Transcript Slide 1

DATATEC GROUP
AUDITED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2007
DATATEC GROUP
Highlights - Business Update
•
Completion of two significant acquisitions post year-end
•
Improving mix of businesses
•
Continued margin expansion
•
Growing geographic presence
•
Strong emerging markets contribution
•
Successful first year of London dual listing
DATATEC GROUP
Financial Performance Summary
•
5th consecutive year of improving key financial ratios
•
Continuing strong revenue growth up 17%
•
Earnings per share up 51% to US$ 0.40c
•
Operating profit up strongly by 45% to over $100 million
•
Year-end net cash of $99 million
•
Change to net revenue accounting on 3rd party maintenance sales
DATATEC GROUP
Total Revenue ($ millions)
3,168
2,715
61
(Analysys Mason)
60
721
510
2,145
FY2006 restated
Consulting
ICT Solutions & Services
(Logicalis & African Legend Indigo)
2,386
FY2007
Revenue grew by 17% (9% organic)
Distribution
(Westcon, Westcon SA & Online)
DATATEC GROUP
Revenue % by Geography
Europe
38%
South America
2%
Asia
7%
Africa &
Middle East
5%
North America
48%
North America remains largest region
DATATEC GROUP
Gross Profit ($ millions)
415
338
22
Consulting
(Analysys Mason)
22
162
ICT Solutions & Services
(Logicalis & African Legend Indigo)
111
205
FY2006
231
Distribution
(Westcon, Westcon SA, Online)
FY2007
Gross profit grew by 23%
DATATEC GROUP
EBITDA ($ millions)
140
119
120
100
85
80
60
40
20
0
FY 2006
FY 2007
EBITDA grew by 40%
DATATEC GROUP
Total Headline Earnings Per Share (US cents)
45.00
40.8
40.00
35.00
30.00
26.9
25.00
20.00
15.00
10.00
5.00
0.00
FY 2006
FY 2007
Headline Earnings grew by 52%
DATATEC GROUP
Cash Generation ($ millions)
172
Opening short term net cash
EBITDA
Working capital
Taxation paid
Net finance costs
Non cash items
Investing activities
Financing activities
Cash distribution
Net movement in cash
Closing short term net cash
Long term loan
Closing net cash
•
119
(102)
(14)
(10)
11
(60)
31
(6)
180
160
140
120
129
99
100
80
60
40
20
(31)
0
141
-42
99
Primary uses of cash:
– working capital investments funding growth
– acquisitions
FY 2006
FY 2007
Net Cash ($ millions)
DATATEC GROUP
Divisional Segmental Analysis
Revenue
Gross Profit
Westcon
72%
Logicalis
22%
AMG
2%
EBITDA
Westcon
52%
Africa /
Middle
East
4%
Westcon
68%
Africa /
Middle
East
5%
Logicalis
37%
AMG
6%
Logicalis
23%
Africa /
Middle
East
4%
AMG
5%
DATATEC GROUP
Revenue Restated ($’000)
•
Change in accounting for revenue recognition on 3rd party
vendor maintenance contracts (announced 3 May 2007)
($’000)
Feb 2006
Feb 2007
Revenue as previously recorded
2,975,635
3,492,917
Total Effect of Restatement
(260,884)
(325,145)
- Westcon
(220,465)
(252,142)
- Logicalis
(40,419)
(73,003)
2,714,751
3,167,772
Revenue as currently recorded
WESTCON GROUP
WESTCON GROUP
Highlights
•
Revenues increased by $209 million to $2.3 billion. Increases in all
geographic regions
•
Gross margins improve to 9.5%
•
EBITDA increases 24%. Significant growth in Europe and Asia
Pacific
•
Purchased distribution arm of Ronco Electronics (Americas).
Acquisition contributes $50 million in revenue FY 2007
•
European process and IT enhancements increase transaction
efficiency and simplify pricing in a multi-currency environment
•
Opened offices in Dubai, Malaysia and New Zealand
•
NOXS and Crane acquisitions create leadership position in
Security & Convergence and improve European product mix
WESTCON GROUP
Financial Performance Summary
($ ‘000s)
Sales
Gross Margin
Gross Margin %
Operating Costs
Operating Cost Margin %
EBITDA
EBITDA %
Operating Profit
As a % of Revenue
Net Interest
Pre-Tax Income
Feb 2006 (restated)
Feb 2007
Growth
2,062,934
2,271,557
10%
194,728
216,192
11%
9.4%
9.5%
128,093
133,521
6.2%
5.9%
66,635
82,671
3.2%
3.6%
56,861
72,504
2.8%
3.2%
5,581
9,277
51,280
63,227
4%
24%
28%
24%
WESTCON GROUP
Revenue % by Geography
Europe
40%
Europe
40%
Asia Pac
10%
Asia Pac
8%
52%
Americas
50%
Americas
FY 2006 Restated
Consistent Geographic results
FY 2007
WESTCON GROUP
Revenue Product Vendor Mix %
Nortel
11%
Other
14%
Security
4%
Other
14%
Nortel
13%
Avaya
10%
Cisco 61%
Avaya
9%
Cisco 60%
FY 2006 Restated
Security
4%
FY 2007
Cisco remains dominant vendor
WESTCON GROUP
Gross Margin %
11.0
FY2006
FY2007
10.6
10.2
9.7
10.0
9.3
9.0
9.4
9.5
8.6
7.9
8.0
7.0
6.0
5.0
Americas
Note: 2006 Restated
Europe
Asia Pacific
Total
WESTCON GROUP
EBITDA ($ millions)
FY2006
FY2007
90
80
70
83
69
70
67
60
50
40
25
30
20
6
10
5
8
-13 -20
0
-10
-20
Americas
Europe
Asia Pac
Central Costs*
-30
Note: * Central costs include infrastructure, systems and other non-operating group costs
Total
WESTCON GROUP
Consolidated Balance Sheet – Working Capital – US GAAP
($ millions)
Feb 2006
Feb 2007
$321
$385
56
61
Inventory
$189
$232
Inventory Turns
10.0x
8.9x
Accounts Payable
$333
$387
DPO (days)
64
68
Current Ratio
1.6
1.6
Accounts Receivable
DSO (days)
Note: Ratios based on trailing twelve month averages
Net revenue accounting for vendor maintenance contracts means that absolute numbers remain
the same but ratios deteriorate compared to previous gross accounting method
WESTCON GROUP
Consolidated Balance Sheet – Capitalisation – US GAAP
($ millions)
Feb 2006
Cash
Feb 2007
$166
$129
Working Capital Lines
67
61
Notes payable
40
40
Net Cash *
22
0
Equity
284
325
Debt to Capitalization
0.33
0.28
Liabilities to TNW
1.83
1.87
* Includes inter-company loan payable to Datatec which is eliminated in consolidation
WESTCON GROUP
Net Cash / Debt Trend
$50,000,000
$0
-$50,000,000
-$100,000,000
-$150,000,000
-$200,000,000
($139,544,122)
($59,842,704)
($30,701,555)
($76,872,694)
($32,122,321)
($55,141,499)
Nov-06
Jul-06
Mar-06
Nov-05
Jul-05
Mar-05
Nov-04
Jul-04
Mar-04
Nov-03
Jul-03
Mar-03
Nov-02
Jul-02
Mar-02
Nov-01
Jul-01
Mar-01
-$250,000,000
WESTCON GROUP
Headcount by Region
Region
Feb 2006
Feb 2007
Americas
451
483
Europe
454
444
Asia-Pacific
141
187
1,046
1,114
Total
WESTCON GROUP
Future Outlook
•
Invest in systems and processes which continue to improve efficiency, lower
operational costs and increase customer service capabilities
•
Further growth to be gained in existing businesses by leveraging our multinational position with select vendors bringing more value to customers
•
NOXS/Crane acquisitions add scale and new customer segments, improve
business mix, enhance margins and accelerate earnings capability
•
Globalisation of the business is presenting new opportunities
LOGICALIS GROUP
LOGICALIS GROUP
Highlights
•
Revenues up 37% to $693 million (11% organic growth)
•
Gross margin increases by 22.3% (FY2006 21.6%)
•
EBITDA up 60% to $26.8 million (FY2006 $16.7 million)
•
Robust growth in profitability from both the UK and US
•
South America sustains the strong growth achieved in FY2006
•
Three acquisitions completed during FY 2007
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Offices opened in Chile and Peru, extended in Germany
•
Number of key vendor awards won from IBM and Cisco
LOGICALIS GROUP
Financial Performance Summary
($ ‘000s)
Feb 2006 (restated)
Feb 2007
Growth
Revenue
505,179
693,113
37%
Gross Margin
109,182
154,972
42%
21.6%
22.3%
92,475
128,177
18.3%
18.4%
16,707
26,795
3.3%
3.9%
11,546
18,783
2.3%
2.7%
Gross Margin %
Operating Costs
Operating Cost Margin %
EBITDA
EBITDA %
Operating Profit
As % of Revenue
Growth has produced stronger results in FY 2007
39%
60%
63%
LOGICALIS GROUP
Revenue % Geographic Split
South
America
7%
South
America
6%
UK
31%
UK
32%
Germany
1%
North
America
61%
Germany
2%
North
America
60%
FY 2006 Restated
FY 2007
North America generated 60% of revenue
LOGICALIS GROUP
Revenue Segmental Split
Professional
Services
Maintenance
8%
6%
Managed
Services
5%
Professional
Services
9%
Maintenance
6%
Managed
Services
4%
Product
81%
Product
81%
FY 2006 Restated
FY 2007
Proportion of product in sales mix relatively constant
LOGICALIS GROUP
Revenue Product Vendor Mix
IBM
39%
IBM
43%
EMC
3%
EMC
3%
Others
Others
11%
9%
HP
26%
Cisco
23%
FY 2006 Restated
Cisco
22%
HP
21%
FY 2007
IBM remains most significant vendor partner
LOGICALIS GROUP
Gross Margin %
35
FY2006
FY2007
31.1 31.3
30
25
23.3 23.1
20.4
21.6
20
23.1
19.6
21.6 22.3
15
10
5
0
UK
Germany
North
America
South
America
Overall Gross margin % steady
Note: 2006 Restated
Total
LOGICALIS GROUP
EBITDA ($ millions)
30
27
25
22
20
17
13
15
10
10
7
5
2
0
2
0
-1
(5)
(10)
UK
Germany
North America South America
Robust growth in profitability in UK and US
Note: EBITDA total includes central group management costs
Total
FY2006
FY2007
LOGICALIS GROUP
Key Financial Measures
($’000)
Feb 2006
Feb 2007
Deferred Revenue
15,933
26,222
Inventory
14,536
23,706
14
16
87,468
147,164
47
50
97,145
116,987
82
73
26,605
8,562
Inventory Days (Excluding Spares Stock)
Accounts Receivable
DSO Days
Accounts Payable
DPO Days
Net Cash
Net cash reduction reflects acquisitions and growth driven increased working capital
Note: Net revenue accounting for vendor maintenance contracts means that absolute numbers remain
the same but ratios deteriorate compared to previous gross accounting method
LOGICALIS GROUP
Headcount by Region
Region
Feb 2006
Feb 2007
North America
441
608
South America
201
251
Europe
343
494
Total
985
1,353
Increase due to acquisitions and growth in scale
LOGICALIS GROUP
Recent Important Wins
US
Manufacturer
HP Technologies and managed services
$5.8M
US
Mobile Operator
Staffing for operations and application
development
$5.0M
US
Entertainment
Three year managed services
$0.9M
UK
Financial Services
IBM z-series (mainframe)
$4.9M
UK
Major Telco
Multi-national managed services
$6.0M
UK
Leisure
Significant Cisco IPT deal
$1.5M
Government
Cabling and Cisco infrastructure
$2.3M
Telecom
Security in network backbone
$1.0M
Telecom
Wi-Max project
$400k
South
America
South
America
South
America
LOGICALIS GROUP
Future Outlook
•
Continuing to execute well defined strategy
•
Focused on gaining market share and growing revenues
•
Strong growth expected from Cisco solutions
•
Emphasis placed on increasing annuity managed service solutions
•
Acquisition opportunities continue to be evaluated
•
Favourable market conditions should drive further margin expansion
ANALYSYS MASON GROUP
ANALYSYS MASON GROUP
Highlights
•
International non-UK revenues now 55% of total
•
Performance similar to prior year despite completion of large
wireless network rollout project
•
Restructuring of Catalyst CRM division
•
Strong cash generation
•
Pioneer in management of world’s 1st 3G network sharing alliance
ANALYSYS MASON GROUP
Financial Performance Summary
($ ‘000s)
Feb 2006
Feb 2007
Growth
Revenue
59,750
61,352
3%
Gross Margin
21,730
22,265
3%
36.4%
36.3%
6,223
6,202
10.4%
10.1%
5,835
5,752
9.8%
9.4%
Gross Margin %
EBITDA
EBITDA %
Operating Profit
Operating Profit %
0%
0%
ANALYSYS MASON GROUP
Revenue % Geographic Split
Europe
Europe
25%
19%
Rest of World
Rest of World
17%
29%
USA
1%
UK
USA
1%
UK
45%
63%
FY 2006
FY 2007
ANALYSYS MASON GROUP
Revenue Segmental Split
Analysys
Research
8%
Analysys
Consulting
40%
Analysys
Consulting
46%
Analysys
Research
8%
Mason
40%
Mason
37%
Catalyst
8%
Catalyst
12%
FY 2006
FY 2007
ANALYSYS MASON GROUP
Gross Margin %
50
FY2006
FY2007
44.4 43.9
45
40
35
36.4 36.3
34.7
32.4 32.6
29.4
30
25
22.3
20
12.9
15
10
5
0
Mason
ACL
ARL
Catalyst
Total
ANALYSYS MASON GROUP
EBITDA – ($ millions)
7.0
6.2 6.2
6.0
5.0
4.4
3.9
4.0
3.0
2.4 2.5
2.0
1.0
0.6
0.5
0.1
0.0
-0.1
-1.0
Mason
ACL
ARL
Note: EBITDA total includes central group management costs
Catalyst
Total
FY 2006
FY 2007
ANALYSYS MASON GROUP
Headcount by Division
Region
Feb 2006
Feb 2007
Mason
74
78
Analysys Consulting
80
85
Analysys Research
35
36
Catalyst
21
18
AMG Support Services (FTE’s)
44
45
254
262
59
40
313
302
Full Time Headcount
Associates
Total
ANALYSYS MASON GROUP
Recent Important Wins
Analysys Consulting and Research
Mason and Catalyst
Business Plan for Etisalat’s mobile service launch in
Afghanistan
National Grid divestment due diligence
Advising Singapore regulator on regulatory model reform
Review of BSkyB capability for providing voice services
Multiple MLRIC product sales (Denmark, France, SA, UK)
Specialist assurance on system integration, fleet mapping
and rf optimisation for London Underground
Continuation of Oger/Turk Telecom post-acquisition
framework
National review of English ambulance service control
rooms to design new operating models
Profitability analysis at Orascom
Specification of RFP for OSS/BSS systems to operate new
3G network and PMO support for Time Malaysia
Joint Projects
Vodafone-Orange network-sharing business planning – ACL / Mason
Mobile service launch assistance for Etisalat in Egypt – ACL / Mason / Catalyst
Market segmentation and market-facing BPR at Maltacom – ARL / Catalyst
ANALYSYS MASON GROUP
Future Outlook
•
Revenue and profit growth expected in the next year
•
Continuing to build on the merged brand and broaden consulting capabilities
•
Further internationalisation of the operations
•
Investment in internal systems and processes to extend growth aspirations
•
Telecoms/Internet broadband environment remains robust
EMERGING MARKET OPERATIONS
AFRICA & MIDDLE EAST
Highlights
•
Historically assets are substantially distribution based
•
Recently completed BEE transaction in South Africa
•
Development of IT services group in South Africa
•
Establishment of Cisco focused Comstor operation in Dubai, Middle East
•
Operations include: Westcon SA, Online, Comstor ME & African Legend
Indigo
•
Expansion planned in Turkey through JV operation
AFRICA & MIDDLE EAST
Financial Performance Summary
($ ‘000s)
Feb 2006
Feb 2007
Growth
Sales
86,889
141,750
63%
Gross Margin
12,523
21,750
74%
14.4%
15.3%
10,303
16,585
11.8%
11.7%
2,220
5,165
2.6%
3.6%
1,828
4,765
2.1%
3.4%
814
623
1,014
4,142
1.2%
2.9%
Gross Margin %
Operating Costs
Operating Cost Margin %
EBITDA
EBITDA %
Operating Profit
Operating Profit %
Net Interest
Pre-Tax Income
Pre-Tax %
61%
133%
161%
308%
DATATEC GROUP
DATATEC GROUP
Market Conditions
•
Outlook for the global ICT industry remains favourable
•
Europe’s improving growth is offsetting softness in the US
•
Rest of the world including emerging markets are showing strong growth
•
Leading technology vendors are in much better shape
•
Major adoption of broadband is driving new business opportunities
DATATEC GROUP
Strategy and Prospects
•
Growth trends of the major divisions continue
•
Scale and improving business mix is driving operating leverage
•
Expecting continued revenue growth and further margin expansion
•
Increasing contribution from Europe and Emerging markets
•
Targeting $1 billion of annualised revenue growth next year
•
Strategy to target accretive acquisitions that can be logically integrated
•
Distribution to shareholders to increase 100% to R0.70 ($0.10) per share
QUESTIONS