DTC - Datatec Limited - Strong Financial Performance And Significant
15 October 2008 8:00
DTC
DTC                                                                             
DTC - Datatec Limited - Strong Financial Performance And Significant            
                         Improvement In Operating Cash Flow                     
Datatec Limited                                                                 
(Incorporated in the Republic of South Africa)                                  
(Registration number: 1994/005004/06)                                           
ISIN: ZAE000017745                                                              
Share Code: DTC                                                                 
Strong financial performance and significant improvement in operating cash flow 
Datatec ("Datatec" or the "Group", JSE and LSE: DTC), the international         
Information and Communications Technology (ICT) group, has today published its  
unaudited results for the six months ended 31 August 2008.                      
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2008                       
Financial highlights                                                            
Revenue: $2,3 billion up 18% (2007: $1,9 billion)                               
Underlying* EBITDA: $76 million up 25% (2007: $61 million)                      
Operating profit: $54,3 million up 12% (2007: $48,5 million)                    
Underlying* earnings per share: 22,5 US cents up 19% (2007: 18,9 US cents)      
Significant increase in cash generation from operations: $66 million (2007: $3  
million)                                                                        
*Excluding goodwill impairment, amortisation of acquired intangible assets,     
profit or loss on sale of assets and businesses, fair value movements on        
put/call arrangements and unrealised foreign exchange movements                 
Operational highlights                                                          
Diversity of Group and significant international scale has helped deliver       
continued growth                                                                
Over 40% of EBITDA now derived from integration, services and consulting        
business streams                                                                
Promon acquisition in Brazil improves Group`s geographic mix                    
Very strong performance from Logicalis in all regions                           
National presence established in India                                          
Commentary                                                                      
Jens Montanana, Chief Executive of Datatec, commented:                          
"Despite deteriorating macro-economic conditions, the Group has delivered a     
strong first half performance with further improvements in revenues,            
profitability and cash flow.                                                    
Our geographic diversity, global presence and improving mix of business are     
helping to mitigate the impact of the current economic climate. In all areas of 
our business and in each of our divisions we have been able to mitigate slower  
growth in some markets with faster growth in others. Emerging and developing    
markets have proved resilient with higher contributions from South America, the 
Middle East and Asia-Pac.                                                       
We are particularly pleased with the financial performance of Logicalis, where  
all regions contributed with increases in profits and margins. The strategically
important acquisition of Promon in South America earlier this year, and the pre-
emptive action taken last year to restructure the US operations, have been major
factors in Logicalis` notable performance over this period.                     
The Group has become more weighted to the cash generative businesses of         
integration services and consulting activities which now account for over 40% of
the Group EBITDA. This change, together with tight cash management across the   
group has resulted in a substantial improvement in operational cash flow during 
the first half of the year.                                                     
The Board currently expects that the second half earnings per share, headline   
earnings per share and underlying earnings per share will be similar to or      
exceed that of the first half."                                                 
Profile and group structure                                                     
Datatec Group is an international Information Communications Technology ("ICT") 
networking and related services business with operations in many of the world`s 
leading economies. The Group`s main lines of business comprise: the global      
distribution of advanced networking and communications convergence products     
("Westcon"); ICT infrastructure solutions and services ("Logicalis"); and       
telecommunications strategy consulting ("Analysys Mason"). "Other Holdings"     
encompasses the Group`s distribution and ICT services businesses in the Middle  
East and Africa as well as the Head Office.                                     
Overview                                                                        
Datatec has reported a continued strong overall performance in a challenging    
environment with good progress made on the execution of key operating           
objectives. The Group`s geographic diversity, global presence and improving mix 
of business is helping to mitigate the impact of the current economic climate.  
Organic revenue growth was 9%, gross margins expanded to 13,4% with underlying* 
operating profits up 19% and underlying* earnings per share up 19%. Notably, a  
combination of the strong overall performance, improved business mix and        
enhanced operational execution across all parts of the business resulted in a   
substantial improvement in operating cash flow, with the Group generating $66   
million (2007: $3 million).                                                     
The initiatives taken to improve the Group`s balance of revenues and profit     
streams has resulted in integration solutions, services and consulting          
activities now accounting for 46% of the gross margin and 43% of EBITDA. In all 
of the Group`s divisions, slower growth in some markets was mitigated by faster 
growth in others.                                                               
Despite Westcon revenues increasing, operating margins were down as a result of 
an investment in building the footprint of value added distribution businesses  
in Europe following the acquisitions of Crane and NOXS during the previous      
financial year. Trading conditions in the US and Europe remain challenging. As a
result further reductions to the operating cost base are being made so that the 
business is sized appropriately for market conditions and to protect            
profitability.                                                                  
There was a significant improvement in the financial performance of Logicalis,  
where all regions contributed increases in profits and margins. The pre-emptive 
steps taken last year to restructure the US operation is one of the key reasons 
the business has continued to perform so strongly this year.                    
Emerging and developing markets have proved resilient. In particular Brazil,    
Turkey, the Middle East and India are expected to continue to show strong growth
in the second half.                                                             
Strategy                                                                        
The Group continues to make good progress with its strategy to deliver long     
term, sustainable, above average returns to shareholders by focussing on a      
combination of organic growth in the faster growing sectors of the ICT market,  
geographical expansion and earnings enhancing acquisitions.                     
The Group has successfully reduced its dependency on any key market, territory  
or technology sector as well as improving supplier and customer diversification 
as a consequence of its scale and increasing globalisation.                     
The Group completed the strategically significant acquisition of Promon         
Tecnologia ("Promon"), a leading Brazilian network integration business, during 
the first six months of the year. On 11 September 2008 Datatec acquired a 50,01%
stake in Inflow Technologies Private Limited ("Inflow"), an Indian ICT          
distribution business. Datatec will continue to look for acquisitions that can  
deliver enhanced margins over the longer term and other initiatives to improve  
the Group`s returns and facilitate consolidation in proven markets. The Board   
believes that with the difficult market conditions, further opportunities may   
present themselves as Datatec will be able to exploit its resilient performance,
strong cash flow and balance sheet strength.                                    
A common theme of Datatec`s acquisitions is the active ongoing participation of 
the local management of the acquired companies, through empowering these        
individuals and ensuring that their interests are aligned to the Group`s. This  
allows Datatec to scale its businesses rapidly without adding substantially to  
head office costs.                                                              
The Group`s increasing scale and international reach is attracting significant  
vendor and customer interest as Datatec continues to broaden its solutions and  
services offerings, as well as offering a greater exposure to key higher growth 
emerging markets and developing economies.                                      
Datatec will continue to target faster growth emerging markets and developing   
countries which offer superior growth characteristics and often lower cost of   
entry compared to more mature markets.                                          
Financial results                                                               
Group revenue increased by 18% (9% organic) to $2,3 billion (2007: $1,9         
billion), while gross margin increased from 12,9% to 13,4%.                     
Of the Group`s $2,3 billion revenue, 35% was generated from North America, 42%  
from Europe, 6% from Asia Pacific, 9% from South America and 8% from Middle East
and Africa.                                                                     
Gross profit increased by 22% from $247,8 million to $303,4 million, while      
operating costs increased 22% from $186,8 million to $227,2 million, mainly as a
result of the Promon acquisition.                                               
An analysis of revenue and gross profit contribution across the Group`s         
principal business streams is provided below.                                   
Analysis by business                                                            
stream ($`m) 2009 - H1         Revenue  %     Gross Profit %                    
Distribution                   1,650    73    165          54                   
ICT Solutions                  471      21    90           30                   
Consulting & Professional      145      6     48           16                   
Services                                                                        
                              2,266          303                                
Underlying* EBITDA, which excludes goodwill impairment, amortisation of acquired
intangible assets, profit or loss on sale of assets and businesses, fair value  
movements on put/call arrangements and unrealised foreign exchange movements    
increased 25% to $76,2 million (2007: $61,0 million). Reported EBITDA increased 
18% to $71,4 million (2007: $60,5 million). The Group had unrealised foreign    
exchange losses of $4,8 million (2007: $0,5 million) and realised foreign       
exchange gains during the period of $5,2 million (2007: $1,2 million).          
Underlying* operating profit increased by 27% to $67,9 million (2007: $53,5     
million). Reported operating profit increased by 12% to $54,3 million (2007:    
$48,5 million). The net interest charge in the period was $7,4 million (2007:   
$8,0 million), down slightly from the same period last year.                    
Underlying* profit before tax increased by 34% to $60,8 million (2007: $45,5    
million). Reported profit before tax was up 17% to $47,2 million (2007: $40,5   
million).                                                                       
The Group`s effective tax rate increased to 32% from 30% in 2007, due to profits
arising in higher taxing jurisdictions.                                         
Underlying* earnings per share rose 19% to 22,5 US cents (2007: 18,9 US cents), 
while Headline Earnings per Share ("HEPS") increased by 5% to 17,6 US cents     
(2007: 16,8 US cents).                                                          
The Group issued 6,8 million new shares during the period. 6,7 million shares   
were issued in May 2008 as part of the Promon acquisition, and 0,1 million      
shares were issued for exercised share options. In the six months to August 2008
the Group continued with its share-buy back initiative and repurchased 1,2      
million shares at a cost of $4,0 million.                                       
Working capital remained tightly controlled. Receivables increased 20% over the 
year, inventory increased by 38% and payables and provisions increased by 33%.  
Outstanding liabilities to vendors of businesses acquired have increased since  
last year end from $2,0 million to a total of $78,9 million, of which $62,2     
million  is included under long term liabilities. The largest portion of the    
increase relates to two elements of the Promon acquisition - potential further  
cash payments ($28,2 million) to the sellers based on future profitability and  
the performance of the Datatec share price, as well as a liability of $44,6     
million recognised against equity in accordance with IAS 32 Financial           
Instruments: Presentation, for a put option held by minority shareholders.      
Cash generated from operating activities (after working capital changes)        
improved significantly to $66,3 million (2007: $2,7 million).                   
The Group paid $20,5 million (2007: $16,8 million) to shareholders as a capital 
distribution in July 2008. The Group ended the period with net debt of $47,7    
million, including long and short-term debt (29 February 2008: $31,9 million).  
The Group spent approximately $49,5 million on acquisitions (net of cash        
acquired) - predominantly Promon - which has improved the Group`s geographical  
reach, market position and product mix particularly in Latin America            
Divisional reviews                                                              
Westcon                                                                         
Westcon accounted for 67% of the Group`s revenues and 55% of EBITDA (2007: 72%  
and 78% respectively).                                                          
Westcon is the world`s leading specialty distributor in networking, security,   
mobility and convergence for leading technology vendors, including Cisco,       
Nortel, Avaya, Juniper and Polycom. Westcon`s revenue increased 9% from         
$1,4 billion to $1,5 billion, with increases in Europe and Asia Pacific         
contrasting with a decrease in the Americas, as a result of a slowdown in US    
sales.                                                                          
Gross margins increased from 9,8% to 10,1% with gross profit increasing 11% from
$136,4 million to $151,9 million. The increase is attributable to increased     
gross margins in the Americas and Asia Pacific. The growth of Cisco business in 
the higher margin Brazil market offset competitive pricing pressures, which have
reduced margins in the US. European margins were consistent with the prior      
comparable period as it also faces competitive pricing pressures.               
Operating expenses in Europe increased as a result of the acquisitions in the   
prior year period. Freight costs also increased which have been impacted by     
surcharges due to the rise in oil prices.                                       
EBITDA decreased 7% from $47,7 million to $44,1 million with decreases in the   
Americas and Europe contrasted with growth in Asia Pacific. Overall EBITDA      
margins decreased 50 basis points to 2,9% as lower margins in the US and Europe 
offset improved margins in Asia Pacific.                                        
During the first half, Westcon generated cash flow from operations (after       
working capital changes) of $11 million. It used $5,2 million for investing     
activities, primarily capital expenditures while $15 million was used to repay  
credit lines and debt.                                                          
Operating profit was $36,9 million (2007: $41,2 million).                       
Cisco products made up 55% (2007: 57%) of Westcon`s revenue, 10% Nortel (2007:  
11%), 10% Avaya (2007: 10%), 15% security solutions (2007: 12%) and 10% other   
developing vendors (2007: 10%). 49% of Westcon`s revenue was generated in Europe
followed by 41% in the Americas and 10% in Asia-Pacific.                        
Companies are seeking efficiency in their networks as well as productivity-     
enhancing applications. Need for effective IT security remains paramount as     
companies begin to rely increasingly on mobile applications. This continues to  
underpin demand for communications technologies and VoIP and networked security 
products in particular.                                                         
Logicalis                                                                       
Logicalis accounted for 24% of the Group`s revenues and 40% of EBITDA (2007: 20%
and 13% respectively).                                                          
Logicalis is an international provider of integrated ICT solutions, delivering  
secure, converged computing and communications infrastructure and services.     
Specialising in the areas of advanced technologies, the group`s integrated      
services portfolio comprises the architecture, deployment, integration and      
management of customers` networks and systems to deliver optimum solutions that 
meet their business needs now and into the future.                              
Revenue increased by 39% to $550,7 million (2007: $395,5 million), including    
$106 million contribution from acquisitions. Excluding the impact of            
acquisitions made in 2007 and 2008 organic revenue increased by 11%.            
On 2 May 2008 Logicalis completed the acquisition of 70% of Promon for a maximum
consideration of $77,2 million in cash and new Datatec shares, plus 30% of      
Logicalis` existing operations in Latin America. Goodwill and intangible assets 
recognised were $71,8 million and $37,6 million respectively.                   
In the first six months of the financial year, the performance in the US, Europe
and Latin America has been strong. The US business continued its recovery from a
difficult first half last year, the UK delivered solid growth and the           
acquisition in Brazil generated significant revenues and EBITDA in the first    
four months of ownership.                                                       
Revenue from product sales was up 42% year on year (10% excluding the benefit of
the Brazil acquisition) with growth mainly in Cisco products. Sales of HP and   
IBM products were similar to the prior period. The focus on growing annuity     
revenues yielded excellent results with maintenance and managed services growing
36%.                                                                            
The gross margin percentage for the six month period was 22,0% (2007: 21,6%)    
with improved product and services margins. The gross profit increased 42% on   
the prior year to $121,3 million (2007: $85,3 million).                         
Operating expenses increased by 16%, significantly lower than the 39% growth in 
revenues with the effective management of operating costs. EBITDA rose to $32,0 
million (2007: $8,1 million), an increase of 295%.                              
Operating profit was $23,2 million (2007: $3,3 million).                        
Analysys Mason                                                                  
Analysys Mason accounted for 1% of the Group`s revenues and 3% of EBITDA (2007: 
2% and 5% respectively).                                                        
Analysys Mason provides strategic and technical consulting to many of the       
industry`s leading service providers, regulators and government bodies.         
Convergence in telecommunications, broadcasting, television and online media    
content is being fuelled by widespread deployment of faster broadband internet  
infrastructure. Analysys Mason is particularly well positioned to exploit demand
for advisory and consulting services in this market around the world.           
On a local currency basis revenues fell by 2%, but the strengthening of the US  
Dollar accentuated this fall resulting in revenues of $30,4 million (2007: $31,4
million).                                                                       
Analysys Mason has felt the impact of the general economic uncertainty as       
discretionary spending with large enterprises has tightened. Steps have been    
taken to reduce the fixed cost base in the business to mitigate the risk of this
uncertainty.  As a result of lower than expected levels of consulting           
utilisation,  gross margin fell to 36.8% (2007: 39.2%) resulting in EBITDA of   
$2,4 million (2007: $3,0 million) at a margin of 7.9% (2007: 9.6%) and operating
profit to $1,9 million (2007: $2,7 million).                                    
On 26 June 2008 Analysys Mason completed the acquisition of OSS Observer. This  
acquisition, based in the US, will strengthen the research business, increasing 
the breadth of service that Analysys Mason delivers to its global client base.  
The business will be fully integrated into the Analysys Mason research business.
Africa and Middle East (included in "Other Holdings")                           
Datatec`s Africa and Middle East operations made up 8% of the Group`s revenue   
and 2% of EBITDA.                                                               
Included in Other Holdings are the operating costs of the Datatec head office   
entities which also include unrealised and realised foreign exchange losses of  
$1,4 million and $1,4 million respectively, (2007: unrealised loss of $0,5      
million and realised gain of $1,5 million).                                     
Westcon Africa Middle East (Pty) Ltd ("WAME") is the distribution holding       
company for Datatec`s 55% stake in Westcon SA and its 51% stake in Westcon      
Africa. These combined operations span 12 sub-saharan African countries. Westcon
SA revenues improved to $42,5 million (2007: $38,6 million), with EBITDA        
increasing to $1,6 million (2007: 1,5 million), and the EBITDA margin increased 
from 3,5% to 4,0%.  Westcon Africa`s performance is reported for an eight month 
period due to a change in year end to align with the Group. Revenues were $62,4 
million. Westcon Africa posted an EBITDA loss of $3,1 million due mainly to     
tougher than expected trading conditions in Kenya as a consequence of the       
political uncertainty that existed after elections earlier in the year  as well 
as investments in organic start up initiatives and provisions made following the
acquisitions of Sparnoon Dynatech and Jet Distribution.                         
Westcon Middle East group, Datatec`s value-added distributor for data networking
products and services, covering the Middle East, Western Asia and North Africa, 
revenues increased by 27% to $33,8 million (2007: $26,7 million) while EBITDA   
increased by 6% to $1,5 million. Comstor Middle East ("Comstor"), Westcon`s     
Cisco business in the Middle East, started operations in February 2007. Comstor 
revenues increased by 180% to $12,0 million, and it achieved EBITDA of $ 0,3    
million (2007: Loss of $0,3 million).                                           
African Legend Indigo is Datatec`s 55% owned South African operation formed in  
partnership with African Legend Technologies as part of South Africa`s Black    
Economic Empowerment programme. This business generated revenue of $25,0 million
(2007: $27,1 million) and EBITDA of $0,7 million (2007: loss of $0,2 million).  
The distribution businesses currently included in the Africa and Middle East sub
grouping operate in some of the most dynamic and fast growing markets in the    
world today. In addition, the acquisition of Inflow in India will also form part
of this sub group. The scale and diversity of these operations requires a more  
focused and structured management approach in order to maximise the underlying  
benefits and cross-group opportunities. As a result, these operations are being 
consolidated under a new `Westcon Emerging Markets` umbrella, which will ensure 
a more regional approach towards management and reporting, with a strong focus  
on existing business development and cross-group operational efficiencies. The  
new structure and reporting will be effective by the end of the financial year. 
Reporting                                                                       
This report complies with International Accounting Standard 34 - Interim        
Financial Reporting as well as with Schedule 4 of the South African Companies   
Act, the AIM Rules and the disclosure requirements of the JSE Limited`s Listings
Requirements.                                                                   
The accounting policies comply with International Financial Reporting Standards 
("IFRS") of the International Accounting Standards Board and are consistent with
those applied in the prior year financial statements. This report has not been  
audited and the forecast within the current trading and prospects section below 
has not been reviewed and reported on by Datatec`s auditors.                    
Subsequent events                                                               
On 11 September 2008 Datatec acquired a 50,01% stake in Inflow. The remaining   
49,99% will continue to be held by management and other existing shareholders.  
The acquisition of a 50,01% stake in Inflow, with its presence in nine key      
Indian cities, provides Datatec with an excellent entry point and initial       
footprint in India. Inflow also has operations in Sri Lanka and Singapore.      
Current trading and prospects                                                   
Market conditions remain challenging and the outlook uncertain. The             
deterioration of the international trading environment and the global financial 
crisis is having an impact on many economies in which Datatec operates. At this 
stage it is unclear how much this may affect the IT and telecommunications      
markets around the world as communications technologies are often leveraged in  
periods of slower economic growth as a means of improving productivity and      
operating efficiencies.                                                         
As a key international intermediary for these technologies, the Group remains   
well positioned. However, in the current market environment management remains  
focused on controlling operating expenses, improving its cash position and      
diversifying its operations globally, particularly in the faster developing     
economies.                                                                      
The Board currently expects that the second half earnings per share, HEPS and   
underlying earnings per share will be similar to or exceed that of the first    
half.                                                                           
On behalf of the Board                                                          
S J Davidson        J P Montanana               I P Dittrich                    
Chairman            Chief Executive Officer     Chief Financial Officer         
15 October 2008                                                                 
www.datatec.co.za                                                               
Condensed group income statement                                                
                         Unaudited     Unaudited     Audited                    
six months    six months    year                       
                         to            to            ended                      
US$ 000`s                 31 Aug 08     31 Aug 07     29 Feb 08                 
Revenue                    2 265 970     1 921 704     4 007 932                
Continuing operations      2 159 870     1 776 978     3 623 024                
Acquisitions#              106 100       144 726       384 908                  
Cost of sales              (1 962 550)   (1 673 876)   (3 460 802)              
Gross profit               303 420       247 828       547 130                  
Operating costs            (227 175)     (186 842)     (401 750)                
Unrealised foreign         (4 841)       (536)         5 315                    
exchange (losses)/gains                                                         
Operating profit before                                                         
finance costs,                                                                  
depreciation                                                                    
and amortisation           71 404        60 450        150 695                  
("EBITDA")                                                                      
Depreciation               (8 305)       (7 470)       (16 460)                 
Amortisation related to    (8 808)       (4 460)       (10 345)                 
acquired intangible                                                             
assets                                                                          
Operating profit before    54 291        48 520        123 890                  
goodwill adjustment                                                             
Goodwill adjustment       -             -              (421)                    
Operating profit           54 291        48 520        123 469                  
Interest received          4 052         5 311         11 533                   
Financing costs            (11 443)      (13 360)      (26 841)                 
Share of equity-           275          -              121                      
accounted investment                                                            
earnings                                                                        
Profit before taxation     47 175        40 471        108 282                  
Taxation                   (15 102)      (12 122)      (28 246)                 
Profit for the period      32 073        28 349        80 036                   
Attributable to:                                                                
Minority interests         1 661         905           4 382                    
Equity holders of the      30 412        27 444        75 654                   
parent                                                                          
32 073        28 349        80 036                    
Number of shares                                                                
(millions)                                                                      
Issued                     175           169           169                      
Weighted average           173           163           166                      
Diluted weighted average   175           166           170                      
Earnings per share (US                                                          
cents)                                                                          
Basic EPS                  17,6          16,8          45,4                     
Diluted basic EPS          17,4          16,5          44,6                     
SALIENT FINANCIAL                                                               
FEATURES                                                                        
Headline earnings          30 411        27 368        75 910                   
Headline earnings per                                                           
share (US cents)                                                                
Headline                   17,6          16,8          45,6                     
Diluted headline           17,4          16,5          44,7                     
Underlying earnings        38 999        30 857        78 796                   
Underlying earnings per                                                         
share (US cents)                                                                
Underlying                 22,5          18,9          47,3                     
Diluted underlying         22,3          18,6          46,4                     
Net asset value per        361,7         362,2         386,9                    
share (US cents)                                                                
Cash-generation per        38,0          1,6           52,7                     
share (US cents)                                                                
KEY RATIOS                                                                      
Gross margin (%)           13,4          12,9          13,7                     
EBITDA on ongoing          3,2           3,1           3,8                      
operations (%)                                                                  
Effective tax rate (%)     32,0          30,0          26,1                     
Exchange rates                                                                  
Average Rand/US$           7,7:1         7,1:1         7,1:1                    
exchange rate                                                                   
Closing Rand/US$           7,7:1         7,2:1         7,7:1                    
exchange rate                                                                   
#The revenue included from acquisitions in the period to August 2008 was $106   
million. Had the acquisition date been 1 March 2008, the pro-forma revenue would
have been approximately $145 million. The profit after tax contributed by these 
acquisitions during the period was $7,3 million.                                
Condensed group balance sheet                                                   
                          Unaudited     Unaudited    Audited                    
US$ 000`s                  31 Aug 08     31 Aug 07    29 Feb 08                 
ASSETS                                                                          
Non-current assets          517 531       372 582      421 074                  
Property, plant and         33 975        28 506       32 220                   
equipment                                                                       
Capitalised development     15 919        13 951       16 638                   
expenditure                                                                     
Goodwill                    354 465       251 111      284 348                  
Other intangible assets     82 933        56 406       54 956                   
Investments                 3 796         2 865        3 652                    
Deferred tax assets         26 443        19 743       29 260                   
Current assets              1 572 597     1 290 099    1 463 245                
Inventories                 401 703       290 359      341 036                  
Receivables                 939 775       784 335      877 527                  
Cash and cash equivalents   231 119       215 405      244 682                  
Total assets                2 090 128     1 662 681    1 884 319                
EQUITY AND LIABILITIES                                                          
Ordinary shareholders`      632 373       612 359      654 707                  
funds                                                                           
Minorities` interest        54 557        16 104       23 576                   
Total equity                686 930       628 463      678 283                  
Long-term liabilities       57 789        59 537       58 760                   
Amounts owing to vendors   62 231        -            -                         
Deferred tax liabilities    37 258        7 064        24 498                   
Current liabilities         1 245 920     967 617      1 122 778                
Payables and provisions     1 009 654     758 792      893 880                  
Amounts owing to vendors    16 631        3 294        2 000                    
Taxation                    10 792        12 712       16 395                   
Bank overdrafts             208 843       192 819      210 503                  
Total equity and            2 090 128     1 662 681    1 884 319                
liabilities                                                                     
Capital expenditure         10 053        7 477        18 502                   
incurred in current                                                             
period                                                                          
Capital commitments at      11 194        4 651        11 283                   
end of period                                                                   
Lease commitments at end    110 695       112 644      116 686                  
of period                                                                       
Payable within one year     19 364        21 614       20 320                   
Payable after one year      91 331        91 030       96 366                   
Condensed group cash flow statement                                             
                           Unaudited     Unaudited    Audited                   
six months    six months   year                      
                           to            to           ended                     
US$ 000`s                   31 Aug 08     31 Aug 07    29 Feb 08                
EBITDA                       71 404        60 450       150 815                 
Profit on disposal of        (1)           (106)        (80)                    
property, plant and                                                             
equipment                                                                       
Non-cash items               (4 486)       658          12 015                  
Cash generated before        66 917        61 002       162 750                 
working capital changes                                                         
Working capital changes      (569)         (58 257)     (85 335)                
(Increase)/decrease in       (56 643)      7 954        (65 598)                
inventories                                                                     
Increase in receivables      (57 746)      (2 034)      (88 049)                
Increase/(decrease) in       113 820       (64 177)     68 312                  
payables                                                                        
Cash generated from          66 348        2 745        77 415                  
operations                                                                      
Net finance costs paid       (7 391)       (8 049)      (15 308)                
Taxation paid                (19 418)      (16 580)     (29 809)                
Net cash inflow/(outflow)    39 539        (21 884)     32 298                  
from operating activities                                                       
Net cash outflow from        (49 496)      (153 847)    (180 744)               
investing in subsidiaries                                                       
Net cash outflow from        (7 843)       (7 068)      (27 640)                
other investing activities                                                      
Net cash inflow from         20 860        76 124       70 574                  
financing activities                                                            
Capital distribution to      (20 485)      (16 775)     (16 775)                
shareholders                                                                    
Decrease in cash and cash    (17 425)      (123 450)    (122 287)               
equivalents                                                                     
Translation difference on    5 522         4 645        15 074                  
opening cash position                                                           
Cash and cash equivalents    34 179        141 392      141 392                 
at beginning of period                                                          
Cash and cash equivalents    22 276        22 587       34 179                  
at end of period(+)                                                             
(+)Comprises cash resources, net of bank overdrafts and trade finance advances. 
Segmental analysis                                                              
Unaudited    Unaudited   Audited                    
                            six months   six months  year                       
                            to           to          ended                      
US$ 000`s                    31 Aug 08    31 Aug 07   29 Feb 08                 
Revenue                                                                         
Westcon                       1 509 645    1 385 224   2 853 636                
Logicalis                     550 650      395 505     845 112                  
Analysys Mason                30 405       31 451      63 476                   
Other holdings                175 270      109 524     245 708                  
                             2 265 970    1 921 704   4 007 932                 
EBITDA                                                                          
Westcon                       44 146       47 660      101 835                  
Logicalis                     32 030       8 117       36 195                   
Analysys Mason                2 350        3 027       6 944                    
Other holdings                (7 122)      1 646       5 721                    
                             71 404       60 450      150 695                   
Operating profit before                                                         
goodwill adjustment                                                             
Westcon                       36 852       41 207      86 468                   
Logicalis                     23 237       3 284       26 141                   
Analysys Mason                1 923        2 719       6 240                    
Other holdings                (7 721)      1 310       5 041                    
                             54 291       48 520      123 890                   
Total assets                                                                    
Westcon                       1 285 091    1 133 779   1 270 967                
Logicalis                     608 556      343 990     391 979                  
Analysys Mason                52 543       51 809      55 594                   
Other holdings                143 938      133 103     165 779                  
2 090 128    1 662 681   1 884 319                 
Determination of headline earnings                                              
                            Unaudited    Unaudited    Audited                   
                            six months   six months   year                      
to           to           ended                     
US$ 000`s                    31 Aug 08    31 Aug 07    29 Feb 08                
Attributable to equity                                                          
holders of the parent                                                           
per the income statement      30 412       27 444       75 654                  
Headline earnings             (1)          (106)        234                     
adjustments                                                                     
Goodwill adjustments         -            -             314                     
Profit on disposal of plant   (1)          (106)        (80)                    
and equipment                                                                   
Tax effect                    -            32           24                      
Minorities` interest          -            (2)          (2)                     
Headline earnings             30 411       27 368       75 910                  
Determination of underlying                                                     
earnings                                                                        
Headline earnings             30 411       27 368       75 910                  
Underlying earnings           13 649       4 996        5 030                   
adjustments                                                                     
Unrealised foreign exchange   4 841        536          (5 315)                 
losses/(gains)                                                                  
Amortisation of acquired      8 808        4 460        10 345                  
intangible assets                                                               
Tax effect                    (2 821)      (1 502)      (3 074)                 
Minorities` interest          (2 240)      (5)          930                     
Underlying earnings           38 999       30 857       78 796                  
Condensed statement of changes in total equity                                  
                             Unaudited    Unaudited    Audited                  
                             six months   six months   year                     
to           to           ended                    
US$ 000`s                     31 Aug 08    31 Aug 07    29 Feb 08               
Balance at beginning of        678 283      552 596      552 596                
period                                                                          
Translation of foreign         (3 980)      (551)        (4 934)                
subsidiaries                                                                    
Translation difference on      (2 293)      1 481        2 236                  
equity loans                                                                    
Put option fair value          (49 302)    -            -                       
Prior year adjustment         -             1 132       -                       
Recognised directly in         (55 575)     2 062        (2 698)                
equity                                                                          
Attributable profit for        30 412       27 444       75 654                 
period                                                                          
Total income recognised for    (25 163)     29 506       72 956                 
the period                                                                      
Shares issued                  26 540       61 225       64 605                 
Capital distribution to        (20 485)     (16 775)     (16 775)               
shareholders                                                                    
Share buy-back                 (4 014)     -             (6 131)                
Share-based payments           780          659          2 308                  
Minority interests             30 989       1 252        8 724                  
Balance at end of period       686 930      628 463      678 283                
Directors                                                                       
SJ Davidson*# (Chairman), JP Montanana# (CEO), IP Dittrich (Chief Financial     
Officer), JF McCartney+*, LW Nkuhlu*, CML Savage*, CS Seabrooke*, NJ Temple*#   
#British  *Non-executive  +American                                             
Date: 15/10/2008 08:00:07 Produced by the JSE SENS Department.                  
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