Transcript Template

06
ANNUAL RESULTS
FOR THE YEAR ENDED 28 FEBRUARY 2006
PRESENTATION
DATATEC GROUP
Performance Highlights
• Record revenues of $3 billion with strong growth in all operations
• Continuing margin expansion drove an acceleration in profits
• HEPS strong at 27c (Includes 1.8c from positive Lucent settlement)
• EBITDA operating profits of $85 million
• Consolidated gross margin percentage expanded by 10%
• Year end cash on hand of $172 million
• 4th year of continuing improvement in key financial ratios
DATATEC GROUP
Continuing Revenues
$2,976B
$2,525B
FY 2005
FY 2006
DATATEC GROUP
Revenues by Region
Europe
36%
South America
2%
Asia
6%
South Africa + ME
3%
North America
53%
DATATEC GROUP
Gross Margin – Continuing Operations
$338.16M
$263.45M
FY 2005
FY 2006
DATATEC GROUP
EBITDA – Continuing
$85.2M
$28.4M
FY 2005
FY 2006
DATATEC GROUP
Total Headline Earnings per Share
26.91
3.59
FY 2005
FY 2006
US Cents
DATATEC GROUP
Net Cash
$172M
$140M
FY 2005
FY 2006
DATATEC GROUP
Segmental Analysis
Revenue
Analysys Mason
2%
Logicalis
19%
79%
Westcon
Gross Margin
Analysys Mason
7%
59%
Westcon
Logicalis
34%
EBITDA
Analysys Mason
7%
Logicalis
19%
74%
Westcon
DATATEC GROUP
Financial Performance - Summary
(US$000)
Year Ended
FY 2005
Revenue
FY 2006
2,524,769
2,975,635
263,448
338,164
10.4%
11.4%
234,531
249,545
9.3%
8.4%
28,917
88,619
1.1%
3.0%
Operating Profit (excluding IFRS 2 charges)
11,406
72,437
IFRS2 – Share based payment charges
501
3,468
Operating Profit (including IFRS 2 charges)
10,905
68,969
0.4%
2.3%
Gross Profit
As % of Revenue
Operating Expenses
As % of Revenue
EBITDA (excluding IFRS 2 charges)
As % of Revenue
As % of Revenue
DATATEC GROUP
Future Outlook
• Continuing growth expected across the group, margins stable
• Revenue increases should be matched by growth in profits
• Moderating macro economic conditions
• European performance is improving
• Considering a secondary listing on AIM
• Distribution of 30 South African cents per share to shareholders
World class portfolio in the
international networking
sector
06
WESTCON GROUP
Highlights
• Revenue increases $228 million to $2.3 billion. Increases in all geographic regions
• Gross margins increase from 7.7% to 8.5%, improved margins in all regions
• Operating expenses decrease $5.1 million or by 3.8% from FY 2005
• Significant increases in EBITDA, operating profit and PBT
• Americas and Asia Pacific performed above expectation for the year. Europe still slow
but an improvement over FY 2005
• New Senior Management hires, recruited General Manager of European Operations
• Company generated $37m in cash from operations
• New $150 million working capital facility and $40 million second lien term loan
WESTCON GROUP
Financial Performance - Summary
(US$000)
Year Ended
28 February 2005
Revenue
28 February 2006
2,055,015
2,283,398
158,243
194,728
7.7%
8.5%
133,200
126,620
6.5%
5.5%
25,043
68,108
1.2%
3.0%
Operating Profit (excluding IFRS 2 charges)
15,420
58,334
IFRS2 – Share based payment charges
-
1,473
Operating Profit (including IFRS 2 charges)
15,420
56,861
0.8%
2.5%
5,328
5,581
10,092
51,280
Gross Profit
As % of Revenue
Operating Expenses
As % of Revenue
EBITDA (excluding IFRS 2 charges)
As % of Revenue
As % of Revenue
Interest
PBT
WESTCON GROUP
Revenue Geographic Split
Europe
(% of revenue)
38%
Europe
37%
Asia Pacific
Asia Pacific
8%
7%
55%
Americas
55%
Americas
FY 2005
FY 2006
Americas remain dominant
WESTCON GROUP
Revenue – Product Vendor Mix %
Other
Other
15%
15%
Security
Security
7%
10%
Avaya
Avaya
55%
9%
9%
59%
Cisco
Cisco
Nortel
Nortel
10%
11%
FY 2005
FY 2006
Cisco remains dominant vendor
WESTCON GROUP
Gross Profit %
9.0%
8.0%
9.0%
8.8%
8.2%
7.9%
8.5%
7.7%
7.3%7.6%
FY 2005
FY 2006
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
Americas
Europe
Asia Pacific
Total
Gross Profit increases across all regions
WESTCON GROUP
EBITDA $000’s
$66,635
$70,000
$60,000
$55,273
FY 2005
FY 2006
$50,000
$40,000
$30,000
$20,000
$25,043
$18,368
$6,134
$10,000
$3,076
$3,600 $5,228
$0
Americas
Europe
Asia Pacific
Total
EBITDA increases across all geographic regions
Note: Americas results include US non-operating subsidiaries. Excludes intercompany management fees
WESTCON GROUP
Consolidated Balance Sheet - Working Capital - US GAAP
(US$, in millions)
Feb 2005
Feb 2006
$283
$321
50
51
Inventory
$189
$189
Inventory Turns
10.1x
11.2x
Accounts Payable
$283
$333
DPO (days)
54
58
Current Ratio
1.5
1.6
Accounts Receivable
DSO (days)
Note:
Ratios based on trailing twelve month averages
WESTCON GROUP
Consolidated Balance Sheet – Capitalisation - US GAAP
(US$, in millions)
Feb 2005
Feb 2006
$123
$166
75
67
Notes payable
-
40
Net Cash *
8
23
Equity
285
284
Debt to Capitalisation
0.29
0.33
Liabilities to TNW
1.52
1.85
Cash
Working capital lines
* 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)
($76,872,694)
($30,701,555)
($32,122,321)
Note: Figures in US dollars. Dollar figure shown for each year represents average (debt) cash balance for year
Dec-05
Sep-05
Jun-05
Mar-05
Dec-04
Sep-04
Jun-04
Mar-04
Dec-03
Sep-03
Jun-03
Mar-03
Dec-02
Sep-02
Jun-02
Mar-02
Dec-01
Sep-01
Jun-01
Mar-01
-$250,000,000
WESTCON GROUP
Headcount by Region
Region
Feb 2005
Feb 2006
Americas
444
451
Europe
470
454
Asia Pacific
134
141
1,048
1,046
Consolidated
WESTCON GROUP
Future Outlook
• FY 06 gross margin, of 8.5%, was helped by several positive one-off events
• Expect organic revenue growth to be in line with our major vendors: 9-12%
• Expect profits to grow in line with revenues
• Positioned to acquire distribution assets and companies which will strengthen our
capabilities and market share in VOIP, Security and Wireless
• Transitioning to an organisation based on sales groups which address customer
segments such as Voice, Security, etc., while internal staff remain dedicated to pursing
the vendor’s initiatives
Client focused approach
makes us a dynamic
solutions provider
LOGICALIS GROUP
Highlights
• Revenues up 60% to $546 million (16% organic growth)
• Gross Margin maintained at 20%
• EBITDA (before IFRS 2) up 83% to $17.8 million from $9.7 million
• Significant recovery in profitability of UK operations
• Five acquisitions completed during FY2006 (UK/US)
• Cisco Worldwide Enterprise Partner of the Year 2005
• Cisco European Service Partner of the Year 2005
• IBM Beacon award for US Enterprise Partner of the Year 2005
• $60 million new banking facilities established in UK and US
LOGICALIS GROUP
Financial Performance - Summary
(US$000)
Year Ended
28 February 2005
28 February 2006
Continuing
Continuing
340,929
545,791
72,162
109,182
21.2%
20.0%
62,430
91,420
18.3%
16.8%
9,731
17,762
2.9%
3.3%
Operating Profit (excluding IFRS 2 charges)
6,175
12,602
IFRS2 – Share based payment charges
133*
1,043
Operating Profit (including IFRS 2 charges)
6,042
11,559
1.8%
2.1%
Revenue
Gross Profit
As % of Revenue
Operating Expenses
As % of Revenue
EBITDA (excluding IFRS 2 charges)
As % of Revenue
As % of Revenue
Trading in FY 2006 has produced results significantly better than FY 2005
Note: Includes inter-company transactions which eliminate on Datatec consolidation
*
2005 Restated for IFRS2 charges
LOGICALIS GROUP
Revenue - Geographic Split (continuing operations)
% of Revenue
South America
5%
United Kingdom
21%
South America
7%
United Kingdom
30%
Germany
1%
Germany
1%
73%
North America
FY 2005
62%
North America
FY 2006
North America remains dominant
LOGICALIS GROUP
Revenue - Segmental Split (continuing operations)
Maintenance
Professional
7%
Managed
Services
Services
8%
6%
Professional Maintenance
6%
Services 8%
4%
Managed
Services
Product
79%
FY 2005
Product
82%
FY 2006
Product revenue mix has increased
LOGICALIS GROUP
Revenue - Product Vendor Mix %
IBM
25%
EMC
3%
IBM
39%
EMC
3%
Others
9%
Others
12%
Cisco
27%
HP
33%
FY 2005
Cisco
24%
HP
25%
FY 2006
IBM product was largest revenue segment
LOGICALIS GROUP
Gross Margin % (continuing operations)
35
31.0 31.1
30
25
FY 2005
25.2
24.6
22.5
19.4 18.3
20
19.6
21.2
FY 2006
20.0
15
10
5
0
UK
Germany
North
America
South
America
Total
Overall gross margin down due to business mix
LOGICALIS GROUP
EBITDA ($ million - continuing operations)
14
12
FY 2005
10
FY 2006
8
6
4
2
0
UK
Germany
North America
South America
-2
Strong improvement in the UK with solid performance from the US
Note: Excluding group costs
LOGICALIS GROUP
Key Financial Measures
US$000
Deferred Revenue
Inventory
Inventory Days (Excluding Spares
Stock)
Accounts Receivable
DSO Days
Accounts Payable
DPO Days
Net Cash
Feb 2005
Feb 2006
16,799
15,933
9,805
14,536
21
14
56,938
87,468
58
47
50,065
97,145
75
82
56,881
26,605
Net cash reduction reflects cash cost of acquisitions
LOGICALIS GROUP
Headcount by Region
Region
Feb 2005
Feb 2006
North America
354
441
South America
181
201
Europe
207
343
Total
742
985
Increase predominantly due to acquisitions
LOGICALIS GROUP
Recent Important Wins
US
Finance Sector
IBM, Cisco, EMC hardware plus three year
managed service contract
$2.5m
US
Mobile Telecom
Annual Services contract
$2.0m
US
IT Disaster Recovery
Services Provider
Ongoing investment in HP server and
storage solutions
$7.5m
UK
Major Telecom Operator
Four year services contract
UK
Manufacturing
IBM infrastructure solution refresh
$5.9m
UK
Business Management
Large Cisco IP Telephony roll-out
$5.0m
UK
Major Retailer
Renewal of three year managed services
contract
$4.0m
Major Telecom Operator
Cisco solutions and support
Oil Major
Cisco solutions and regional support
South
America
South
America
$20.0m
$12.0m
$2.7m
LOGICALIS GROUP
Future Outlook
• Improved critical mass from complementary acquisitions
• Services continue to gain momentum, especially in UK
• Cisco Advanced Technologies growing strongly
• Steady growth expected from main system vendors (IBM/HP)
• Changes in HP channel strategy squeezing margins
• Planning for growth but remaining vigilant to changes in business confidence
• Acquisition opportunities being evaluated in US, UK and Germany
Quest for technological
innovation driven by
expertise
ANALYSYS MASON GROUP
Overview
Analysys Research
Analysys Consulting
Telecoms research,
publications
and benchmarking
Strategy consulting and
economic modelling in
the telecoms sector
Technical, business
and management
consulting
in telecoms
and high-tech
Contact centre,
CRM and
change management
consulting
• The group offers a full spectrum of business advisory, management consultancy,
research and implementation services
• Trusted “independent” consultancy operating throughout the world with a direct
presence in the UK, Ireland, France, Spain, Italy, USA and Singapore
• Analysys Mason’s input has become an indispensable part of any major telecoms
initiative
• The group employs approximately 320 professional consultants and support staff
ANALYSYS MASON GROUP
Highlights
• Revenue for the year rose by 15% to $60 million and EBITDA rose 89% to
$6.3 million
• Analysys Research increased coverage of networked media and IT content
• Analysys Consulting increased US and emerging markets revenues
• Mason Communications increased its international revenues, strengthened its
position in the UK Public Sector and consulted on one of Europe’s largest
outsourcing deals
• Catalyst returned to profitability, strengthened its management and internal
operations
• On a Group basis, AMG continued to make market inroads with divisions
successfully bidding jointly on 36 projects worth $6.8 million or more,
representing 11% of total revenue.
ANALYSYS MASON GROUP
Financial Performance - Summary
(US$000)
Year Ended
28 February 2005
28 February 2006
Continuing
Continuing
Revenue
52,058
59,750
Gross Profit
14,088
21,730
27.1%
36.4%
10,748
15,416
20.6%
25.8%
3,340
6,314
6.4%
10.6%
Operating Profit (excluding IFRS 2 charges)
3,007
5,926
IFRS2 – Share based payment charges
-
91
Operating Profit (including IFRS 2 charges)
3,007
5,835
5.8%
9.8%
As % of Revenue
Operating Expenses
As % of Revenue
EBITDA (excluding IFRS 2 charges)
As % of Revenue
As % of Revenue
ANALYSYS MASON GROUP
Revenue - Geographic Split
% of Revenue
Europe
19%
Europe
16%
Rest of World
17%
Rest of World
8%
1% USA
UK
75%
1% USA
UK
63%
FY 2005
FY 2006
ANALYSYS MASON GROUP
Revenue - Segmental Split
Catalyst
12%
Catalyst
12%
Mason
40%
Analysys
Research
8%
Analysys
Research
7%
Mason
48%
Analysys Consulting
33%
FY 2005
Analysys Consulting
40%
FY 2006
ANALYSYS MASON GROUP
EBITDA - $000
7000
6,223
6000
FY 2005
5000
FY 2006
3,860
4000
3000
3,340
2,442
2,134
2000
1,494
1000
508
138
0
Mason
ACL
ARL
637
(371)
Catalyst
Total
-1000
Note:
Feb 05 figures reflect results for 7 month period from formation in Aug 04. 28 Feb 2006 total figures exclude USD659k of aborted
acquisition costs. Certain inter group costs are reported in the total results only
ANALYSYS MASON GROUP
Headcount by Division
Division
Feb 2005
Feb 2006
Mason
82
74
Analysys Consulting
77
80
Analysys Research
25
35
Catalyst
25
21
AMG Support Services (FTE’s)
43
47
Associates
75
59
327
316
Total
ANALYSYS MASON GROUP
Recent Important Wins
Analysys Consulting and Research
Mason and Catalyst
Scandinavian incumbent – 2 year contract for
OTS research content ($470k)
UK government body – technical support on
national mobile radio implementation ($3.4m)
Development of Broadband strategy in Singapore
($300k)
UK utility network optimisation study ($540k)
Licence acquisition strategy support for bidders in
Middle East and N Africa ($2.2m)
Major new area of UK Health sector – customer &
IT strategy and operational improvement ($625k)
Spectrum allocation and trading strategy inc
Digital Dividend review in UK ($1.5m)
Network management and business improvement
programme for Global telecoms provider ($900k)
N European incumbent – 2 year contract for OTS
research content ($375k)
Far East new 3G licence winner – creation of
business build and master program ($500k)
Joint
Turkey fixed/mobile operator –post acquisition integration $3m (ACL & Catalyst)
ANALYSYS MASON GROUP
Future Outlook
• Telecoms/IT environment remains stable
• Management is addressing the following business issues:
- Emphasis on marketing and growing brand awareness
- Focus on margin performance of all business units within divisions
- Improve productivity and enhance operational synergies
• “Hot” industry themes:
- 3G and Next Generation Network technology changes
- Digital TV technologies (terrestial, cable TV and satellite)
- Convergence of media and communications
- Fixed-mobile convergence and triple/quadruple play services
- Mergers and acquisitions and private equity interest in telecoms
- Privatisations and telecoms market liberalisation in developing economies
- Large scale regulatory initiatives in key markets
- Government intervention to reduce “digital divide” between rich/poor, urban/rural
06
QUESTIONS