Datatec Limited - Special cash dividend

29 November 2017

Datatec Limited

A SPECIAL CASH DIVIDEND OF R23 PER SHARE TO ORDINARY SHAREHOLDERS WITH AN ELECTION TO RECEIVE NON‑RENOUNCEABLE CAPITALISATION ISSUE SHARES IN LIEU OF THE CASH DIVIDEND

1.         Introduction

On 13 November 2017, Datatec announced the Board's intention, pursuant to the sale of Westcon Americas, to distribute a special dividend of US$350 million (approximately R5 billion at that date) to shareholders as a cash dividend with a scrip distribution alternative.

Notice is hereby given that the board of directors of the Company ("Board") has declared a special cash dividend of R23.00 per ordinary share ("Cash Dividend") to its ordinary shareholders ("Shareholders") recorded in its register at the close of business on the Record Date, being Friday, 12 January 2018 ("Record Date"). The Cash Dividend has been declared from distributable retained profits.

The Cash Dividend will be treated as a 'dividend' for the purposes of the Income Tax Act, No 58 of 1962 (as amended) and, consequently, a dividend withholding tax of 20% will apply to all Shareholders who do not qualify for an exemption. The gross Cash Dividend is an amount of R23.00 (approximately U$1.66 per share) per Share and, after deduction of dividend withholding tax, the net Cash Dividend is an amount of R18.40 per Share. No STC (secondary tax on companies) credits are available for utilisation by the Company. Foreign Shareholders (i.e. those who are not residents of South Africa for tax purposes) should consult their own professional advisors regarding their tax implications.

Shareholders are entitled, in respect of all or a part of their shareholding, to elect to receive a scrip distribution of fully‑paid capitalisation Shares ("the Scrip Distribution") in lieu of the Cash Dividend. Any such elections must reach the Company's transfer secretaries, Computershare Investor Services (Pty) Ltd, by 12:00 noon on Friday, 12 January 2018.

New Shares issued pursuant to the Scrip Distribution alternative will be settled by way of the capitalisation of the Company's distributable retained profits.

To the extent that the full Cash Dividend is not paid as a result of Shareholders electing the Scrip Distribution alternative, the Board intends to use the full undistributed cash amount to undertake a general buyback of Shares through the market under the authority granted at the Annual General Meeting on Thursday, 14 September 2017.

As announced on 24 October 2017, the listing of the Company's Shares on the Alternative Investment Market (AIM) in London will be cancelled on Friday, 8 December 2017. Depositary Interests on the AIM will revert to certificated Shares on the Jersey register on Friday, 8 December 2017 and be transferred to the main register on Sunday, 10 December 2017. Therefore, Shareholders whose Shares are currently held on the Company's Jersey share register (including those dematerialised for trading on AIM) will participate in the Cash Dividend with the Scrip Distribution alternative in exactly the same way as all other Shareholders. Specifically, such Shareholders will receive the Cash Dividend (or the Scrip Distribution, if elected) along with all other Shareholders, provided that their Shares are still held as at the close of business on the Record Date.

The Company's total number of issued Shares as at 28 November 2017 is 211,967,622 (including 17,941 treasury shares). Datatec's income tax reference number is 9999/493/71/2.

2.         Terms of the Scrip Distribution

Shareholders will receive the Cash Dividend in respect of the Shares held by them as at the close of business on the Record Date, being Friday, 12 January 2018, if and to the extent to which such Shareholders have not elected to receive the Scrip Distribution alternative.

Shareholders are, however, entitled to elect to receive a distribution of fully‑paid capitalisation Shares, in respect of all or any part of their shareholding as at the close of business on the Record Date, being Friday, 12 January 2018, in lieu of the Cash Dividend.

The maximum number of Shares which the Company is able to issue to Shareholders electing the Scrip Distribution alternative is 63,590,285 Shares, based on the number of Shares in issue (including treasury shares) as at Tuesday, 28 November 2017. This number has been calculated to ensure that the Company does not issue 30% or more of the number of Shares in issue as at the List Date of Wednesday, 10 January 2018. If the elections of Shareholders in respect of the Scrip Distribution would result in the number of Scrip Distribution Shares that are issued exceeding the maximum number set forth above, then the number of Scrip Distribution Shares to be issued to each Shareholder who has elected the Scrip Distribution alternative will be reduced proportionately, such that each such Shareholder continues to receive the same percentage/proportion of the Scrip Distribution Shares (calculated with reference to all elections made to receive Scrip Distribution Shares) that it would have received had no limit been imposed. Shareholders will be paid the Cash Dividend in respect of those Scrip Distribution Shares which they do not receive pursuant to the application of the foregoing limitation, subject to dividend withholding tax.

The number of Scrip Distribution Shares to which each of the Shareholders will become entitled pursuant to the Scrip Distribution (if and to the extent that such Shareholders have elected to receive the Scrip Distribution) will be determined by reference to such Shareholder's shareholding in Datatec (at the close of business on the Record Date, being Friday, 12 January 2018) in relation to the ratio that the amount of the Cash Dividend bears to the volume weighted average price ("VWAP") of a Share traded on the JSE during the 30‑day trading period ending at the close of business on Thursday, 21 December 2017, less the amount of the Cash Dividend (i.e. the ex-dividend 30‑day VWAP on that date). A further announcement relating to the ratio of entitlement will be released on SENS on Friday, 22 December 2017 and published in the press on Wednesday, 27 December 2017.

Where the application of this ratio of entitlement gives rise to a fraction of a new ordinary share, such fraction of a new ordinary share will be rounded down to the nearest whole number, resulting in allocations of whole Shares and a cash payment for the fraction. In addition, if the maximum number of Shares that the Company is able to issue pursuant to the Scrip Distribution alternative exceeds 63,590,285 Shares, then the allocations of Shares will be proportionately scaled down and Shareholders will be deemed to have elected the Scrip Distribution alternative for a proportionately smaller part of their shareholding. Such Shareholders will receive cash for the remaining part of their dividend. The fractional entitlement in respect of the rounding down of new Shares to the nearest whole number will also apply. The applicable cash payment for any fraction arising in terms hereof is determined with reference to the volume weighted average price of a Share traded on the JSE on Wednesday, 10 January 2018 (being the day on which a Share begins trading 'ex' the entitlement to receive the Cash Dividend or the Scrip Distribution alternative), discounted by 10%.

3.         Circular and salient dates

A circular providing shareholders with full information on the Cash Dividend and the Scrip Distribution alternative, including a Form of Election to elect to receive the Scrip Distribution Shares in lieu of the Cash Dividend, will be made available on the Company's website (www.datatec.co.za) and posted to certificated Shareholders and dematerialised Shareholders who have not elected to receive electronic communications from the Company on or about Friday, 8 December 2017. The salient dates of events thereafter are as follows:

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

Share certificates may not be dematerialised or rematerialised between Wednesday, 10 January 2018 and Friday, 12 January 2018, both days inclusive.

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