Transcript Slide 1

DATATEC GROUP
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2006
DATATEC GROUP
Performance Highlights
•
Continuing strong revenue growth up 16%
•
Big increase in earnings per share to 15.65 US cents
•
EBITDA profits up 32% to $52m
•
Margin expansion at all levels
•
Successful listing on AIM market of London Stock Exchange
– Full transferability of shares between the two exchanges
– All shares listed on both markets
– 100% market capitalisation on both markets
DATATEC GROUP
Revenues ($ millions)
1,675
1,700
1,650
1,600
1,534
1,550
1,500
1,450
1,442
1,400
1,350
1,300
H1 FY06
H2 FY06
Revenues grew by 16%
H1 FY07
DATATEC GROUP
Revenues by Region
Europe
36%
South America
2%
Asia
7%
South Africa + ME
3%
North America
52%
North America remains dominant
DATATEC GROUP
Gross Profit ($ millions)
195
190
185
180
175
170
165
160
155
150
145
191
175
163
H1 FY06
H2 FY06
H1 FY07
DATATEC GROUP
EBITDA ($ millions)
60
52
46
50
40
40
30
20
10
0
H1 FY06
H2 FY06
H1 FY07
DATATEC GROUP
Total Headline Earnings Per Share (US cents)
18.00
14.89
16.00
14.00
15.65
12.02
12.00
10.00
8.00
6.00
4.00
2.00
0.00
H1 FY06
H2 FY06
H1 FY07
DATATEC GROUP
H1 FY2007 Cash Generation ($ millions)
Opening Net Cash
EBITDA
Dividends
Working Capital
Acquisitions
Other
Movement in Net Cash
Closing Net Cash
132
120
52
(6)
(63)
(24)
(8)
132
140
112
100
83
80
60
(49)
83
40
20
0
H1 FY06
•
•
•
First dividend payment
Primary uses of cash:
– one-off working capital investments
– acquisitions
Strong closing next cash position
H2 FY06
H1 FY07
Net Cash ($ millions)
DATATEC GROUP
Segmental Analysis
Revenue
AMG
3%
Logicalis
20%
AMG
6%
Logicalis
36%
AMG
6%
MEA
4%
MEA
2%
Westcon
75%
EBITDA
Gross Profit
Westcon
54%
Logicalis
22%
MEA
3%
Westcon
69%
WESTCON GROUP
WESTCON GROUP
Highlights
•
Interim revenues up 10% to $1.26bn with increases in all
geographies
•
Gross margin stable at 8.3%
•
Operating expenses trimmed back to 5.2% of revenue from 5.8%
•
EBITDA margins grew to 3.0% from 2.7%
•
Ronco acquisition in H1 has expanded Nortel convergence offerings
•
Big improvement in Europe’s financial contribution
WESTCON GROUP
Financial Performance Summary
($ millions)
Aug 2005
Sales
Gross Profit
Gross Margin
Operating Costs
Operating Margin
EBITDA
EBITDA %
Dep & Amort
D&A %
Interest Expense, Net
Interest Expense %
Pre-Tax Income
Pre-Tax %
Aug 2006
Growth
1,127
1,250
11%
96 *
103
7%
8.5%
8.3%
65 *
66
5.8%
5.2%
31
38
2.7%
3.0%
5
5
0.4%
0.4%
3
4
0.2%
0.3%
23
28
2.1%
2.3%
* Includes once-off benefits
Financial Performance summary includes inter-group adjustments
2%
23%
22%
WESTCON GROUP
Revenue Trend – Six Months
$1,300
$1,200
$ millions
$1,100
$1,000
$1,259
$1,140
$900
$1,163
$1,013
$800
$700
Sep-Feb
2005
Mar-Aug
2006
Sep-Feb
2006
Mar-Aug
2007
WESTCON GROUP
Revenue by Geography - % of Revenue
Europe
36%
Europe
37%
Asia Pac
8%
56%
Americas
Asia Pac
9%
54%
Americas
H1 FY 2006
H1 FY 2007
Consistent Geographic results
WESTCON GROUP
Revenue Product Vendor Mix %
Nortel
10%
Other
14%
Security
8%
Other
15% Security
6%
Nortel
12%
Avaya
9%
Cisco 59%
H1 FY 2006
Avaya
8%
Cisco 59%
H1 FY 2007
Cisco remains dominant vendor
WESTCON GROUP
Gross Margin %
H1 FY 2006
H1 FY 2007
12.0%
10.0%
9.4%
9.1%
8.5%
7.8%
8.0%
8.4%
8.5% 8.3%
7.0%
6.0%
4.0%
2.0%
0.0%
Americas
Europe
Asia Pacific
Including once-off benefits
Total
WESTCON GROUP
Operating Expenses
$68
6.6%
6.4%
6.0%
$66
$ millions
5.8%
5.6%
5.4%
$64
5.2%
$66
$62
$64
$65
5.0%
Operating Expense %
6.2%
4.8%
4.6%
$63
4.4%
4.2%
$60
4.0%
Sep-Feb
2005
Mar-Aug
2006
Sep-Feb
2006
Mar-Aug
2007
Operating expenses relatively constant despite high revenue growth
WESTCON GROUP
EBITDA ($000’s)
H1 FY2006
EBITDA increases across all geographic regions.
H1 FY2007
$45.0
38.0
$40.0
$35.0
30.8
$30.0
$25.0
26.7
24.7
$20.0
$15.0
9.1
$10.0
$5.0
1.7
2.4
4.2
$0.0
Americas
Europe
Note: Americas results include US non-operating subsidiaries
Asia Pacific
Total
WESTCON GROUP
Consolidated Balance Sheet – Working Capital – US GAAP
($ millions)
Aug 2005
Feb 2006
Aug 2006
$325
$321
$370
55
51
56
Inventory
$183
$189
$198
Inventory Turns
10.7x
11.2x
11.2x
Accounts Payable
$324
$333
$360
DPO (days)
60
58
59
Current Ratio
1.5
1.6
1.6
Accounts Receivable
DSO (days)
Note: Ratios based on trailing twelve month results
WESTCON GROUP
Consolidated Balance Sheet – Capitalisation – US GAAP
($ millions)
Cash
Aug 2005
Feb 2006
Aug 2006
$135
$166
$156
86
67
79
Notes payable
-
40
40
Net Cash*
9
23
1
Equity
287
284
306
Debt to Capitalization
0.31
0.33
0.34
Liabilities to TNW
1.69
1.85
1.88
Working Capital Lines
* Includes inter-company loan payable to Datatec which is eliminated in consolidation
WESTCON GROUP
Net Cash / Debt Trend ($ millions)
$50
$0
-$50
-$100
-$150
-$200
Jul-06
Mar-06
Nov-05
Jul-05
($32,122,321)
Mar-05
Nov-04
($76,872,694)
Jul-04
Mar-04
Nov-03
($30,701,555)
Jul-03
Nov-02
Jul-02
Mar-02
Nov-01
Jul-01
Mar-01
-$250
Mar-03
($59,842,704)
($139,544,122)
WESTCON GROUP
Headcount by Region
Region
Aug 2005
Feb 2006
Aug 2006
Americas
435
451
476
Europe
426
454
457
Asia-Pacific
133
141
154
Total
994
1,046
1,087
WESTCON GROUP
Future Outlook
•
Cautious optimism with continued organic growth for the second half
•
Increasing the focus on acquisition driven growth
•
Enhanced logistics in North America should drive efficiency gains
•
Further improvements in margins and profitability expected in Europe
LOGICALIS GROUP
LOGICALIS GROUP
Highlights
•
Revenues up 39% to $343m
•
Organic growth of 11%
•
Gross margin maintained at 20%
•
EBITDA profits up 59% to $11.8m
•
Continued growth in profitability in both the UK and US operations
•
One acquisition completed during H1 FY 2007
•
Offices opened in Chile and Peru
•
Acquisition of IBM partner completed 1 September in US
LOGICALIS GROUP
Financial Performance Summary
($ millions)
Revenue
Gross Profit
Gross Margin
Operating Expenses
Opex %
EBITDA
As % of Revenue
Operating Profit
As % of Revenue
Aug 2005
Aug 2006
Growth
247,278
342,632
39%
49,665
68,822
39%
20.1%
20.1%
42,223
56,980
17.1%
16.6%
7,442
11,842
3.0%
3.5%
5,182
8,550
2.1%
2.5%
Increased scale has produced stronger results in FY 2007
Notes:
Includes Datatec level inter-company transactions which eliminate on Datatec consolidation
35%
59%
65%
LOGICALIS GROUP
Revenue Geographic Split – as % of Revenue
South America
South America
6%
26% UK
North America
5%
Germany
Germany
1%
1%
North America
67%
62%
H1 FY 2006
32% UK
H1 FY 2007
North America generated 62% of revenue
LOGICALIS GROUP
Revenue Segmental Split
Professional
Services
Maintenance
7%
7%
Managed
Services
5%
Professional
Services
8%
Maintenance
8%
Managed
Services
4%
Product
81%
H1 FY 2006
Product
80%
H1 FY 2007
Proportion of product in sales mix relatively constant
LOGICALIS GROUP
Revenue Product Vendor Mix
IBM
32%
EMC
IBM
38%
EMC
2%
4%
Others
Others
12%
10%
HP
28%
Cisco
26%
H1 FY 2006
HP
23%
Cisco
25%
H1 FY 2007
IBM remains most significant vendor partner
LOGICALIS GROUP
Gross Margin %
35
30
25
H1 FY2006
H1 FY2007
34.8
27.2
22.7
21.5
20.9
23.1
18.7 19.0
20
20.1 20.1
15
10
5
0
UK
Germany
North
America
South
America
Overall Gross margin % steady
Total
LOGICALIS GROUP
EBITDA ($ millions)
14
13
12
11
10
9
8
7
6
5
4
3
2
1
(1)
H1 FY2006
H1 FY2007
UK
Germany
North America
South America
Continued growth in profitability in UK and US
Note: EBITDA pre IFRS 2 charges and head office costs
LOGICALIS GROUP
Key Financial Measures
($’000)
Aug 2005
Feb 2006
Aug 2006
Deferred Revenue
21,580
15,933
17,773
Inventory
10,349
14,536
17,216
11
14
12
75,862
87,468
115,555
54
47
53
66,658
97,145
90,480
76
82
75
30,913
26,605
(2,010)
Inventory Days (Excluding Spares
Stock)
Accounts Receivable
DSO Days
Accounts Payable
DPO Days
Net Cash
Net cash reduction reflects acquisitive growth resulting in increased working capital requirements
LOGICALIS GROUP
Headcount by Region
Region
Aug 2005
Feb 2006
Aug 2006
North America
385
441
487
South America
186
201
230
Europe
295
343
400
Total
866
985
1,117
Increase predominantly due to acquisitions and growth in scale
LOGICALIS GROUP
Recent Important Wins
US
Finance
IP comms solution, services and
managed services
$1.9m
US
Local Govt
Datacenter build out
$0.4m
US
Technology
Three year network managed
Services ($ per year)
$0.1m
UK
Manufacturing
Server upgrade and storage solution
following SAP implementation
$3.5m
UK
University
Consultancy, project definition and
supply of initial network upgrade
$875k
UK
Finance
Cross sell of a computing/
application integration project
$350k
UK
Construction
Five year managed services of
WAN/LAN/IPT and Data centre
$4.9m
South
America
Telecoms
Regional deal for Cisco MPLS
plus two year maintenance
$3.0m
South
America
Finance
Outsourcing contract
to manage telecom infrastructure
$1.2m
LOGICALIS GROUP
Future Outlook
•
Optimistic about second half trading conditions
•
Cisco Advanced Technologies still growing strongly
•
Continuing to focus on growing the services mix
•
Continue to evaluate acquisition opportunities
•
Scale should drive further operating efficiencies
•
Ian Cook – CEO, Logicalis European Operations – to succeed Jens
Montanana in his capacity as Logicalis Group CEO from 1 March 2007
Jens to continue duties as Chairman of this division
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
Overview
•
•
•
•
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 now employs approximately 330 professional consultants and support staff
ANALYSYS MASON GROUP
Highlights
•
Non-UK international revenues now contribute 48% of total
•
Modest revenue growth of 2% despite completion last year of
large wireless network rollout
•
Improvements in gross and net profits
•
Debt free balance sheet with $9m of cash
ANALYSYS MASON GROUP
Financial Performance Summary
Aug 2005
Aug 2006
Variance %
Revenue
30,072
30,703
+2%
Gross Profit
10,331
11,201
+8%
34.4%
36.5%
3,263
3,227
10.9%
10.5%
2,685
2,709
8.9%
8.8%
($ millions)
Gross Margin
EBITDA
As % of Revenue
PBT
As % of Revenue
-1%
+1%
ANALYSYS MASON GROUP
Revenue Geographic Split – as % of Revenue
Europe
Europe
18%
27%
Rest of World
14%
Rest of
World
USA
1%
20%
UK
UK
1% USA
52%
67%
H1 FY 2006
H1 FY 2007
ANALYSYS MASON GROUP
Revenue Segmental Split
Analysys
Consulting
38%
Analysys
Research
9%
Analysys
Consulting
49%
Mason
41%
Catalyst
12%
Mason
35%
Catalyst
8%
H1 FY 2006
Analysys
Research
8%
H1 FY 2007
ANALYSYS MASON GROUP
Gross Margin %
H1 FY2006
H1 FY2007
60
55
50
41.6
45
44.7
40
35
30
40.1
34.4
31.4
28.7 30.6
36.5
25
17.3
20
10.7
15
10
5
0
%
Mason
Analysys
Consulting
Analysys
Research
Catalyst
Total
ANALYSYS MASON GROUP
EBITDA – ($000’s)
H1 FY2006
H1 FY2007
3,500
3,263
3,227
3,000
2,465
2,500
2,000
1,500
1,694
1,239 1,110
1,000
370
500
157
162
0
-86
-500
$000
Mason
ACL
ARL
Catalyst
Total
ANALYSYS MASON GROUP
Headcount by Division
Region
Aug 2005
Feb 2006
Aug 2006
Mason
84
74
78
Analysys Consulting
76
80
83
Analysys Research
26
35
36
Catalyst
21
21
20
AMG Support Services (FTE’s)
47
47
48
254
257
265
62
59
70
316
316
335
Full Time Headcount
Associates
Total
ANALYSYS MASON GROUP
Recent Important Wins
Analysys Consulting and Research
Mason and Catalyst
Middle East operator – Fixed and mobile LRIC
modelling - $900k
UK Department of Health – Ambulance radio
programme $3.4m
Turkish operator – Cost modelling project - $700k
UK Mobile Operator – Mobile network projects $3.2m
Leading investment bank – Due diligence of cable TV
& 3G business plans - $240k
Transport for London – IT and telecommunications
projects $770k
Italian operator – Development of mobile cost model $375k
Norway Ministry of Justice – Tetra network
procurement $450k
North African operator – Pricing and tariff advice $290k
Sri Lanka – Core network roadmap strategy - $290k
Joint
Morocco operator – 3G license bid support - $500K
UK Development Agency – Procurement advice re: FibreSpeed - $405k
Asian Development Authority – Mobile interconnect framework review - $570K
ANALYSYS MASON GROUP
Future Outlook
•
•
•
Building critical mass in key geographies and content areas, e.g.:
–
US, Asia
–
Convergence, digital media research
Telecoms industry is still forecast to grow steadily, market drivers include:
–
Market liberalisation / privatisation
–
Fixed/mobile convergence and quadruple play
–
Development of IPTV and VOIP services
Telecoms consultancy is also forecast to maintain growth levels, key
drivers being:
–
Geographic diversification
–
Operations and outsourcing
–
Business and strategic planning
–
NGN, Broadband and VOIP services
DATATEC GROUP
DATATEC GROUP
Market Conditions
•
Outlook for the global IT industry remains favourable
•
US market continues to be robust
•
Europe inches forward
•
Rest of the world including emerging markets showing strong growth
DATATEC GROUP
Prospects
•
Expecting continued revenue growth and profit margin expansion
•
Improving contribution from Europe
•
Considering a number of strategic acquisitions
•
Plans to increase geographic footprint and extend services offerings
QUESTIONS