DTC
DTC
DTC - Datatec Limited - Trading Statement And IMS
Datatec Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1994/005004/06)
ISIN: ZAE000017745
Share Code: DTC
TRADING STATEMENT AND IMS
Datatec, ("Datatec" or the "Group", JSE and LSE: DTC), the international
Information and Communications Technology (ICT) group, is today publishing a
Trading Statement and IMS (Interim Management Statement) covering the period
from 1 September 2008 to 31 December 2008.
Group
Group trading in the first four months of the second half of the financial
year has been relatively resilient when compared with the overall market
conditions, albeit below the Board`s prior expectations at the interim
results published on 15 October 2008.
Revenues and gross profit margins have held up relatively well despite the
sharp deterioration in economic activity in most markets. The Board remains
confident that Datatec is well positioned to deliver a satisfactory financial
performance for the full year in the context of the current environment and
expects the Group to achieve revenues of approximately $4.3bn for the
financial year to 28 February 2009. (2008: $4 bn).
Group profits have been impacted by the cost base which had been sized for
higher revenues than achieved and have also been adversely impacted by the
rapid appreciation of the US dollar during recent months particularly against
Sterling, the Australian dollar, the Brazilian Real, the Turkish lira and
South African Rand.
The Group remains focused on reducing operating expenses in all areas and on
continuing to improve its cash generation. More than $20m of annualised cost
reductions have been completed or initiated during the second half year
across all operations. The costs of these actions are included in the
operating results. The Group has historically proven its ability to take
early action in managing its cost base in tough market conditions.
The Board currently expects, based on current exchange rates, that operating
profit before finance costs, depreciation and amortisation ("EBITDA") will
amount to approximately $120 million for the year ended 28 February 2009
(2008: $151 million). The Board further expects, based on current exchange
rates, that earnings per share and headline earnings per share for the year
ended 28 February 2009 will be between 25 and 29 US cents (2008: 45 US cents)
and that underlying* earnings per share will be between 31 and 35 US cents
(2008: 47 US cents). The Group`s effective tax rate is expected to be higher
than the prior year rate, due to profits being earned in higher taxing
jurisdictions.
Despite the difficult market conditions, the Group has remained profitable in
each of its divisions. Gross margins have held broadly steady as the Group`s
main operating divisions have focused on maintaining sales quality and
services mix.
The Group enjoys a comfortable head room against its working capital lines
and is benefiting from the reduction in interest payments as rates have
declined. Operating cash flows have continued to improve as the Group de-
leverages on the back of lower than expected revenues and improvements in
working capital.
Westcon
Westcon`s performance for the 10 months ended 31 December 2008 has tracked
the trends seen in many of the world`s major economies. Continued weakness in
demand in the US and European revenues has been partially offset by a strong
sales result in South America and Asia Pacific. Revenues for the second half
are expected to be somewhat lower than those achieved in the first half of
the current financial year. This will reduce operating profits and margins
which have also been impacted by currency and translation losses that have
been incurred, due to the rapid strengthening of the US Dollar.
Westcon has continued to align its cost base to the slower market conditions,
and will enter the new financial year starting 1 March 2009 with a much lower
operating cost base than that of the prior year.
Westcon Emerging Markets
The Westcon Emerging Markets division, consisting of Datatec`s distribution
businesses in Africa, the Middle East and India, has continued to grow
revenues. The acquisition of a 50.01% stake in Inflow Technologies in India,
completed during the second half, has contributed positively in this period.
Logicalis
The strong performance from Logicalis in the first half of the financial year
remained robust up to the period ended 31 December 2008. This second half
performance has been impacted by the weakening of the Brazilian Real against
the US Dollar which is expected to result in a reduced contribution from
South America in the second half. Operating expenses across Logicalis are
being reduced further in line with market conditions and a solid performance
is expected for the full year.
Analysys Mason
Analysys Mason`s underlying performance is in line with management
expectations, but has been impacted by currency translation given the
appreciation of the US Dollar.
Jens Montanana, Chief Executive Officer said:
"Our diversified business model, with global scale and no single geographic,
technological or business segment dependency is a demonstrable advantage in
these challenging times. We have continued to reduce our cost base to reflect
the market conditions. Good balance sheet management and strong cash
generation remain a priority to help insulate us against the worst effects of
the current economic climate and prepare for recovery when it arrives."
Preliminary results
The Group expects to release its preliminary results for the year ended 28
February 2009 on Wednesday 13 May 2009.
* Underlying earnings per share excludes goodwill impairment, amortisation of
intangible fixed assets, profit or loss on sale of assets and businesses,
fair value movements on put/call arrangements and unrealised foreign exchange
movements.
The financial information on which this statement is based has not been
reviewed and reported on by Datatec`s auditors.
ENDS
Enquiries:
Datatec Limited (www.datatec.co.za)
Ivan Dittrich - Group Finance Director +27 11 233 1221
Wilna de Villiers - Group Marketing Manager +27 11 233 1013
Dresdner Kleinwort
Simon Russell / James Rudd +44 (0) 20 7623 8000
College Hill
Adrian Duffield/Jon Davies (UK) +44 (0) 20 7457 2020
Fred Cornet / Hayley Crane (SA) +27 (0) 11 447 3030
Note to Editors
Datatec Limited is an international Information & Communications Technology
(ICT) group focused on the supply of advanced ICT and the delivery of
professional services into the higher growth segments of the global market.
The Group`s main lines of business comprise the global distribution of
advanced networking and communications convergence products (Westcon Group),
IT infrastructure solutions and network integration (Logicalis) and strategic
telecommunications consulting (Analysys Mason). Datatec is registered in
South Africa and its shares are listed in Johannesburg and London.
15 January 2009
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 15/01/2009 09:00:03 Produced by the JSE SENS Department.
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