Transcript Slide 1

DATATEC GROUP
UNAUDITED RESULTS
FOR THE SIX MONTHS ENDED 31 AUGUST 2005
Jens Montanana
CEO
DATATEC GROUP
Trading Environment
• Strong US and Asia markets, weaker Europe
• Higher energy prices creating inflationary pressures
• Global demand for IT continues to improve
• Services opportunities increasing
• Continental Europe continues to lag
• Currency volatility has diminished
DATATEC GROUP
Performance Highlights
• Revenue growth and market share gains in all operations
• Accelerating improvement in financial performance
• HEPS up strongly to 12c (includes 1.8c from positive Lucent settlement)
• Quadrupling of EBITDA operating profits to $40m
• Gross margins continue to expand
• Growing contribution from integration services and consulting
• Strong cash flow generated from operations
DATATEC GROUP
Revenues ($ million)
$1,442
$1,251
$1,287
1H FY 2005
2H FY 2005
1H FY 2006
Continuing revenues grew by 14.2% from $1.2 billion to $1.4 billion
DATATEC GROUP
Revenue by Region
Europe
34%
South America
2%
Asia
7%
South Africa + ME
2%
North America
55%
DATATEC GROUP
Gross Margin ($ million)
$163
$142
$125
1H FY 2005
2H FY 2005
1H FY 2006
DATATEC GROUP
EBITDA ($ million)
$40
$15
$10
1H FY 2005
2H FY 2005
1H FY 2006
DATATEC GROUP
Total Headline Earnings Per Share
12.02
3.85
0.10
1H FY 2005
2H FY 2005
US Cents
1H FY 2006
DATATEC GROUP
Net Cash
$140m
$112m
$97m
1H FY 2005
2H FY 2005
1H FY 2006
Strong net cash position
DATATEC GROUP
Segmental Analysis
Gross Ma rgin
Revenue
2%
EBITDA
8%
30%
17%
7%
18%
4%
3%
78%
1%
73%
59%
Westcon
AMG
Logicalis
MEA
DATATEC GROUP
Future Outlook
• All divisions expected to continue delivering improving financial results
• Revenue increases should be matched by growing profitability
• Global growth may moderate
• Balance sheet and working capital management remains strong
• Management focused on best practices and appropriate growth strategies
• Board considering maiden dividend at year-end
WESTCON GROUP
WESTCON GROUP
Highlights
• Revenue exceeds $1.1 billion with increases over all geographic regions
• Gross Margin increases from 7.6% to 8.5%
• Company generates $10 million cash from operations
• Cost reduction initiatives accelerate growth in EBITDA and Pre-tax profitability
• Americas and Asia Pacific perform above expectations, Europe still slow but starting to
improve
• “Thin office concept” being deployed in Eastern Europe and Asia
WESTCON GROUP
Revenue and gross margin trend - Six months
1,150
9.0
1,100
1,000
8.2
950
900
7.8
850
800
7.4
750
981
1,044
1,011
1,127
700
US$m
7.0
2H FY 2004
1H FY 2005
2H FY 2005
1H FY 2006
Gross Profit %
8.6
1,050
WESTCON GROUP
Revenue by Geography
38%
36%
8%
8%
54%
56%
2H FY 2005
1H FY 2006
Americas % increases on strength of increased Cisco market share
Americas
Europe
Asia Pacific
WESTCON GROUP
Revenue by Vendor
10%
9%
10%
11%
8%
10%
16%
14%
53%
59%
2H FY 2005
1H FY 2006
US Cisco market share increases in Q2 FY 2006
Cisco
Nortel
Avaya
Security
Other
WESTCON GROUP
Operating expenses
70
7.0
69
67
6.2
66
65
5.8
64
63
5.4
62
67.5
69.2
64.0
64.9
61
US$m
5.0
2H FY 2004
1H FY 2005
2H FY 2005
1H FY 2006
Operating Expense %
6.6
68
WESTCON GROUP
EBITDA ($M - continuing operations)
40
30,8
30
26,7
20
9,9
10
3,6
0
$000
Americas (a)
5,0
1,7
Europe
H1 FY 2005
(a) Includes non-operating subsidiaries
1,3
2,4
Asia Pacific
H1 FY 2006
Total
WESTCON GROUP
Headcount by Region
Region
Feb 2004
Aug 2004
Feb 2005
Aug 2005
Americas
432
439
444
435
Europe
509
486
470
426
Asia-Pacific
124
129
134
133
1,065
1,054
1,048
994
Consolidated
WESTCON GROUP
Consolidated results - Six month periods
(US$, in millions)
Sales
Gross Profit
Gross Profit %
Operating Costs
Operating Costs %
EBITDA
EBITDA %
Dep & Amort
D&A %
Interest Expense, Net
Interest Expense %
Pre-Tax Income
Pre-Tax %
* Includes profit of $4.3m from Lucent settlement
Aug 2004
Feb 2005
Aug 2006
1,044
1,011
1,127
79
79
96
7.6%
7.8%
8.5%
69
64
65
6.6%
6.3%
5.8%
10
15
31
0.9%
1.5%
2.7%
5
6
5
0.5%
0.6%
0.4%
3
2
3
0.3%
0.3%
0.2%
2
7
23
0.2%
0.7%
2.1%
*
WESTCON GROUP
Consolidated Balance Sheet - Working Capital - US GAAP
(US$, in millions)
Aug 2004
Feb 2005
Aug 2005
$299
$283
$325
53
50
55
$204
$189
$183
9.3x
10.1x
10.7x
$285
$283
$324
DPO (days)
55
54
60
Current Ratio
1.5
1.5
1.5
Accounts Receivable
DSO (days)
Inventory
Inventory Turns
Accounts Payable
Note:
Ratios based on trailing twelve month results
WESTCON GROUP
Consolidated Balance Sheet - Capitalization - US GAAP
(US$, in millions)
Aug 2004
Feb 2005
Aug 2005
$99
$123
$135
97
75
86
Net (Debt) Cash
(36)
8
Equity
279
285
287
Debt to Capitalization
0.33
0.29
0.31
Liabilities to TNW
1.65
1.52
1.69
Cash
Working Capital Lines
* Includes $40m inter-company loan payable to Datatec which is eliminated in consolidation
9*
WESTCON GROUP
Net Cash / Debt Trend
50
0
-50
-100
(30,701,555)
(59,842,704)
-150
(76,872,694)
-200
(139,544,122)
-250
$m
Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep
2001
2002
2003
2004
Note:
Figures in US dollars. Dollar figure shown for each year represents average (debt) cash balance for year
2005
WESTCON GROUP
Future Outlook
• Revenue growth should be matched by lower operating cost %
• Profit growth and margin expansion will drive improving ratios
• Expect improvements in Continental Europe to feed through into better overall
consolidated performance
• Strong performance in Americas, especially the US, should help underpin 2nd half
• Despite tightening of macro-economic conditions outlook remains favourable
LOGICALIS GROUP
LOGICALIS GROUP
Highlights
• Total revenues up 78% (27% organic growth)
• Market share gains in UK and US (rate of growth outstripped vendors)
• Operating leverage as gross margins increased more than operating expenses
• Transformation to an ICT integrator and services group largely complete
• #3 IBM partner in UK following TBC Group acquisition in September 2005
• Opened new managed service centres in UK and US
• Completed on $50M credit facility to fund growth
LOGICALIS GROUP
Financial Performance - Summary
(US$000)
Half Year ended
31 Aug 2004
31 Aug 2005
Continuing
Revenue
Gross Profit
As % of Revenue
Operating Expenses
As % of Revenue
EBITDA
As % of Revenue
Operating Profit
As % of Revenue
Continuing
Variance %
139,136
247,278
78%
29,094
49,665
71%
20.9%
20.1%
26,743
42,223
19.2%
17.1%
2,351
7,442
1.7%
3.0%
733
5,182
0.5%
2.1%
Trading in first half of FY 2006 has been strong
Note:
Includes Datatec level inter-company transactions which eliminate on Datatec consolidation
58%
217%
607%
LOGICALIS GROUP
Revenue - Geographic Split (continuing operations)
% of Revenue
5%
6%
25%
26%
2%
68%
1%
67%
H1 FY 2005
H1 FY 2006
North America generated 67% of revenue
North America
South America
United Kingdom
Germany
LOGICALIS GROUP
Revenue - Segmental Split (continuing operations)
Professional
Services
9%
Maintenance
8%
Managed
Services
8%
Professional
Services
7%
Maintenance
7%
Managed
Services
5%
Product
75%
H1 FY 2005
Product
81%
H1 FY 2006
Product revenue mix has increased following IBM partner acquisition in US
(predominantly product business)
LOGICALIS GROUP
Revenue - Product Vendor Mix %
5%
32%
4%
4%
18%
10%
36%
HP
26%
HP
Cisco
37%
Cisco
IBM
28%
EMC
Others
H1 FY 2005
EMC
Others
H1 FY 2006
IBM now one of three major vendors (better balance to business)
Note:
Continuing operations only
IBM
LOGICALIS GROUP
Gross Margin % (continuing operations)
35
30.8
30
27.2
25.6
25
30.1
22.7
21.5
18.1 18.7
20
20.9 20.1
15
10
5
0
%
UK
Germa ny
H1 FY 2005
N orth America South America
H1 FY 2006
Gross Margins were steady year on year
Tota l
LOGICALIS GROUP
EBITDA ($M - continuing operations)
9
8
7
6
5
4
3
2
1
(1)
UK
Germa ny
H1 FY 2005
N orth America
South America
H1 FY 2006
Good improvement in the UK with strong performance from the US
LOGICALIS GROUP
Key Financial Measures
US$000
Aug 2004
Feb 2005
Aug 2005
Deferred Revenue
17,506
16,799
21,580
Inventory
11,622
9,805
10,349
17
15
11
37,138
56,938
75,862
41
58
54
37,667
50,065
66,658
79
74
76
64,991
56,881
30,913
Inventory Days (Excluding Spares
Stock)
Accounts Receivable
DSO Days
Accounts Payable
DPO Days
Net Cash
Net cash reduction reflects cash cost of acquisitions ($24.2M)
LOGICALIS GROUP
Headcount by Region
Region
Aug 2004
Feb 2005
Aug 2005
North America
275
354
385
South America
177
181
186
Europe
207
207
295
Total
659
742
866
Increase predominantly due to acquisitions
LOGICALIS GROUP
Recent Important Wins
Printing Solutions
Company
Global Investment
Services
Information Management
Provider
HP/EMC infrastructure plus managed
services ($1.1m)
$2.6m
Application development and integration
$2.0m
Major HP/IBM/EMC and Oracle database
consolidation
$3.7m
UK
Telecoms Sector
Professional services
$1.4m
UK
Insurance
UK
IT Services
UK
Education Sector
US
US
US
South
America
South
America
IP network, voice, data and video
convergence plus support ($300k)
IP telephony, voicemail and video
conferencing solution plus 5 years support
($500k)
Virtual storage solution
$0.9m
$1.0m
$0.7m
Mobile Telecoms Company Products and services
$3.5m
Major Telecom Company
$7.3m
Cisco products
LOGICALIS GROUP
Future Outlook
• Management is addressing the following business issues:
- Process and system requirements for our increased scale
- Successful integration of UK acquisitions important
 Breadth of solutions for customers
 Achieving cost synergies
- Identifying and evaluating other suitable acquisition targets
• Remaining cautious on general economic outlook
• Historically IBM revenues strong in second half
• Expect continuing improvement in second half
ANALYSYS MASON GROUP
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 300 professional consultants and support staff
ANALYSYS MASON GROUP
Highlights
• Successfully integrated the Analysys acquisition and now generating $650k per
annum of infrastructure savings
• Proposal win rates and average order size for joint Analysys and Mason bids double
those of pre merger
• Expanded geographic footprint, established Singapore office
ANALYSYS MASON GROUP
Financial Performance - Summary
Half Year ended
31 Aug 2004
$000
Revenue
Gross Profit
As % of Revenue
EBITDA
As % of Revenue
PBT
As % of Revenue
31 Aug 2005
$000
Variance %
19,150
30,072
+57%
5,608
10,329
+84%
29.3%
34.3%
1,431
3,003
7.5%
10%
1,252
2,685
6.5%
9%
Note:
31 Aug 2004 figures include 6 months’ results (Mason/Catalyst) and 1 month’s results (Analysys)
+109%
+114%
ANALYSYS MASON GROUP
Revenue - Geographic Split
% of Revenue
18%
4%
14%
6%
1%
1%
89%
67%
H1 FY 2005
USA
H1 FY 2006
UK
Europe
Rest of World
ANALYSYS MASON GROUP
Revenue - Segmental Split
Catalyst
20%*
Analysys Consulting
9%**
Analysys Research
2%**
Mason
69%*
Analysys Consulting
38%
Analysys Research
9%
Mason
41%
Catalyst
12%
H1 FY 2005
Note:
31 Aug 2004 figures include 6 months’ results (Mason/Catalyst) and 1 month’s results (Analysys)
H1 FY 2006
ANALYSYS MASON GROUP
Gross Margin %
60
55
50
45
41.6
40
35
30
36.1
33.5
40.1
36.1
34.4
28.7
29.3
25
20
17.3
15
11.2
10
5
0
%
Mason
Analysys
Consulting
H1 FY 2005
Analysys
Research
Catalyst
H1 FY 2006
Total
ANALYSYS MASON GROUP
EBITDA - $000
3,500
3003
3,000
2,500
2,000
1694
1580
1,500
1431
1239
1,000
370
500
151
162
9
0
-200
-500
$000
Mason
ACL
H1 FY 2005
ARL
Catalyst
H1 FY 2006
Note:
31 Aug 2004 figures include 6 months’ results (Mason/Catalyst) and 1 month’s results (Analysys)
Total
ANALYSYS MASON GROUP
Headcount by Division
Division
Aug 2004
Feb 2005
Aug 2005
Mason
81
82
84
Analysys Consulting
79
77
76
Analysys Research
20
25
26
Catalyst
32
25
21
AMG Support Services (FTE’s)
50
43
47
Associates
75
75
62
337
327
316
Total
ANALYSYS MASON GROUP
Recent Important Wins
Analysys Consulting and Research
Mason and Catalyst
Middle East – Fixed operator – International
acquisitions ($1.0m)
W. Europe - Mobile operator - Network roll-out
programme management ($4.1m)
European regulators – 3 Mobile interconnect
projects ($940k)
UK – Transport – Mobile Radio Project
management – ($710k)
W.Europe – Fixed operator – Off-the-shelf and
custom research ($475k)
S. Europe – Mobile operator – EDGE/3G network
procurement; Analysys follow-on ($145k)
Asia – Regulator – National Broadband strategy
($350k)
UK Public Sector – Technical support – ($140k)
Europe – Venture Capital – Operator purchase
($300k)
Mobile operator – Contact centre processes
change management ($950k)
Joint
South Africa – Fixed and mobile operator – International acquisition ($1.0m)
Asia – Fixed operator – Response to privatisation ($630k)
Europe – Mobile operator – 3G Business plan and spectrum bid ($560k)
ANALYSYS MASON GROUP
Future Outlook
• Management is addressing the following business issues:
- Emphasis on marketing and building brand awareness
- Focus on margin performance of all business units within divisions
- Attention to recruitment and retention challenges
- Generating further integration gains and easing cross-divisional working
- Monitoring impact of incentive structure changes on culture and morale
• Telecoms/IT environment is stable
• “Hot” industry themes:
- Triple play
- Mobile content
- Fixed-mobile convergence
- Mergers and acquisitions
- Outsourcing
• Growth expected in a continuing competitive industry
QUESTIONS