow Statements 69

Notes to the Cash Flow Statements 70

Notes to the Annual Financial Statements 72

Annexure 1 – Subsidiary Companies and Joint Venture 91

Annexure 2 – Associated Companies 93

Annexure 3 – Investments 94


Board Approval


The annual financial statements for the year ended 31 March 2002 are prepared in accordance with GenerallyAccepted Accounting Practice as applied in the Republic of South Africa and incorporate appropriate and responsibledisclosure together with appropriate accounting policies.

The directors are responsible for the maintenance of adequate accounting records, the preparation and integrity ofthe annual financial statements and all related information. The directors are also responsible for the systems ofinternal control which are designed to provide reasonable, but not absolute, assurance as to the reliability of thefinancial statements and to adequately safeguard, verify and maintain accountability of assets and to prevent anddetect material misstatement and loss.

The directors believe that the Group has adequate resources to continue in operation for the foreseeable future andaccordingly the financial statements have been prepared on a going concern basis.

The annual financial statements which appear on pages 57 to 94 were approved by the board of directors on 17 July2002 and are signed on its behalf by:

J P Montanana R S Rindel D B PfaffChief Executive Officer Executive Director Executive Director

(Group Finance Director (Group Finance Directorfrom 1 April 2001 to 31 May 2002) from 1 June 2002)

Certificate by Secretary

In terms of section 268G(d) of the Companies Act (Act 61 of 1973), as amended (“Act”), I certify that for the year

ended 31 March 2002, Datatec Limited has lodged with the Registrar of Companies all such returns as are required

of a public company in terms of the Act.

Further, that such returns are true, correct and up to date.

I P DittrichSecretary

> for the year ended 31 March 2002


Report of the Independent Auditors


To the members of Datatec Limited

We have audited the annual financial statements and Group annual financial statements of Datatec Limited, set out

on pages 57 to 94, for the year ended 31 March 2002. These financial statements are the responsibility of the

company’s directors. Our responsibility is to express an opinion on these financial statements based on our audit.

SCOPE

We conducted our audit in accordance with statements of South African Auditing Standards. Those standards require

that we plan and perform the audit to obtain reasonable assurance that the financial statements are free of material

misstatement. An audit includes:

• examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements;

• assessing the accounting principles used and significant estimates made by management; and

• evaluating the overall financial statement presentation.

We believe that our audit provides a reasonable basis for our opinion.

AUDIT OPINION

In our opinion, the financial statements fairly present, in all material respects, the financial position of the company

and the Group at 31 March 2002 and the results of their operations and cash flows for the year then ended in

accordance with Statements of Generally Accepted Accounting Practice as applied in the Republic of South Africa,

and in the manner required by the Companies Act of South Africa.

Deloitte & ToucheChartered Accountants (SA)

Registered Accountants and Auditors

Sandton

17 July 2002


Directors’ report


PROFILE AND GROUP STRUCTURE

Datatec and its subsidiaries (“the Group”) is an international IT networking and services group with operations in

many of the world's leading economies. The Group's main lines of business comprise the global distribution of

advanced networking and communication products (“Westcon”), professional services and IT network integration

(“Logical”) and strategic telecommunications consulting (“Mason”). The Group also has a number of other interests

in SA, which are included with the Group Head Office under Other Holdings. These interests include Westcon AME

(operating in Africa and the Middle East), a 47.5% interest in Affinity Logic and a 79.1% interest in RangeGate

(operating in SA and the UK).

GROUP FINANCIAL RESULTS

Commentary on the Group financial results is given in the Finance Report on pages 30 to 36. Full details of the

financial position and financial results of the Group are set out in the annual financial statements on pages 57 to 94.

SHARE CAPITAL

Authorised share capital

The authorised share capital of the company is made up of R2 000 000, divided into 200 000 000 ordinary shares of

one cent each.

Issued share capital

As at 31 March 2002, the issued share capital is made up of R1 373 819,23 divided into 137 381 923 ordinary shares

of one cent each.

Share capital issued during the year ended 31 March 2002

During the year, 8 680 251 shares were issued, primarily to finance acquisitions, to fund the Group's working capital and

capital expenditure requirements and to settle shares issued in terms of The Datatec Group Share Option Scheme.

During the year the following shares were issued for cash:

– 3 000 000 shares at R18.60 per share; and

– 5 000 000 shares at R20.00 per share.

The authorised and issued share capital of the company, and full details of the movement in share capital, have been

reflected in the statements of changes in equity on page 68 in the annual financial statements.

DIRECTORS

Details of the current board of directors appear on pages 6 and 7 and page 101. M J Lamberti and J S James resigned

from the Board on 22 October 2001 and 6 December 2001 respectively. D B Pfaff and A M Smith were appointed to

the Board on 1 July 2001 and 17 July 2001 respectively. L Boyd, C B Brayshaw and C M L Savage were appointed to

the Board on 6 December 2001. There were no other changes in the composition of the Board.


Directors’ report continued


All directors, including non-executive directors, are required, in terms of the company’s Articles of Association, to

retire and offer themselves for re-election at least every three years. All directors are subject to re-election by

shareholders at the first opportunity after their appointment in addition to re-election at least every three years.

Messrs Boyd, Brayshaw, Seabrooke and Savage retire at the forthcoming Annual General Meeting and, being eligible,

offer themselves for re-election.

More details on the directors and their interests are provided in the Remuneration Report set out on pages 45 to 53.

INVESTMENTS, ASSOCIATES, SUBSIDIARIES AND JOINT VENTURES

Financial information relating to the Group's investments and interests in subsidiaries, associates, investments and

joint ventures is contained in notes 10, 12 and 13 as well as Annexures 1 to 3 to the annual financial statements.

ACQUISITIONS

The following significant acquisitions were concluded during the year under review:

Pursuant to an agreement dated 8 June 2001 (“the Agreement”) RangeGate Mobile Solutions Limited (“RangeGate”)

acquired the Task Management System computer software programme (“the Programme”) and certain assets from

Symbol Technologies Limited and Symbol Technologies Inc. (collectively “Symbol”) for an initial consideration of

£57 034 together with further payments of 33% of all licence fees received by RangeGate for licences sold and

collected by it in respect of the Programme. These payments in respect of the licence fees continue for a period of

four years or until a total aggregate amount of $2 million has been paid. In addition, Datatec has provided a guarantee

limited to $1 million to Symbol in respect of RangeGate’s other obligations under the Agreement.

Westcon AME acquired, with effect from 30 June 2001, the entire issued share capital of, and shareholders’ claims

against, On Line Distribution Limited, a Dubai-based networking distribution company, for an initial consideration of

$2.43 million, plus a further amount of up to $1.92 million to be paid in the event of the achievement of certain profit

milestones over the twelve-month period ending 30 April 2002. This amount was finalised during May 2002 and an

amount of R15 million ($1.3 million) was paid to the vendors.

Datatec acquired, on 17 July 2001, an additional 5% of Westcon Group, Inc. from the original founders of Westcon

and certain other shareholders, for an amount of $22 million. In addition, during the period Datatec exercised its

rights under the original sale agreements entered into between Datatec and certain members of Westcon's senior

management and repurchased the 2.25% of equity capital of Westcon sold to such members during the 2000 financial

year. The consideration for such repurchase was (in each case) cancellation of the loan amount (together with any

accrued interest) owed by the relevant member to Datatec which was created at the time of the original purchase of

such equity capital by such member. As a result of these acquisitions Datatec increased its investment in Westcon from

85.3% to 92.5%.

Datatec, together with Primedia Limited, entered into a scheme of arrangement during November 2001 in

terms of which the minority shareholders’ shareholdings in Metropolis* were acquired by Datatec and

Primedia at a price of 40 cents per Metropolis* share. Metropolis* has since been delisted and Datatec’s

interest amounts to 28.6% of Metropolis*.



DISPOSALS

Datatec, with effect from 1 April 2001, disposed of 20.9% of RangeGate to certain members of RangeGate’s

management for an amount of R1.58 million.

With effect from 11 June 2001, the Group disposed of, for an amount of R1.6 million, the business of Datasoft Logical

(Pty) Limited that, since the disposal of the South African Logical business, was no longer core to the South African

based Datatec subsidiaries. The disposal agreement was drawn up under SA law and contains warranties that are

considered normal for disposals of this nature.

With effect from 28 June 2001, the Group disposed of its interest in Network I Limited, based in the UK. The sale,

made to a consortium of incumbent management and external investors, was for an amount of £0.75 million,

including a dividend payment of £0.1 million. In the event that Network I is sold to a third party at a later date, a

further £0.25 million will accrue to the Group. The disposal agreement was drawn up under UK law and contains a

warranty in respect of ownership of the shares.

As set out in the 2001 annual report, the Group has disposed of its investment holding in Korbitec Holdings (Pty)

Limited for an amount of R4 million to existing Korbitec shareholders. The disposal agreement was drawn up under

SA law and contains a warranty in respect of ownership of the shares. Certain of these shareholders (Messrs

Montanana, Karpul and Seabrooke, directors of Datatec), constitute related parties and duly declared their interest.

The approval of the JSE Securities Exchange South Africa was obtained prior to the disposal.

On 28 September 2001, Logical Group Limited disposed of its Swiss subsidiary Logical Solutions AG, for an amount

of CHF 1 plus 10% of the proceeds realised in the event of a future sale of the company. Logical Solutions AG was loss

making and focused on packaged applications, such as Broadvision, and desktop services. The company was disposed

of as its focus was not consistent with the Group's strategic direction. The disposal agreement was drawn up under

Swiss law and contains a warranty in respect of ownership of the shares.

On 20 December 2001, Logical Group Limited disposed of its loss making French subsidiary Logical France SA and

its 100% subsidiary Logical Systems SA for an amount of EUR1 000. Logical Systems SA was focused on desktop

product supply and support. Logical France SA was disposed of as the business was not consistent with Logical’s

strategic direction. The disposal agreements were drawn up under French law and contain limited warranties that

expire on 19 December 2002 and warranty claims cannot exceed EUR152 450 in the aggregate.

SPECIAL RESOLUTIONS OF THE GROUP

During the year, RangeGate (Pty) Limited increased its authorised share capital from R1 000 to R10 000 and

Logical Group Limited increased its authorised share capital from £32 million to £80 million.

CORPORATE GOVERANCE COMPLIANCE STATEMENTS

A statement on the Group's corporate governance policies and procedures is set out on pages 37 to 42.


Directors’ report continued


EXTERNAL AUDITORS

Deloitte & Touche have expressed their willingness to continue in office as external auditors of the Group and a

resolution to re-appoint them will be proposed at the forthcoming Annual General Meeting in accordance with

section 270 of the Companies Act.

STRATE (Share Transactions Totally Electronic)

As set out in the 2001 annual report, the company's shares were dematerialised on 25 September 2001 by the JSE

Securities Exchange South Africa. Electronic trading of the company's shares commenced on 15 October 2001, details

of which were sent to shareholders in August 2001.

SHARE OPTION AND MANAGEMENT INCENTIVE SCHEMES

Details of the Group's share option and other management incentive schemes are set out in the Remuneration Report

on pages 45 to 53.

EVENTS OCCURRING SUBSEQUENT TO THE YEAR-END

Landis

Pursuant to a sale and purchase agreement dated 25 April 2002, as varied by a supplemental agreement dated 14 May

2002 (“the Agreement”), Westcon Group European Operations Limited (“Westcon Europe”), a subsidiary of Westcon

Group, Inc., purchased the European computer networks equipment distribution business of Landis Group NV (“the

Business”) for a total consideration of EUR6 617 883. Completion of this transaction took place on 15 May 2002. The

Business is carried on in The Netherlands, Belgium, Germany, France, Norway, Sweden, Denmark, Spain and Austria.

Westcon Europe obtained an abbreviated set of warranties in relation to this transaction from Landis Group NV but

a substantial amount of the purchase price is to remain in escrow as security for the proper discharge by Landis Group

NV of its obligations under the Agreement.

Westcon has assumed no liabilities in respect of the Business other than in respect of the employees of the Business.

Westcon has estimated an amount in respect of the costs of any restructuring of the workforce of the Business which

may need to be carried out and has set aside such amount in terms of the Agreement.

Westcon has received restrictive covenants in the usual form from Landis Group NV and its affiliates to the effect that,

inter alia, such persons will not carry on any business in competition with the Business during a period of three years

after the date of the Agreement.

Affinity Logic Holdings (Pty) Limited (“Affinity Logic”)

Subject to the approval of the Competition Commission, Datatec is to increase, without cost, its investment in Affinity

Logic from its current holding of 47.5% to 55.2%, through the disposal by Wooltru Limited (“Wooltru”) of its 33.2%

interest in Affinity Logic as a result of the unbundling of Wooltru. The management of Affinity Logic have acquired

the balance of Wooltru's interest (25.5%) for an amount of R6.69 million. Datatec has advanced such amount to the

management of Affinity Logic to enable them to acquire these shares, which amount bears interest and is repayable

at the end of a period of three years.



ANNUAL GENERAL MEETING (“AGM”)

The AGM will be held at 14h00 on 30 September 2002 in the auditorium at Building 8, Harrowdene Office Park,

Western Service Road, Woodmead, Sandton, Republic of South Africa. In addition to the ordinary business of the

meeting, as special business, shareholder consent will be sought to:

(a) authorise directors to repurchase the company shares from time to time according to certain guidelines;

(b) ratify the grant of options on 14 March 2002 to Messrs J F McCartney and C S Seabrooke, non-executive directors

of the company; and

(c) amend the Articles of Association of the company to allow for the electronic communication of proxies and notices.


Group Accounting Policies


BASIS OF ACCOUNTING

The company’s annual financial statements and Group annual financial statements set out on pages 57 to 94 havebeen prepared on the historical cost basis and incorporate the following principal accounting policies, prepared inaccordance with Statements of Generally Accepted Accounting Practice as applied in the Republic of South Africa,which have been consistently applied in all material respects, with the exceptions of those noted in the accountingpolicies that follow. The principal accounting policies adopted are set out below.

CONSOLIDATION

The consolidated financial statements incorporate the financial statements of the company and enterprises controlledby the company up to 31 March each year, with the exception of Westcon Group, Inc. which is consolidated for thetwelve month period to 28 February each year. Control is achieved where the company has the power to govern thefinancial and operating policies of an investee enterprise so as to obtain benefits from its activities.

The Group annual financial statements incorporate the annual financial statements of the company and itssubsidiaries, associates and joint venture. The operating results of these entities have been included from theeffective dates of acquisition to the effective dates of disposal. All significant inter-company transactions andbalances have been eliminated.

ASSOCIATES

Associates are those enterprises in which the Group holds a long-term equity interest, and over which it has the abilityto exercise significant influence and which are neither subsidiaries nor joint ventures.

Associates are accounted for on the equity method in the Group financial statements as from the date on which theybecome investees.

Provision is made when, in the opinion of the directors, there has been an impairment in the carrying value of aninterest in an associate.

Unrealised profits and losses are eliminated to the extent of the Group’s interest in the relevant associate.

JOINT VENTURES

Joint ventures are those companies where there is a contractual agreement in terms of which the Group and one ormore venturers undertake an economic activity subject to joint control.

Such joint ventures are accounted for using the proportionate consolidation method. The proportionate share ofassets, liabilities, income and expenses of the joint venture are brought into account in the Group annual financialstatements on a line-by-line basis. Inter-company transactions are eliminated.

INVESTMENTS

Investments are stated at cost to the Group, unless an impairment in the value of the investment has occurred. In thesecircumstances, the investment is stated at its written down value. Income from investments is brought to account onlyto the extent of dividends received or declared.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment have been stated at historical cost, less accumulated depreciation. In accordance withrevised accounting standards, owner occupied properties are stated at historical cost and are depreciated. This is notconsistent with prior financial periods. The prior year amounts have not been restated as the effect of this revisedaccounting policy is immaterial.



Depreciation is calculated based on historical cost using the straight-line method over the estimated useful lives ofthe assets.

The basis of depreciation to be provided on property, plant and equipment is as follows:

Number of years over which to be written off

Computer equipment and software 2 – 6Leasehold improvements period of the leaseOffice furniture and equipment 2 – 6Motor vehicles 2 – 4Owner occupied properties 20

INTANGIBLES

Goodwill, comprising the excess of the cost of shares in subsidiaries, associates and joint ventures over their net assetvalue at the date of acquisition, is written off over its useful life, not exceeding seven years.

Other intangible assets, comprising trademarks, tradenames, patents and other intellectual property purchased by theGroup, are treated in the same manner as goodwill.

IMPAIRMENT

At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determinewhether there is any indication that those assets have suffered an impairment loss. If any such indication exists, therecoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where itis not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amountof the cash-generating unit to which the asset belongs.

If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, itscarrying amount is reduced to its recoverable amount. Impairment losses are recognised as an expense immediatelyand are treated as exceptional items.

Where an impairment loss subsequently reverses, the carrying amount of the asset or cash generating unit isincreased to the revised estimate of its recoverable amount. This is done so that the increased carrying amountdoes not exceed the carrying amount that would have been determined had no impairment loss beenrecognised in prior years. A reversal of an impairment loss is recognised as income immediately and treated asan exceptional item.

AMOUNTS OWING TO VENDORS

Amounts owing to vendors represent purchase considerations owing in respect of acquisitions. Amounts owing arerecognised once there is sufficient assurance that the suspensive conditions will be met and the amounts can bemeasured reliably. Amounts potentially owing where the suspensive conditions have not been met are disclosed ascontingent liabilities.

LEASED ASSETS

Assets leased in terms of agreements, which are considered to be finance leases, are capitalised. Capitalised leasedassets are depreciated at the same rate and on the same basis as equivalent owned assets. Lease finance charges areamortised over the duration of the leases, using the effective interest rate method.


Group Accounting Policies continued


INVENTORIES

Inventories, comprising merchandise for resale and raw materials, are stated at the lower of cost and net

realisable value and are primarily valued on the average cost basis.

Provision is made for obsolete and slow-moving inventory.

Contract work in progress is recognised on the percentage of completion method by reference to the milestones set

out in each contract.

DEFERRED TAXATION

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from

differences between the carrying amount of assets and liabilities in the financial statements and the corresponding

tax basis used in the computation of taxable profit. In principle, deferred tax liabilities are recognised for all taxable

temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will

be available against which deductible temporary differences can be utilised. Such assets and liabilities are not

recognised if the temporary difference arises from goodwill (or negative goodwill).

Deferred tax liabilities are recognised for temporary taxable differences arising on investments in subsidiaries and

associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary

difference and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the

liability is settled. Deferred tax is charged or credited in the income statement, except when it relates to items credited

or charged directly to equity, in which case the deferred tax is also dealt with in equity.

FOREIGN CURRENCY TRANSACTIONS

Transactions in currencies other than the South African Rand are initially recorded at the rates of exchange ruling

on the dates of the transactions. Monetary assets and liabilities denominated in such currencies are retranslated at the

rates ruling on the balance sheet date. Profits and losses arising on exchange are dealt with in the income statement.

Where appropriate, in order to hedge its exposure to foreign exchange risks, the Group enters into forward contracts.

On consolidation, the assets and liabilities of the Group's overseas operations are translated at exchange rates ruling

on the balance sheet date. Income and expense items are translated at the average exchange rates for the period.

Exchange differences arising, if any, are classified as equity and transferred to the Group's translation reserve. Such

translation differences are recognised as income or expenses in the period in which the operations are disposed of.

PROVISIONS

Provisions are recognised when the Group has a present legal or constructive obligation, as a result of past events, for

which it is probable that an outflow of economic benefits will be required to settle the obligation, and a reliable

estimate can be made for the amount of the obligation. Where the effect of the discounting to present value is

material, provisions are adjusted to reflect the time value of money.



REVENUE

The invoiced value of sales and services rendered, excluding value added and sales taxes, in respect of trading

operations is recognised at the date on which goods are delivered to customers or services are provided.

Revenue and profits from long-term and fixed-price contracts are recognised on the percentage of completion

method, after providing for contingencies and once the outcome of the contract can be assessed with reasonable

assurance. The percentage of completion is measured by reference to milestones set out in each contract. As soon as

losses on individual contracts become evident, they are provided for in full.

Revenue from cost plus contracts is recognised by reference to the recoverable costs incurred during the period plus

the fee earned, measured by the proportion that costs incurred to date bear to the estimated total costs of the contract.

Inter-company and inter-divisional sales are eliminated on consolidation.

PENSION SCHEME ARRANGEMENTS

Certain subsidiaries of the Group make contributions to various defined contribution retirement plans, on behalf of

employees, in accordance with the local practice in the country of operation. These contributions are charged against

income as incurred.

The Group has no liability to these defined contribution retirement plans other than the payment of its share of

the contribution in terms of the agreement with the funds and employees concerned, which differs from country

to country.

EXCEPTIONAL ITEMS

Exceptional items are those items of income and expenditure from ordinary activities that are of such size and nature

of incidence that their separate disclosure is relevant to explain the performance of the Group.

DISCONTINUING OPERATIONS

Discontinuing operations are significant, distinguishable components of an enterprise that have been sold,

abandoned or are the subject of formal plans for disposal or discontinuance.

Once an operation has been identified as discontinuing, comparative information is restated.

CAPITALISED DEVELOPMENT EXPENDITURE

Development expenditure is capitalised where costs are incurred for a clearly defined project that are separately

identifiable, and where the outcome of the project has been assessed with reasonable certainty with adequate

resources to complete the project.

Capitalised development costs are amortised over a maximum period of between three to seven years.

Income Statements

> for the year ended 31 March



Group Company

2002 2001 2002 2001Notes R million R million R million R million

Revenue 20 677 20 158 – –

Continuing operations 20 360 17 500 – –Acquisitions 202 1 537 – –

��

Ongoing operations 20 562 19 037 –Discontinued operations 115 1 121 – –

Cost of sales (17 759) (16 853) – –

Gross margin 2 918 3 305 – –Operating (costs)/income (2 072) (2 246) 141 40

Operating profit before finance costs, depreciation and amortisation (“EBITDA”) 846 1 059 141 40

Ongoing operations 873 1 127 141 40Discontinued operations (27) (68) – –

Depreciation 1 (200) (170) – –Restructuring costs of continuing operations – (82) – –

Operating profit 1 646 807 141 40 Income from investments 2 76 146 34 79 Financing costs 3 (172) (250) (3) –Share of associate company losses (3) (13) – –

Profit before exceptional items and goodwill amortisation 547 690 172 119 Goodwill amortisation 11 (133) (80) (1) –Exceptional items 4 (561) 706 (524) 374

Goodwill impairment (397) – (9) –Other exceptional items (164) 706 (515) 374

(Loss)/profit before taxation (147) 1 316 (353) 493 Taxation 5 (178) (301) (53) (24)

(Loss)/profit after taxation (325) 1 015 (406) 469 Profit attributable to outside shareholders (11) (57) – –

Attributable (loss)/earnings 6 (336) 958 (406) 469

Headline earnings 6 346 410

Number of shares issued (millions)– Issued 137 128– Weighted average 131 126– Diluted weighted average 133 126

Earnings per share (cents) 6– Headline 265 325– Basic (257) 761– Diluted (253) 761– Diluted headline 260 325

Balance Sheets

> as at 31 March



Group Company

2002 2001 2002 2001

Notes R million R million R million R million

ASSETS

Non-current assets 1 295 1 302 1 490 1 196

Property, plant and equipment 8 513 448 – 3 Capitalised development expenditure 9 131 75 – –Subsidiary companies and joint venture 10 – – 1 485 1 177 Intangible assets 11 419 571 – 10 Associated companies 12 1 9 – –Investments 13 29 34 5 6 Deferred tax asset 14 202 165 – –

Current assets 8 420 8 466 779 1 348

Inventories 15 2 397 3 044 – –Accounts receivable 16 3 781 3 268 – –Other receivables 366 308 2 95 Subsidiary companies 10 – – 700 401 Cash resources 1 876 1 846 77 852

Total assets 9 715 9 768 2 269 2 544

EQUITY AND LIABILITIES

Ordinary shareholders’ funds 3 726 3 205 2 145 2 071

Share capital and premium 1 193 1 029 1 193 1 029 Non-distributable reserves 1 228 535 629 471 Distributable reserves 1 305 1 641 323 571

Outside shareholders’ interest 199 260 – –

Total shareholders’ funds 3 925 3 465 2 145 2 071

Non-current liabilities 78 80 23 –

Long-term liabilities 17 58 74 – –Deferred tax liability 14 20 6 23 –

Current liabilities 5 712 6 223 101 473

Accounts payable and provisions 18 3 771 3 584 40 53 Amounts owing to vendors 19 90 413 12 401 Taxation 143 118 49 19 Bank overdrafts and trade finance advances 20 1 708 2 108 – –

Total equity and liabilities 9 715 9 768 2 269 2 544

Statements of Changes in Equity




Group Company

Non- Non-

distri- Distribu- distri- Distribu-

Share Share butable table Share Share butable table

capital premium reserves reserves Total capital premium reserves reserves Total

Balance at 1 April 2000 1 546 173 717 1 437 1 546 95 102 744

New share issues – 484 – – 484 – 484 – – 484

Share issue expenses – (2) – – (2) – (2) – – (2)

Exchange difference

arising on translation of

offshore operations – – 95 – 95 – – 109 – 109

Recoupment of goodwill

and trademarks – – 267 – 267 – – 267 – 267

Attributable earnings for

the year – – – 958 958 – – – 469 469

Change of accounting

period for Westcon – – – (34) (34) – – – – –

Balance at 31 March 2001 1 1 028 535 1 641 3 205 1 1 028 471 571 2 071

New share issues – 165 – – 165 – 165 – – 165

Share issue expenses – (1) – – (1) – (1) – – (1)

Exchange difference

arising on translation of

offshore operations – – 622 – 622 – – 87 – 87

Recoupment of goodwill

and trademarks – – 71 – 71 – – 71 158 229

Attributable loss for

the year – – – (336) (336) – – – (406) (406)

Balance at 31 March 2002 1 1 192 1 228 1 305 3 726 1 1 192 629 323 2 145

Authorised share capital200 000 000 (2001: 200 000 000) ordinary shares of R0.01 each

Issued share capital137 381 923 (2001: 128 701 672) ordinary shares of R0.01 each

18 000 000 (2001: 18 000 000) of the unissued shares equivalent to 13.1% (2001: 13.9%) of the issued share capital,have been set aside for the purpose of granting options to any officer or employee of the company, including anydirector, in terms of the Group employee share option scheme. At the balance sheet date 5 013 433 of the18 000 000 shares set aside for the share option scheme had been exercised.

The remaining unissued ordinary shares of 62 618 077 (2001: 71 298 328) are under the control of the directorsuntil the next general meeting, subject to the provisions of section 221 and 222 of the Companies Act and therequirements of the JSE Securities Exchange South Africa.

Cash Flow Statements




Group Company

2002 2001 2002 2001

Notes R million R million R million R million

Cash flow from operating activities

Cash generated from operations A 2 051 623 105 52

Income from investments 76 146 34 79

Financing costs (172) (250) (3) –

Taxation paid B (268) (230) (27) (14)

1 687 289 109 117

Net cash flow relating to exceptional items – (82) (2) (1)

Net cash inflow from operating

activities 1 687 207 107 116

Cash flow from investing activities

Acquisition of subsidiary companies and

joint ventures C (371) (725) (662) (960)

Investment in associated companies 10 (10) (18) –

Loans to subsidiaries – – (35) 14

Proceeds on disposal of businesses and

investments D 6 1 118 22 1 314

Additions to property, plant and equipment E (149) (375) – (3)

Additions to capitalised development expenditure (76) (53) – –

Proceeds on disposal of property, plant

and equipment 60 64 – –

Net cash (outflow)/inflow from investing activities (520) 19 (693) 365

Cash flow from financing activities

Net proceeds from issue of shares F 164 482 164 482

Decrease in amounts owing to vendors (323) (190) (353) (126)

Increase/(decrease) in long-term liabilities 59 (146) – –

Increase in short-term loans – 2 – –

Net cash (outflow)/inflow from financing activities (100) 148 (189) 356

Net increase/(decrease) in cash and cash equivalents 1 067 374 (775) 837

Cash and cash equivalents at the beginning of year (262) (298) 852 15

Translation difference on opening cash position G (637) (151) – –

Change in Westcon cash for one month – (187) – –

Cash and cash equivalents at end of year H 168 (262) 77 852

Notes to the Cash Flow Statements




Group Company

2002 2001 2002 2001R million R million R million R million

A. Cash generated from operations

(Loss)/profit before taxation (147) 1 316 (353) 493 Adjustments for:Unrealised foreign exchange gains (95) – (95) –Share of associated companies losses 3 13 – –Depreciation 200 170 – –Net loss on disposal of property, plant and equipment 1 11 3 –Income from investments (76) (146) (34) (79)Financing costs 172 250 3 –Goodwill amortisation 133 80 1 –Restructuring costs – 82 – –Exceptional items 561 (706) 524 (374)

Operating profit before working capital changes 752 1 070 49 40

Working capital changes:Decrease/(increase) in inventories 1 611 (683) – –Decrease/(increase) in accounts receivable 754 (214) 62 (16)(Decrease)/increase in accounts payable (1 066) 450 (6) 28

2 051 623 105 52

B. Taxation paid

Amounts unpaid at beginning of year 118 86 19 9 Amounts charged to the income statement excluding deferred tax 224 395 53 24 Other movements 69 (133) 4 –Amounts unpaid at end of year (143) (118) (49) (19)

268 230 27 14

C. Acquisition of subsidiary companies and joint ventures

Cost of investment acquired in subsidiary companies and joint venture 662 960

The fair value of assets acquired and the liabilities assumed on the acquisition of subsidiary companies and on the purchase of joint ventures, net of cash acquired, is as follows: 371 725 – –

Property, plant and equipment 1 11 Goodwill arising on acquisitions 421 698 Accounts receivable 37 397 Inventories 30 181 Taxes acquired 8 –Accounts payable (53) (562)Long-term liabilities (73) –

371 725

Notes to the Cash Flow Statements continued




Group Company


D. Proceeds on disposal of businesses and investments

Property, plant and equipment 13 71 – –Capitalised development expenditure 5 4 – –Investments 4 7 4 579 Accounts receivable 21 141 – –Inventories 8 1 – –Accounts payable (20) (102) – –Long-term liabilities (81) (395) – –Outside shareholders – (9) – –Deferred tax 3 (1) – –Surplus on disposal 10 1 354 18 735 Intangibles 43 47 – –

6 1 118 22 1 314

E. Additions to property, plant and equipment

Office furniture, equipment and motor vehicles (52) (91) – –Computer equipment and software (85) (246) – (3)Leasehold improvements (12) (38) – –

(149) (375) – (3)

F. Net proceeds from issue of shares

Ordinary shares issued, including share premium 165 484 165 484 Share issue expenses (1) (2) (1) (2)

164 482 164 482

G. The translation difference on the opening cashposition is calculated on opening cash balancesof companies based outside SA, and not on thenet cash and cash equivalents included on thebalance sheet at the beginning of the year, whichis inclusive of cash held by the company, Datatec Limited.

H. Cash and cash equivalents at end of year

Cash resources 1 876 1 846 77 852 Bank overdrafts and trade finance advances (1 708) (2 108) – –

168 (262) 77 852

Notes to the Annual Financial Statements




Group Company


1. Operating profit

Operating profit is arrived at after taking into account the following items: Auditors’ remuneration Audit fees – current year 15 12 – –

– prior year 3 2 – –Other services and expenses 4 2 – –

22 16 – –

Depreciation –Office furniture, equipment and motor vehicles 33 31 – –Computer equipment and software 133 126 – –Leasehold improvements 12 11 – –Owner occupied property 2 – – –

180 168 – –Capitalised development expenditure 20 2 – –

200 170 – –

Foreign exchange gains 136 49 149 51

Fees for services Administrative 18 8 – –Managerial 7 4 1 –Technical 9 20 – –

34 32 1 –

Operating lease rentals Premises 112 92 – –Computer equipment 19 17 – –Office furniture, equipment and motor vehicles 32 19 – –

163 128 – –

Net loss on disposal of property, plant and equipment Computer equipment – 2 3 –Office furniture, equipment and motor vehicles 1 9 – –

1 11 3 –

Retirement benefit contributions 39 36

Staff costs 1 721 1 620 – –

Directors’ emolumentsExecutive directorsSalaries 17 15Incentive bonuses 7 4Special incentive bonuses arising from the sale of UUNET – 17Benefits 3 1

27 37Non-executive directors’ fees 2 1

29 38

Full details are provided on directors’ emoluments in the Remuneration Report on pages 45 to 53.

Notes to the Annual Financial Statements continued




Group Company


2. Income from investments

Dividends received 2 4 – 2

Listed – 2 – 2Unlisted 2 2 – –

Interest received From subsidiary companies – – 21 25 Other investments 74 142 13 52

76 146 34 79

3. Financing costs

Interest paid Finance charges on finance leases 1 3 – –Bank overdraft and trade finance interest 171 247 3 –

172 250 3 –

4. Exceptional items

Impairments of property, plant and equipment (1) (109) (3) –Net (loss)/surplus on disposal of operations and investments (1) 1 068 4 579 Write-down of carrying value of investments (58) (161) (485) (105)Loss on disposal and closure of discontinued operations (64) (92) (26) (105)Proposed subsidiary listing costs (40) – (5) 5 Goodwill impairment (397) – (9) –

Exceptional items (561) 706 (524) 374 Taxation 11 (65) – –

(550) 641 (524) 374 Attributable to outside shareholders 2 (5) – –

Net effect of exceptional items (548) 636 (524) 374

The taxation credit and outside shareholders’portion of the exceptional items relates primarilyto the proposed subsidiary listing costs. In 2001,a tax charge of R104 million was incurred on thesurplus on disposal of operations, a credit ofR32 million on the loss on disposal and closureof discontinued operations and a further creditof R7 million on the impairment of property,plant and equipment.





Group Company


5. Taxation

5.1 Taxation charge

South African normal taxation:

Current taxation – current year 101 30 53 24

Current taxation – prior year – 1 – –

Deferred taxation – current year 1 (3) – –

Deferred taxation – prior year (1) (2) – –

101 26 53 24

Foreign taxation:

Current taxation – current year 143 355 – –

Current taxation – prior year (20) 9 – –

Deferred taxation – current year (25) (87) – –

Deferred taxation – prior year (21) (2) – –

77 275 – –

Total taxation charge 178 301 53 24

5.2 Reconciliation of taxation rate to profit

before taxation

South African normal tax rate 30.0% 30.0% 30.0% 30.0%

Tax losses utilised – (1.0%) – –

Permanent differences (60.7%) 4.1% (45.0%) –

Goodwill impairment (84.3%) – – –

Foreign taxation rate differential 2.4% 4.4% – –

Non-taxable capital gain – (21.3%) – (25.1%)

Tax losses not recognised (8.5%) 6.7% – –

Effective taxation rate (121.1%) 22.9% (15.0%) 4.9%

Certain subsidiaries had tax losses at the end

of the financial year, that are available to

reduce the future taxable income of the

Group, estimated to amount to: 364 300

Estimated future tax relief at an estimated

tax rate of 34.6% (2001: 31.7%) 126 95





Group Company

2002 2001 2002 2001

R million R million R million R million

6. Earnings per share

Basic earnings per share was a loss of 257 cents

(2001: earnings of 761 cents) and is calculated

on the weighted average number of shares in

issue during the year of 130 673 730

(2001: 125 963 705), based on earnings

attributable to ordinary shareholders.

Reconciliation of basic earnings to headline earnings:

Attributable (loss)/earnings per the income

statement (336) 958

Headline earnings adjustments: 682 (548)

Goodwill amortisation 133 80

Net loss on disposal of property, plant and

equipment 1 11

Net loss/(surplus) on disposal of operations and

investments 1 (1 068)

Impairments of property, plant and equipment 1 109

Write-down of carrying value of investments 58 161

Loss on disposal and closure of discontinued

operations 64 92

Proposed subsidiary listing costs 40 –

Goodwill impairment 397 –��

695 (615)

Tax effect (11) 62

Outside shareholders’ interest (2) 5

Headline earnings 346 410

Headline earnings per share of 265 cents (2001: 325 cents) is calculated on the weighted average number ofshares in issue during the year of 130 673 730 (2001: 125 963 705), based on the headline earnings attributableto ordinary shareholders.

Diluted loss per share of 253 cents (2001: earnings of 761 cents) is calculated on the diluted weighted averagenumber of shares in issue during the year of 133 046 599 (2001: 126 032 880), after taking into account thedifference between the number of shares issued and the number of shares that would have been issued at fair valuein respect of the 11 626 398 (2001: 10 963 876) options granted, but not exercised. These are calculated on the basisthat the shares required for the options are issued by the company and not bought through the open market.

Diluted headline earnings per share of 260 cents (2001: 325 cents) is based on headline earnings attributable toordinary shareholders and the diluted weighted average number of shares in issue.





Group Company


7. Interest in profits and losses of subsidiaries and joint venture

Interest in the aggregate amount of profits and losses of subsidiaries and joint venture after taxation

Profits 380 999Losses – continuing operations (296) (380)

– discontinued operations (14) (130)

8. Property, plant and equipment

2002 2002 2002 2001 2001 2001R million R million R million R million R million R million

Accumulated Net book Accumulated Net bookCost depreciation value Cost depreciation value

GroupOffice furniture, equipment and motor vehicles 181 84 97 163 78 85Computer equipment and software 634 305 329 517 223 294 Leasehold improvements 109 43 66 80 26 54Owner occupied properties 23 2 21 15 – 15

947 434 513 775 327 448

CompanyComputer equipment and software – – – 3 – 3

Included in property, plant and equipment are assets held under finance lease agreements with a book value ofR16 million (2001: R9 million) which are encumbered as security for liabilities under finance lease agreementsas stated in note 17. A register giving particulars of land and buildings is maintained at the company's registeredoffice and may be inspected by members of the public or their duly authorised agents. Property, plant andequipment have been impaired by an amount of R1 million. Refer to note 4.





8. Property, plant and equipment (continued)

Officefurniture,

equipment Computer Leasehold OwnerMovement of property, plant and and motor equipment improve- occupiedequipment vehicles and software ments properties Total

GroupNet book value at beginning of year 85 294 54 15 448Subsidiaries acquired 1 – – – 1 Other additions 52 85 12 – 149Translation differences (net) 22 106 20 8 156

160 485 86 23 754Subsidiaries disposed of (13) – – – (13)Disposals and impairments (17) (23) (8) – (48)Depreciation (33) (133) (12) (2) (180)

Net book value at end of year 97 329 66 21 513

CompanyNet book value at beginning of year – 3 – – 3Additions – – – – –

– 3 – – 3 Disposals and impairments – (3) – – (3)

Net book value at end of year – – – – –

Group Company


9. Capitalised development expenditure

Balance at beginning of year 75 24 – –Amounts capitalised 102 80 – –Disposals (5) (4) – –Transfers (21) (23) – –Amounts amortised (20) (2) – –

Balance at end of year 131 75 – –





Group Company


10. Subsidiary companies and joint venture

Unlisted shares at cost 1 765 741Impairment of unlisted shares (449) (6)

Unlisted shares at written down value 1 316 735Amounts owing by subsidiaries and joint venture 869 843

Total investment per Annexure 1 2 185 1 578

Disclosed as follows:Shares at cost and long-term portion of loans 1 485 1 177 Current portion of loans 700 401

2 185 1 578

Certain of the unlisted shares in the underlying subsidiaries have been pledged as stated in note 20.

The Group's proportional interest in the joint venture has been incorporated in the Group's assets and liabilities and results as follows:

Property, plant and equipment, investment and cash 148 144Long-term borrowings 33 49Working capital (26) 21Revenue 91 166(Loss)/profit before tax (29) 29

Further details of the company's subsidiaries and joint venture are disclosed in Annexure 1.

11. Intangible assets

Goodwill at cost 949 651 10 10

At beginning of year 571 – 10 –Arising on acquisition of subsidiaries 421 698 – –Disposal of a subsidiary (43) (47) – –Arising on restructuring of joint venture – – – 10

Impairment (397) – (9) –Goodwill amortised (133) (80) (1) –

Balance at end of year 419 571 – 10





Group Company


12. Associated companies

Shares at cost 5 82 – 78

Attributable share of post-acquisition losses,net of dividends received (4) (1) – –

Beginning of year (1) 12 – –Current year (3) (13) – –

Write-down of investment to fair value – (73) – (78)Loans – 1 – –

1 9 – –

The aggregate share of associated companies' net assets and revenue is as follows:

Property, plant and equipment, investments and cash 3 152 Total borrowings – 349 Working capital (1) 308Revenue 14 2 680

Further details of the Group’s associated companies are disclosed in Annexure 2

For 2001 the results of Siltek Limited are included.

13. Investments

Investments at beginning of year 34 98 6 41 Additions 11 12 5 –Disposals (4) – (4) –Write-down of investments to fair value (12) (76) (2) (35)

Investments at end of year 29 34 5 6

Further details of the Group's investments are disclosed in Annexure 3.

14. Deferred tax asset/(liability)

Movement of deferred tax assets Balance at beginning of year 165 65 – –Arising on acquisition and disposal of subsidiaries 5 36 – –Other movements 32 64 – –

202 165 – –

Analysis of deferred tax assets Capital allowances 10 6 – –Provisions 135 90 – –Effect of tax losses 35 44 – –Other temporary differences 22 25 – –

202 165 – –





Group Company


14. Deferred tax asset/(liability) (continued)

Movement of deferred tax liabilities

Balance at beginning of year (6) (11) – –

Other movements (14) 5 (23) –

(20) (6) (23) –

Analysis of deferred tax liabilities

Capital allowances – (1) – –

Provisions – (1) – –

Other temporary differences (20) (4) (23) –

(20) (6) (23) –

15. Inventories

At cost:

Merchandise for resale 2 790 3 236 – –

Contract work in progress 3 7 – –

2 793 3 243 – –

Inventory provisions (273) (199)

Lucent inventory provision (123) – – –

2 397 3 044 – –

The Group has established return policies with

its major vendors to reduce the risk of

technological obsolescence of inventories.

R2 149 million inventories are encumbered as

set out in note 20.

16. Accounts receivable

Trade receivables 3 952 3 407 – –

Receivables provisions (171) (139) – –

3 781 3 268 – –

R3 728 million (2001: R2 920 million) of trade

receivables are encumbered as per note 20 at

the end of the financial year.





Group Company


17. Long-term liabilities

Liabilities under capitalised finance leases 38 33 – –

Unsecured loans 58 56 – –

96 89 – –

Less: Current portion included in accounts

payable and provisions (note 18) (38) (15) – –

Long-term portion 58 74 – –

Repayable within 2–5 years 51 73 – –

Repayable after 5 years 7 1 – –

58 74 – –

Liabilities under capitalised finance lease

agreements are repayable in monthly

instalments of R3 million (2001: R0.8 million),

at rates linked to the prime interest rates.

The liabilities relate to assets included under

property, plant and equipment in note 8,

with a net book value of R16 million (2001:

R9 million). The final repayment date is

April 2005. The long-term liabilities are

reflected at their book values, which

approximate fair values. Unsecured loans

comprise borrowings raised to fund capital

expenditure in certain subsidiary and joint

venture companies. These loans bear interest

at rates linked to prime borrowing rates, are

repayable in 2005 and are unsecured.





Group Company


18. Accounts payable and provisions

Trade accounts payable 3 116 2 842 – –Other payables 509 553 12 15Provisions 108 174 28 38Current portion of long-term liabilities 38 15 – –

3 771 3 584 40 53

Onerous Onerouscontract contract

Analysis of provisions provisions Other provisions Other

Balance at 1 April 2000 12 7 – 25 Amounts added 149 75 27 –Amounts utilised (56) (13) – (14)

Balance at 1 April 2001 105 69 27 11 Amounts added 14 4 5 –Amounts utilised (99) (40) (7) (8)Foreign exchange effects 33 22 – –

Balance at 31 March 2002 53 55 25 3

Group Company


19. Amounts owing to vendors

Purchase considerations owing 90 413 12 401

Amounts owing to vendors in the balance sheetrepresent purchase considerations due in respectof acquisitions and may, at the election of the Group, be funded out of the issue of newshares or by cash, pending the achievement ofthe relevant profit warranty milestones by thevendors of the businesses. Amounts owing arerecognised once there is sufficient assurance thatthe suspensive conditions will be met and theamounts can be measured reliably. At the end ofthe financial year the Group had an estimatedcontingent liability of R65 million (2001:R395 million) relating to possible future earnoutobligations.





Group Company


20. Bank overdrafts and trade finance advances

Total borrowings at year end:Bank overdraft and trade finance advances 1 708 2 108 – –Other borrowings (note 17) 96 89 – –

1 804 2 197 – –

South Africa – Other HoldingsThe Group has general short-term banking facilities amounting to R30 million (2001: R30 million) with the StandardBank of South Africa Limited. In terms of the cash management system operated in SA, various cross guarantees havebeen put in place to restrict the overall exposure to the amount of the banking facility.

Westcon AME (through OnLine Distribution) has a facility of $2.5 million with HSBC Bank in the Middle East,backed by a guarantee of $2 million by Datatec Limited. The facility bears interest at 6.5% and inventory andaccounts receivable balances have been pledged as collateral.

South Africa – Affinity LogicAffinity Logic Holdings (Pty) Limited has a long-term loan of R220 million (2001: R220 million) with RandMerchant Bank (“RMB”). The loan bears interest at 20.35% and is repayable in 2004. Promissory notesamounting to R94 million (2001: R142 million) have been furnished to the loan creditor in respect of all interestpayments due in terms of the loan agreement. An investment in an investment trust of R143 million (2001:R114 million) has been set off against this loan, with the net loan outstanding amount being R77 million(2001: R106 million). 47.5% of the net loan has been proportionally consolidated in the Group balance sheet.Datatec previously provided a letter of comfort to RMB in respect of the loan obligations of Affinity Logic toRMB, which letter of comfort was cancelled by RMB after the year end.

WestconWestcon has entered into a $225 million senior revolving credit facility, expiring on 31 December 2002 (2001:$285 million facility, expiring 30 September 2003). In addition, during the 2002 financial year, Westcon had asenior acquisition loan facility of $75 million, of which $50 million was repaid during April 2001. In December2001, $10 million of the acquisition facility was repaid with the balance to be repaid in six monthly instalmentsof $2.5 million each through June 2002.

Advances under the revolving facility are available up to 85% of the company’s eligible accounts receivable andup to 50% of the company’s eligible inventory, with sub-limits on borrowings for certain of the company’ssubsidiaries. The revolving credit component of these facilities bears interest at a base rate per annum equal tothe US prime rate, as defined in the agreement, minus 0.5% or the London Interbank Offered Rate (“LIBOR”)plus 2.5%, at the company’s option. Amounts outstanding under the acquisition facility bear interest at primeplus 5.0% after December 31, 2001. Borrowings under these facilities were collaterised by (1) a pledge ofcommon stock and (2) liens on inventory and accounts receivable of Westcon and its subsidiaries which utilisethe facility. The loan facilities contain covenants including, but not limited to, financial covenants limitingbalance sheet leverage, establishing minimum liquidity and pre-tax earnings coverage, restricting asset sales andpurchases, restricting the payment of dividends during continuing events of default, limiting additional debt andgranting liens. In addition, certain of the companies within Westcon had $203 million of inventory purchasefinancing. The amounts are collaterised by inventory and accounts receivable and are generally guaranteed byWestcon. These arrangements generally contain financial covenants limiting leverage and establishing minimumliquidity and pre-tax earnings coverage for subsidiaries that are parties to such arrangements. General short-termbanking facilities amounting to $14 million are also available to the Australian and UK businesses.





20. Bank overdrafts and trade finance advances (continued)

Westcon’s UK subsidiary has a revolving credit line of $10 million, which expires 30 September 2003. Advancesunder the revolving credit arrangement are generally available up to 85% of the subsidiary’s eligible accountsreceivable and bears interest at the UK base rate plus 1.5%.

LogicalLogical operates a cash management system with Natwest/Royal Bank of Scotland in the UK. In terms of the cashmanagement arrangement various cross guarantees have been put in place between the UK companies. Datatecpreviously issued a letter of comfort to Natwest which has now been cancelled. Logical UK had an IBM GlobalFinance facility of £2.5 million (2001: £15 million) at the year end where Logical UK had pledged its accountsreceivable book as security for the facility. The facility was terminated after the year end. The facility wasrepayable on demand and bore interest at the UK base rate plus 2.5%. Logical US has short-term bankingfacilities amounting to $22 million (2001: $12.5 million) with Comerica Bank, with its accounts receivable bookas security for the facility. The facility bears interest at the US prime rate less 0.5%. In addition short-termbanking facilities of approximately $4 million (2001: $20.5 million) are also available from various financialinstitutions to other Logical companies across the world. These facilities are generally secured over specifiedassets of the local company.

MasonMason has access to general short-term banking facilities amounting to £2 million (2001: £2 million), bearinginterest at the UK base rate plus 1%, as well as outstanding term loans of £1.1 million (2001: £1.7 million). These facilities are secured over the company’s debtors’ book.

Group Company


21. Foreign liabilities

Uncovered foreign liabilities at the balance sheet date: Trade accounts payable US Dollars 9 9 – – Pounds sterling 2 – – –

The Group's operations manage their exposure to exchange rate fluctuations, where appropriate,through entering into forward exchange contractsand hedges with major commercial banks.

22. Commitments

Capital commitments Capital expenditure authorised and contracted for 10 30 – –Capital expenditure authorised but not yet contracted for 54 113 – –

Total capital commitments 64 143 – –

This expenditure will be incurred in the ensuing year and will be financed from existing cash resources and available facilities.





Group Company


22. Commitments (continued)

Operating lease commitmentsDue within one year: Property 150 98 – – Office furniture, equipment and motor vehicles 28 20 – – Computer equipment 18 16 – –

Total operating lease commitments due within one year 196 134 – –

Due within two to five years: Property 387 319 – –Office furniture, equipment and motor vehicles 31 20 – –Computer equipment 15 17 – –

Total operating lease commitments due within two to five years 433 356 – –

Due after five years: Property 417 298 – –Office furniture, equipment and motor vehicles – – – –Computer equipment – – – –

Total operating lease commitments due after five years 417 298 – –

Total operating lease commitments 1 046 788 – –

Other commitments

At the time of the acquisition of Mason, Datatec entered into a series of put and call arrangements (exercisablein two equal tranches) with the founder management shareholders of Mason, that commenced in May 2002 andterminates in May 2004. The founder management shareholders own 15% of Mason. Neither Datatec nor thefounder management shareholders exercised their rights to put or call in 2002. However the foundermanagement shareholders have agreed to exercise their rights to put to Datatec the 15% shareholding owned bythem in two equal tranches in May 2003 and May 2004. The consideration payable for such put will amount to amultiple of 8.28 times the audited pre-tax profits of Mason achieved in the previous financial year (ie financialyear ended 31 March 2003 and 2004). In the event that Datatec had exercised a call, the multiple increases to10.35 times. The Employee Benefit Trust ("EBT") owns 10% of Mason. At the time of the acquisition, it wasintended that Datatec would consider offering similar arrangements to the EBT that it had agreed with thefounder management shareholders. Datatec is currently in discussions with the Trustees of the EBT in respect ofthese arrangements which may result in the EBT agreeing to allow its option holders to elect to either put theirshares to Datatec in May 2003 (as to 33% of the shares subject to the put), May 2004 (as to a further 33% of theshares subject to the put) and May 2005 (as to the balance of 33% of the shares subject to the put) or to put theirshares in the same percentages, but in May 2004, May 2005 and May 2006. The consideration payable for such putwill amount to a multiple of 8.28 times the audited pre-tax profits of Mason achieved in the previous financial year.These arrangements are also subject to the approval of the Exchange Control Department of the South AfricanReserve Bank and the JSE Securities Exchange South Africa.





22. Commitments (continued)

In the event of a change of control of Westcon, should Datatec directly own less than 51% of the issued and

outstanding capital shares of Westcon, Datatec has committed to pay an amount of $4.5 million to Mirado Corp,

whose shareholders include Philip Raffiani, Tom Dolan and Roman Michalowski. A M Smith (CEO of

Westcon) has the right to require Westcon to purchase his 1.02% shareholding in Westcon at any time after

1 July 2004 for a period of thirty six months at fair market value. This right expires upon the commencement

of trading of Westcon on the NASDAQ, New York or London stock exchanges.

23. Contingent liabilities, guarantees and litigation

There are contingent liabilities relating to purchase considerations owing to vendors of businesses. These are

conditional upon future earnout targets being met. Refer note 19 for details.

As noted in the Group’s 2001 annual report, Westcon held $24 million of inventory purchased from Lucent

and in July 2001 commenced litigation to require Lucent to abide by the distribution agreement between the

parties and accept return of this inventory. Westcon management believe that Westcon has a meritorious case

against Lucent and is continuing with the litigation. Management has, however, decided to adopt a prudent

approach, and accordingly, Westcon has, during the year, provided an amount of $13 million (R123 million)

against its remaining Lucent inventory of $16 million.

In terms of the arrangement between RangeGate and Symbol, Datatec has provided a guarantee to Symbol in

respect of licence fees sold and collected by RangeGate, limited to an amount of $2 million. In addition,

Datatec has also issued a guarantee to Symbol for $1 million, expiring in June 2003.

As set out in the 2001 annual report, the Group disposed of UUNET SA (Pty) Limited to WorldCom, Inc. The

disposal agreement was drawn up under SA law and contains warranties and conditions required by the purchaser

for its protection that were considered normal for disposals of this nature. The warranties expire after eighteen

months from February 2001 with tax warranties expiring after thirty six months from the date of assessment by

the South African Revenue Service of UUNET’s income tax returns for the period ended 31 December 2000.

Such assessment has as yet not been made. In addition, in the normal course of business, Datatec had provided

guarantees to certain suppliers and customers of UUNET SA. UUNET International Limited (a subsidiary of

WorldCom, Inc.) indemnified Datatec in respect of these guarantees and agreed to procure Datatec is released

from these guarantees. At the date of this report, Datatec had been released from the majority of its guarantees

and has called on UUNET SA to procure its release from the remaining guarantees.

Datatec has issued, in the ordinary course of business, guarantees and letters of comfort to third parties in

SA in respect of trading facilities and lease commitments. RangeGate (Pty) Limited (SA) has provided a letter

of support to RangeGate Mobile Solutions Limited (UK) confirming its intention to provide financial support

for a period of at least twelve months from the date of signing their statutory financial statements.

Westcon has issued, in the ordinary course of business, guarantees and letters of comfort to suppliers and

financial institutions on behalf of its subsidiaries. The inventory purchase financing of $203 million referred to

in note 20 is generally guaranteed by Westcon.





23. Contingent liabilities, guarantees and litigation (continued)

Logical has issued, in the ordinary course of business, guarantees to third parties in respect of trading facilities

and lease commitments. Logical Group Limited has provided letters of support to Logical Networks Limited

(incorporated in Australia), Logical Group Services Limited, Logical e-Business Solutions Limited and Logical

Strategy Limited (all incorporated in the UK) confirming its intention to continue to provide financial support

to these subsidiaries for a period of at least twelve months from the date of signing their statutory financial

statements. In addition, Logical Group Limited also issued a letter of comfort confirming its intention to

continue to provide financial support to Logical Networks France.

The Group has certain other contingent liabilities resulting from litigation and claims including breach of

warranties where operations have been disposed of, generally involving commercial and employment matters,

which are incidental to the ordinary conduct of its business. Management believes, after taking legal advice

where appropriate on the probable resolution of these contingencies, that none of these contingencies will

materially affect the consolidated financial position or the results of operations of the Group.

24. Related party transactions

Related party transactions exist within the Group. Sales and purchases between Group companies are

concluded at arm's length in the ordinary course of business. Details of material transactions with related

parties are disclosed elsewhere in the financial statements, specifically in the Directors’ Report.

For the year ended 31 March 2002, the intergroup sales of goods and provision of services amounted to R179 million.

Logical Other Holdings

2002 2002

R million R million

25. Disposal and discontinuance of subsidiaries

A description of subsidiaries disposed of can be found in the

Directors’ Report on page 59.

Revenue 112 3

Cost of sales (98) –

Gross margin 14 3

Operating costs (40) (9)

Operating loss before finance costs (26) (6)

Financing costs – –

Loss before exceptional items and goodwill (26) (6)

Exceptional items (36) (8)

Loss before taxation (62) (14)

Taxation – –

Loss after taxation (62) (14)





Logical Other Holdings

2002 2002

R million R million

25. Disposal and discontinuance of subsidiaries (continued)

Net operating cash outflow 68 6

Investing activities outflow 5 6

Financing activities outflow 80 5

The net assets at date of disposal were as follows:

Property, plant and equipment 13 –

Goodwill 43 –

Capitalised development expenditure 5 –

Inventories 8 –

Accounts receivable 21 –

Accounts payable (20) –

Holding company and fellow subsidiary companies (3) (43)

Bank overdraft (2) –

Deferred taxation 3 –

Long-term liabilities – (81)

68 124

Net selling price – 2

Loss (36) (20)

26. Segmental report

For management purposes the Group is currently organised into four operating divisions – Westcon, Logical,

Mason and Other Holdings. These divisions are the basis on which the Group reports its primary segmental

information.

Principal activities are as follows:

Westcon – Global distribution of advanced networking and communication products

Logical – Provision of professional services and IT network integration

Mason – Strategic telecommunications consultancy

Other Holdings – Other distribution and service orientated interests in SA





26. Segmental report (continued)

Westcon Logical Mason Other Holdings Eliminations Total

2002 2001 2002 2001 2002 2001 2002 2001 2002 2001 2002 2001R million R million R million R million R million R million R million R million R million R million R million R million

Abridged Income StatementRevenue 15 595 14 963 3 911 4 040 282 222 889 933 – – 20 677 20 158

– North America 9 887 9 115 2 060 1 826 – – – – (8) (68) 11 939 10 873 – South America 223 170 235 232 – – – – – 458 402 – UK and Europe 4 572 4 784 956 1 321 282 222 37 3 (23) – 5 824 6 330 – Asia Pacific 1 080 962 672 661 – – – – (133) – 1 619 1 623 – Africa – – – – – – 852 938 (15) (8) 837 930 – Intersegmental (167) (68) (12) – – – – (8) 179 76 – –

Operating profit/(loss) 586 781 (39) (20) 6 34 93 10 – 2 646 807 Financing costs (118) (201) (26) (43) (2) (2) (26) (33) – 29 (172) (250)Income from investments 29 34 11 14 1 – 35 129 – (31) 76 146 Share of associate company losses – – – – – – (3) (13) – – (3) (13)

Profit/(loss) before exceptional items and goodwill amortisation 497 614 (54) (49) 5 32 99 93 – – 547 690 Goodwill amortisation (61) (42) (64) (35) (4) (7) (4) 4 – – (133) (80)Goodwill impairment – – (382) – – – (15) – – – (397) –Other exceptional items (29) 200 (36) (179) (5) – (94) 685 – – (164) 706

Profit/(loss) before taxation 407 772 (536) (263) (4) 25 (14) 782 – – (147) 1 316 Taxation (122) (304) 48 37 (4) (10) (100) (24) – – (178) (301)

Profit/(loss) after taxation 285 468 (488) (226) (8) 15 (114) 758 – – (325) 1 015

EBITDA 685 838 30 117 13 40 118 64 – – 846 1 059

– North America 220 421 50 69 – – – – 15 – 285 490 – South America 25 29 8 34 – – – – – – 33 63 – UK and Europe 346 334 (60) (11) 13 40 22 1 – 2 321 366 – Asia Pacific 79 69 32 5 – – – – – – 111 74 – Africa – – – – – – 95 54 1 12 96 66 – Intersegmental 15 (15) – 20 – – 1 9 (16) (14) – –

Gross assets 7 823 7 151 2 169 1 915 285 220 938 3 292 (1 500) (2 810) 9 715 9 768

– North America 4 683 4 805 1 224 1 004 – – – – (34) (96) 5 873 5 713 – South America 168 122 112 190 – – – – – – 280 312 – UK and Europe 2 526 1 740 517 453 285 220 72 36 (477) (59) 2 923 2 390 – Asia Pacific 446 484 316 268 – – – – (20) – 742 752 – Africa – – – – – – 866 3 256 (969) (2 655) (103) 601

Property, plant, equipment andcapitalised development costs 354 238 196 197 11 15 83 73 – – 644 523

– North America 271 220 70 39 – – – – – – 341 259 – South America 28 4 6 17 – – – – – – 34 21 – UK and Europe 45 13 73 100 11 15 1 – – – 130 128 – Asia Pacific 10 1 47 41 – – – – – – 57 42– Africa – – – – – – 82 73 – – 82 73





26. Segmental report (continued)

Westcon Logical Mason Other Holdings Eliminations Total

2002 2001 2002 2001 2002 2001 2002 2001 2002 2001 2002 2001R million R million R million R million R million R million R million R million R million R million R million R million

Investments and associated companies 6 99 – 3 15 9 1 941 1 374 (1 932) (1 442) 30 43

– North America – 95 – – – – – – – (92) – 3 – South America – – – 17 – – – – – – – 17 – UK and Europe 6 4 – (19) 15 9 – 1 – (1) 21 (6)– Asia Pacific – – – 5 – – – – – – – 5 – Africa – – – – – – 1 941 1 373 (1 932) (1 349) 9 24

Net cash resources (453) (1 315) 183 (46) 53 43 385 1 056 – – 168 (262)

– North America (1 047) (1 606) 115 (17) – – – – – – (932) (1 623)– South America 19 2 (6) (32) – – – – – – 13 (30)– UK and Europe 545 306 85 12 53 43 9 1 – – 692 362 – Asia Pacific 30 (17) (11) (9) – – – – – – 19 (26)– Africa – – – – – – 376 1 055 – – 376 1 055

Inventories 2 046 2 797 241 172 1 8 109 67 – – 2 397 3 044

– North America 1 214 1 960 100 49 – – – – – – 1 314 2 009 – South America 40 32 22 32 – – – – – – 62 64 – UK and Europe 651 599 66 64 1 8 – – – – 718 671 – Asia Pacific 141 206 53 27 – – – – – – 194 233– Africa – – – – – – 109 67 – – 109 67

Trade accounts receivable 2 863 2 308 704 817 65 70 149 73 – – 3 781 3 268

– North America 1 542 1 376 413 408 – – – – – – 1 955 1 784 – South America 35 36 68 101 – – – – – – 103 137 – UK and Europe 1 070 690 110 230 65 70 16 – – – 1 261 990 – Asia Pacific 216 206 113 78 – – – – – – 329 284 – Africa – – – – – – 133 73 – – 133 73

Liabilities (2 672) (2 636) (953) (1 031) (131) (148) (620) (757) 294 377 (4 082) (4 195)

– North America (1 100) (1 229) (381) (282) – – – – 25 9 (1 456) (1 502)– South America (10) (68) (75) (64) – – – – – – (85) (132)– UK and Europe (1 387) (1 059) (278) (484) (131) (148) (35) (13) 131 236 (1 700) (1 468)– Asia Pacific (175) (280) (219) (201) – – – – 20 – (374) (481)– Africa – – – – – – (585) (744) 118 132 (467) (612)

Trade accounts payable (2 368) (2 292) (596) (459) (8) (11) (144) (80) – – (3 116) (2 842)

– North America (1 030) (1 212) (341) (204) – – – – – – (1 371) (1 416)– South America (12) (24) (64) (31) – – – – – – (76) (55)– UK and Europe (1 146) (866) (106) (161) (8) (11) (4) – – – (1 264) (1 038)– Asia Pacific (180) (190) (85) (63) – – – – – – (265) (253)– Africa – – – – – – (140) (80) – – (140) (80)

The average number of employees for the year for each of the Group’s principal divisions was as follows: 916 1 059 1 217 2 050 253 233 637 488 – – 3 023 3 830

Annexure 1Subsidiary Companies and Joint Venture



Issued Effective holding Unlisted shares Indebtedness

Nature of ordinary 2002 2001 2002 2001 2002 2001business capital % % R’000 R'000 R’000 R'000

Active SubsidiariesINCORPORATED IN SOUTHERN AFRICADatatec Management Services (Pty) Ltd O 100 100.0 100.0 – – 224 47RangeGate (Pty) Ltd O 10 000 79.1 100.0 – – 1 –Westcon AME (Pty) Ltd O 1 100.0 100.0 – – 35 (66)

INCORPORATED IN UK AND EUROPEComstor Belgium W 620 92.5 – – – – –Comstor Group Ltd W 2 010 000 92.5 85.3 – – 175 119Comstor Ltd W 2 92.5 – – – – –Comstor Networks GmbH W 24 329 92.5 85.3 – – 17 2Westcon GmbH W 1 92.5 85.3 4 4 – –Westcon UK Ltd W 2 92.5 85.3 – – 133 92Logical (UK) Ltd L 1 583 885 100.0 100.0 – – 5 –Logical e-Business Solutions L 1 810 100.0 100.0 – – – 2Logical GmbH L 255 646 100.0 100.0 – – – 10Logical Group Ltd L 72 000 000 100.0 100.0 621 289 205 –Logical Group Services Ltd (formerly Datatec Group Services Ltd) L 2 100.0 100.0 – – – 86Logical Networks GmbH L 25 000 100.0 100.0 – – – –Logical Networks SA L 77 600 100.0 60.0 – – – –Logical Strategy Ltd L 2 100.0 100.0 – – – –Regreb BV L 40 000 100.0 100.0 – – – –Satelcom UK Ltd L 59 380 100.0 100.0 – – – –Catalyst IT Partners Ltd M 441 810 75.0 75.0 – – – –Mason Group Ltd M 11 247 100 75.0 75.0 9 9 6 34Mason Communications Ltd M 119 403 75.0 75.0 – – – –Mason Communication Ireland Ltd M 2 75.0 75.0 – – – –Datatec UK Holdings Ltd O 50 000 100.0 100.0 – – (4) 5Rangegate Mobile Solutions Ltd O 100 79.1 100.0 – – 7 –

INCORPORATED IN US AND CANADABusiness Operation Services Corp. W 50 92.5 85.3 – – – –Comstor Inc. W 10 92.5 85.3 6 6 – –Eastpro Services Inc. W 10 92.5 85.3 – – – –Voda One Corp W 1 92.5 85.3 – – – –Westcon Canada Systems (WCS) Inc. W 173 228 92.5 85.3 – – – –Westcon Group Inc. W 46 448 296 92.5 85.3 674 423 (44) (27)Westcon.net Inc. W 10 92.5 85.3 – – – –Logical e-Business solutions Inc (Formerly Pudget Sound Systems Group, Inc.) L 36 554 100.0 100.0 – – – –Logical Networks Inc. L 54 100.0 100.0 – – – –Logical US Holdings Inc. L 100 100.0 100.0 – – – 382Network I US Inc. L 1 000 100.0 100.0 – – – –


Annexure 1 continued

Subsidiary Companies and Joint Venture


IssuedEffective holding Unlisted shares Indebtedness

Nature of ordinary 2002 2001 2002 2001 2002 2001business capital % % R’000 R'000 R’000 R'000

Active Subsidiaries (continued)INCORPORATED IN SOUTH AMERICAWestcon Brazil W 987 748 92.5 85.3 – – – –Softnet- Logical SA (formerly Softnet SA) L 400 000 75.0 75.0 – – – 30Softnet - Logical Uruguay SA (formerly Softnet Uruguay SA) L 130 000 75.0 75.0 – – – –X-Net Cuyo SA L 2 000 000 75.0 75.0 – – – –

INCORPORATED IN AUSTRALIALAN Systems (Pty) Ltd W 100 000 92.5 85.3 – – – –Westcon Australia (Pty) Ltd W 1 92.5 85.3 – – – –Westcon Australia, Inc. W 100 92.5 85.3 – – – –Logical Australia (Pty) Ltd (formerly Logical Systems (Pty) Ltd) L 10 000 100.0 100.0 – – – –Logical Networks Ltd L 7 762 280 100.0 100.0 – – – –

INCORPORATED IN NEW ZEALANDLogical Networks Ltd L 500 000 100.0 100.0 – – – –Logical Secure Ltd L 100 100.0 100.0 – – – –Mentum Secure Ltd L 100 100.0 100.0 – – – –

INCORPORATED IN SINGAPORERBR Networks Pte Ltd W 100 000 92.5 85.3 – – – 24

INCORPORATED IN BRITISH VIRGIN ISLANDSDatatec International Holdings Ltd O 50 000 100.0 100.0 – – 38 35

Dormant Subsidiaries – – – – 2 6 3

Joint VentureAffinity Logic Holdings (Pty) Ltd O 10 017 570 47.5 47.5 2 2 65 65

Companies disposed ofLogical France SA (formerly Datatec France SA) L 5 520 800 – 100.0 – – – –Logical Procurement Management Services (Pty) Ltd (Australia) L 12 – 100.0 – – – –Logical Solutions (formerly Conexus Logical AG) (Switzerland) L 650 – 100.0 – – – –Logical Systems (WA) (Pty) Ltd (Australia) L 12 – 100.0 – – – –Logical Systems SA (France) L 55 208 000 – 100.0 – – – –Network I Australia (Pty) Ltd (Australia) L 12 – 100.0 – – – –Destiny Electronic Commerce (Pty) Ltd O 300 – 61.0 – – – –

1 316 735 869 843

W: Westcon L: Logical M: Mason O: Other Holdings


Annexure 2Associated Companies


Group Company

2002 2001 2002 2001


Listed:

Siltek Limited:

Percentage holding 23% 23% – –

Carrying value – – – –

Market value – 4 – 4

Siltek, through its subsidiaries and associated

companies, distributed IT hardware, software and

networking products and provides integrated IT

software, networking and telecommunication

related service and solutions.

The company’s year-end is 30 June.

Unlisted:

Dotcom Trading 118 (Pty) Limited:(Held via Affinity Logic)

Percentage holding 40% 40% – –

Carrying value 1 4 – –

Directors' valuation of interest in associated company 1 4 – –

The nature of the company's business is desktop

and in-store system support.

The company's year-end is 31 December.

Network I Limited:

Percentage holding – 50% – –

Carrying value – 5 – –

Directors' valuation of interest in associated company – 5 – –

Network I provides on-line industrial strength

services and products, by providing value added

network intelligent solutions.

The company's year-end is 31 March.

1 9 – –


Annexure 3Investments


Group Company

2002 2001 2002 2001


Listed:

Cisco Systems, Inc.39 709 shares of $0.01 each 6 7 – –

Market value at 31 March 2002: $672 273

African Lakes Corporation plc 5 – 5 –

4 409 171 shares of 5 pence each

Market value at 31 March 2002: £297 619

Unlisted:

NetActive Limited 3 5 – –

(Held via Affinity Logic)

10 294 010 shares of 2 cents each

Directors' valuation: R3 million

The Mason Group Employee Benefit Trust 15 9 – –

1 104 500 shares of 10p each

Directors' valuation: R15 million

Metropolis* Transactive Holdings Limited – 4 – 2

31 652 664 shares of 1 cent each

(2001: 21 804 530 shares)

Hertiq 2118 (Pty) Limited – 2 – –

(Held via Affinity Logic) – –

Logical Secure Investments (NZ) – 3 – –

Korbitec Holdings (Pty) Limited – 4 – 4

29 34 5 6


Shares and Shareholders


Listed below are analyses of holdings extracted from the register of ordinary shareholders at 31 March 2002:

1 April 2001 to 1 April 2000 to 1 April 1999 to31 March 2002 31 March 2001 31 March 2000

Stock exchange performance Total number of shares traded ('000) 130 566 127 537 79 297Total number of shares traded as a percentage of total shares 95.0% 99.1% 66.7%Total value of shares traded (R million) 2 199 6 212 7 405

Prices (cents)Closing 1 650 1 650 11 600High 2 500 11 700 14 500Low 880 1 450 5 530

Percentage of shares held by non-public shareholders 4.8% 57.6%* 65.3%*Percentage of shares held by public shareholders 95.2% 42.4%* 34.7%*

The following are the principal shareholders whose holding directly or indirectly, including asset managers' investment funds, in the company total more than 5% of the issued share capital as at 31 March 2002:

Old Mutual Asset Management (Pty) Limited 45 801 940 33.34%Stanlib Limited 10 635 250 7.74%Prudential Asset Management (Pty) Limited 6 872 976 5.00%Sanlam Investment Managers (Pty) Limited 6 759 730 4.92%

No of shareholders No of shareholdersShareholder type in South Africa other than in South Africa Total shareholders

Nominal Nominal Nominalnumber Percentage number Percentage number Percentage

Public 6 863 83.4 243 11.8 7 013 95.2Directors 3 0.6 3 4.2 6 4.8

Total 6 866 84.0 246 16.0 7 019 100.0

*Per the certificated share register, prior to the introduction of STRATE and amendments to Companies Act(Act 61 of 1973), as amended

Shareholders’ Diary

Annual General Meeting 30 September 2002

Reports

Interim half-year to September 2002 Published November 2002

Preliminary announcement of 2003 annual results Published May 2003

2003 annual report Published July 2003


Notice to Members


Notice is hereby given that the Annual General Meeting of members of Datatec Limited will be held in the auditoriumon Monday, 30 September 2002 at Building 8, Harrowdene Office Park, Western Service Road, Woodmead, RepublicSouth Africa at 14h00 for the purpose of transacting the following business:

1. To receive and consider the annual financial statements and Group annual financial statements for the year ended31 March 2002.

2. 2.1 To re-elect the directors retiring in accordance with the Articles of Association in one bulk resolution.

2.2 To re-elect the directors retiring in accordance with the Articles of Association. Please refer to the CurriculumVitae of the directors being re-elected on pages 6 to 7.

3. To grant the directors the power, until the next Annual General Meeting, to allot and issue, at their discretion, theunissued ordinary shares of the company subject to the Listings Requirements of the JSE Securities ExchangeSouth Africa and the relevant sections of the Companies Act (Act 61 of 1973), as amended.

4. To confirm the re-appointment of Deloitte & Touche as auditors for the ensuing financial year.

5. To ratify the directors’ remuneration for the past financial year.

6. To consider and, if deemed fit, pass with or without modification the following ordinary resolutions:

6.1 “That in terms of the Listings Requirements of the JSE Securities Exchange South Africa, the directors begiven the general authority to issue ordinary shares of one cent each (being a class already in issue) for cashas and when suitable situations arise, subject to the following conditions:

• that this authority shall not extend beyond 15 (fifteen) months from the date of this Annual GeneralMeeting or the date of the next Annual General Meeting, whichever is the earlier date;

• that the issue may only be made to public shareholders as defined in paragraphs 4.26 to 4.27 of theListings Requirements of the JSE Securities Exchange South Africa and not to related parties;

• that a paid press announcement giving full details, including the impact on net asset value and earningsper share, will be published at the time of any issue representing, on a cumulative basis within one year,5% or more of the number of shares of that class in issue prior to the issue;

• that issues in the aggregate in any one financial year may not exceed 15% of the number of shares of thatclass of the company's issued share capital, including instruments which are compulsorily convertible intoshares of that class; and

• that, in determining the price at which an issue of shares will be made in terms of this authority, themaximum discount permitted will be 10% of the average ruling price of the shares in question, asdetermined over the 30 business days prior to the date that the price of the issue is determined or agreedby the directors of Datatec.”

The approval of 75% of the votes cast by shareholders present or represented by proxy at this meeting isrequired for this ordinary resolution to become effective.

6.2 “That the directors be and are hereby authorised to amend the Datatec Share Option Scheme (“OptionScheme”) as follows:

• CLAUSE 1.2.13By deleting the words ‘less a 15% (fifteen per cent) discount’.

• CLAUSE 3.1By deleting the existing clause and substituting the following:

‘That the directors be and are hereby authorised to increase the maximum number of shares available interms of the Option Scheme to 15% (fifteen per cent) of the issued share capital from time to time’.


Notice to Members continued


• CLAUSE 5.8

By inserting the following words after the word “exercised” in the first line of clause 5.8:

‘whether or not the beneficiary has retired’

• CLAUSE 5.8.3.1

By rewording this clause to read as follows:

‘within 12 (twelve) months after becoming a retrenched employee subject to clause 5.8.3.3. If the

beneficiary does not exercise the option within such period, it shall lapse;’

• CLAUSE 3.2

By deleting the words ‘1 000 000 (one million) shares, being 0.9% (nought decimal nine per cent) of the

issued share capital as at 18 August 1999’ and the substitution in place thereof of the following: ‘shares

aggregating at the time of the granting of such options not more than 1.5% (one decimal five per cent)

of the issued share capital of the company’.

• CLAUSE 5.9.4

By deleting the existing clause and substituting the following:

‘If not duly exercised by the tenth anniversary of the option date.’”

6.3 “That subject to the passing of the ordinary resolutions, any director of the company be and is hereby

authorised to sign all documents and perform all acts which may be required to give effect to the resolutions

passed at the meeting.”

7. To consider and, if deemed fit, pass with or without modification, the following special resolutions:

7.1 Repurchase by the company of its own securities

• “That the directors of the company be authorised from time to time to acquire issued shares in the

ordinary share capital of the company on the JSE Securities Exchange South Africa (“JSE”) “open market”

at a price no greater than 10% above the weighted average of the market value for the securities for the

five previous business days immediately preceding the date on which the transaction was agreed; and the

purchase by any of the company’s subsidiaries of shares in the company in the manner contemplated by,

and in accordance with, the provisions of section 89 of the Companies Act (Act 61 of 1973), as amended,

and provisions of the Listings Requirements of the JSE that may be applicable;”

• “that a paid press release giving such details as may be required in terms of the Listings Requirements of

the JSE be published when the company or its subsidiaries have repurchased 3% of the shares in issue;”

• “that the authorisation granted above shall remain in force from the date of registration of these special

resolutions by the Registrar of Companies until the conclusion of the next Annual General Meeting of the

company and, in any event, no later than 15 months from the date on which they were passed;”

• “that the repurchase by the company of its own securities above may not exceed 20% of the company's

issued ordinary share capital in the aggregate in any one financial year or, in the case of acquisition by any

of the company's subsidiaries, 10% of such issued ordinary share capital in the aggregate if such shares

are to be held as treasury stock;”

• “that the sponsor to the company provides a letter on the adequacy of working capital in terms of section

2.14 of the JSE Listings Requirements prior to any repurchases being implemented on the open market

of the JSE.”




As at the date of this report, the company’s directors undertake that they will not implement any such

repurchase in the 12 months following the date of this Annual General Meeting, unless:

• the company and the group would, after payment for such maximum repurchase, be able to repay its

debts in the ordinary course of business;

• the company’s and the group’s consolidated assets, fairly valued according to generally accepted

accounting practice and on a basis consistent with the last financial year of the company, would, after such

payment, exceed their consolidated liabilities;

• the company’s and the group’s ordinary share capital and reserves would, after such payment, be

sufficient to meet their needs; and

• the company and the group would, after such payment, have sufficient working capital to meet its needs.

The Board has no immediate intention to use this authority to repurchase company shares. However, the

Board is of the opinion that this authority should be in place should it become appropriate to undertake a

share repurchase in the future.

Reason for and effect of the Special Resolution

The reason for and the effect of the special resolution are to grant the company’s directors a general

authority, up to and including the date of the following Annual General Meeting of the company, to approve

the company’s purchase of shares in itself, or of shares in its holding company, or to permit a subsidiary of

the company to purchase shares in the company.

7.2 Ratification and approval of share options to non-executive directors, which are proposed to be granted

without discount.

That the company ratify, confirm and approve, in terms of section 223 of the Companies Act (Act 61 of 1973),

as amended, the grant of the following share options to non-executive directors, which are proposed to be

granted without discount:

Non-executive director Number of options Option price per share Date of grant

J F McCartney 125 000 R18.06 14 March 2002

C S Seabrooke 80 000 R18.06 14 March 2002

7.3 Electronic notification to and from shareholders

• “That in terms of section 62 of the Companies Act (Act 61 of 1973), as amended (“the Act”) the Articles

of Association of the company be amended as follows:

• the deletion of article 10.6 and the insertion of the following new sub-articles in place thereof:

10.6.1 “The form appointing a proxy which is not an electronic communication and the power of

attorney and other authority, if any, under which it is signed or a notarially certified copy of

such power or authority shall be deposited at the registered office of the company not less than

48 (forty-eight) hours (or such lesser period as the directors may determine in relation to any

particular meeting) at which the person named in the form proposes to vote, or in the case of

a poll not less than 24 (twenty-four) hours (or such lesser period as the directors may

determine in relation to the particular poll) before the time appointed for the taking of the

poll, and in default the form of proxy shall not be treated as valid.




10.6.2 The form appointing a proxy which is an electronic communication, where an address hasbeen specified for the purpose of receiving electronic communications in the notice ofmeeting or in the form itself, and the power of attorney or other authority, if any, under whichit is signed or a notarially certified copy of such power or authority shall be received at thatspecified address not less than 48 (forty-eight) hours (or such lesser period as the directorsmay determine in relation to any particular meeting) before the time for holding the meeting(including an adjourned meeting) at which the person named in the form proposes to vote,or in the case of a poll not less than 24 (twenty-four) hours (or such lesser period determinedas aforesaid in relation to the particular poll) before the time appointed for the taking of thepoll, and in default the form of proxy shall not be treated as valid.

10.6.3 No form appointing a proxy shall be valid after the expiration of 6 (six) months from the datewhen it was signed, which shall include signature in any form which the directors may requirefor the purpose of establishing the authenticity or integrity of an electronic communication,except at an adjourned meeting or on a poll demanded at a meeting or adjourned meetingin cases where the meeting was originally held within 6 (six) months from the said date,unless so specifically stated in the proxy itself. A vote given in accordance with the terms ofan instrument of proxy shall be valid notwithstanding the previous death or mental disorderof the principal or revocation of the proxy or of the authority under which the proxy wasexecuted, or the transfer of the share in respect of which the proxy is given, provided that nointimation in writing of such death, insanity, revocation or transfer as aforesaid shall havebeen received by the company at the office before the commencement of the meeting oradjourned meeting at which the proxy is used. In this Article reference to “in writing” shallinclude the use of electronic communication, subject to any terms and conditions decided bythe directors.”

• the deletion of the terms of article 10.7 and the insertion of the following new article in place thereof:

“Subject to the provisions of the Act, a form appointing a proxy shall be in writing, or may be byelectronic means including without limitation, electronic mail or facsimile.”

• the deletion of article 29 and the insertion of the following new sub-articles in place thereof:

29.1 “Notices shall be served by the company upon each member personally or by transmissionthrough the post in a prepaid letter, envelope or wrapper addressed to such member at hisregistered address or transmitted by electronic mail or facsimile to such registered address.

29.2 Any member may notify in writing to the company an address, electronic mail address orfacsimile number. Such address shall be deemed to be his registered place of address within themeaning of Article 29.1, and if he has not notified such address, he shall be deemed to havewaived his right to be served with notices.”

• the deletion of the words “as the directors may determine” in Article 29.3 and the insertion of thewords “as the directors may determine, and in accordance with the requirements of the JSE SecuritiesExchange South Africa.” in place thereof;

• the insertion of the words “Any notice sent by the company using electronic communication orpublication on a website shall be deemed to have been served on the day after it was sent. Proof thata notice contained in an electronic communication was sent in accordance with guidelines determinedfrom time to time by the directors shall be conclusive evidence that the notice was given.” at the endof Article 29.5;

• the deletion of article 29.7 and the insertion of the following new article in place thereof:




29.7 “Any notice or document delivered using electronic communication or publication on a website or

sent by post to any member or beneficial holder in pursuance of these articles shall, notwithstanding

that such member or beneficial holder be then deceased, and whether or not the company has

intimation of his death, be deemed to have been duly served in respect of any registered shares or

securities in respect of which such beneficial holder has or is deemed to have a beneficial interest,

whether held solely or jointly with other persons, until some other person be registered or disclosed

in his stead as the holder or joint holder thereof, and such service shall, for all purposes of these

articles, be deemed a sufficient service of such notice or document on his heirs, executors or

administrators, and all persons (if any) jointly interested with him in any such shares or securities.””

8. To transact such other business as may be transacted at an Annual General Meeting.

Members who have not dematerialised their ordinary shares or who have dematerialised their ordinary shares and

registered them in their own name are entitled to attend and to vote at the meeting. Such members are entitled to

appoint one or more proxies to attend, speak and vote in their stead. A proxy need not be a member of the company.

Proxies must be lodged at the registered office of the company not less than 48 (forty-eight) hours before the time

allotted for the meeting.

Members who have dematerialised their ordinary shares and registered them in the name of a CSDP or broker should

contact their CSDP or broker to make the relevant arrangements to attend/vote at the meeting.

By order of the board

I P Dittrich

Company Secretary

17 July 2002


Administration


DIRECTORATEName Date of appointment Date of resignation Position held at 31 March 2002

Executive DirectorsJ P Montanana (British) † October 6, 1994 Chief Executive OfficerS F Lawrence (British) † November 7, 2000 Chief Executive Officer: LogicalD B Pfaff † July 1, 2001 Executive DirectorR S Rindel † September 1, 1995 Group Finance DirectorA M Smith (American) † July 17, 2001 Chief Executive Officer: Westcon

Non-executive DirectorsL Boyd ‡ December 6, 2001 ChairmanC B Brayshaw * December 6, 2001 DirectorM Karpul August 30, 1996 DirectorJ F McCartney (American) ‡† May 11, 1998 Deputy ChairmanC M L Savage *† December 6, 2001 DirectorC S Seabrooke *‡ October 6, 1994 Director

ResignationsJ S James September 1, 1998 December 6, 2001M J Lamberti October 23, 1997 October 22, 2001

*Audit and Compliance Committee ‡Remuneration and Nomination Committee †Business Risk Committee

Registered Office

Building 8Harrowdene Office ParkWestern Service RoadWoodmead, 2148South AfricaTelephone +27 (0)11 233 1000Telefax +27 (0) 11 233 3300

Registration Number

1994/005004/06

Secretary

I P Dittrich

Office – UK

110 Buckingham AvenueSloughBerkshireSL14PFUnited KingdomTelephone +44 (0) 1753 797 100Telefax +44 (0) 1753 819 284

Office – US

520 White Plains RoadTarrytownNew York 10591USATelephone +1 914 829 7170Telefax +1 914 829 7184

Sponsors

Rand Merchant Bank 1 Merchant PlaceCorner Fredman Drive andRivonia RoadSandton, 2196South Africa

Transfer Secretaries

Computershare Investor ServicesLimited (previously MercantileRegistrars Limited)10th Floor 11 Diagonal StreetJohannesburg, 2000South Africa

Corporate law advisors andconsultants

Edward Nathan & Friedland (Pty)Limited4th FloorThe ForumMaude StreetSandton, 2196South Africa

Auditors

Deloitte & ToucheThe Woodlands Woodlands DriveWoodmeadSandton, 2148South Africa

Principal Bankers – SA

The Standard Bank of SouthAfrica LimitedCommercial Banking Centre78 Fox StreetJohannesburg, 2001

Principal Bankers – UK

Royal Bank of Scotland plcAbbey GardensReadingBerkshire

Principal Bankers – US

IBM Global FinancingNorth Castle DriveArmontNew York, 10504

Internet Address

www.datatec.co.zawww.westcon.comwww.logical.comwww.masoncom.com


102 Datatec Annual Repor t 2002Printed by Ince (Pty) Ltd


Form of Proxy

Datatec Annual Repor t 2002

I/We

of

being a member/members of the above-mentioned company, hereby appoint:

or failing him/her,

or failing him/her, the chairperson of the Annual General Meeting as my/our proxy to vote for me/us on my/ourbehalf at the Annual General Meeting of the company to be held at 14h00 on 30 September 2002 and at anyadjournment of that meeting.

Signed at this day of 2002

Signature

Please indicate with an “X” in the appropriate space on the right how you wish your votes to be cast. If you return thisform duly signed, without any specific directions, the proxy shall be entitled to vote as he/she thinks fit.

In favour of Against Abstainresolution resolution from voting

1. Adoption of annual financial statements

2. Re-election of directors

2.1 Re-election of directors in one bulk resolution

2.2 Re-election of directors

3. Placing the unissued shares under the directors’ control

4. Confirming the re-appointment of the auditors

5. Ratifying directors’ remuneration for the past financial year

6. ORDINARY RESOLUTIONS

6.1 General authority to issue shares for cash

6.2 Amendment of Datatec Share Option Scheme

6.3 Authorise directors to give effect to the resolution

7. SPECIAL RESOLUTIONS

7.1 Repurchase by company of its own securities

7.2 Ratification and approval of share options to non-executive directors

7.3 Electronic notification to and from shareholders

A member entitled to attend and vote at this meeting is entitled to appoint one or more proxies to attend, speak andvote in his/her stead. A proxy need not be a member of the company. Proxies must be lodged at the registered officeof the company no less than 48 (forty-eight) hours before the time scheduled.

Please note that this proxy form is only for use by members who have not dematerialised their ordinary shares or whohave dematerialised their ordinary shares and registered them in their own name.

corporate profile - sharedata · 2002. 8. 16. · corporate profile datatec annual report 2002 1...

Documents