DTC
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DTC - Datatec - Audited Results For The Year Ended 28 February 2009 And Cash
Distribution By Way Of Capital Reduction
DATATEC LIMITED
Registration number 1994/005004/06
Share code: DTC & ISIN: ZAE000017745
("Datatec")
www.datatec-group.com
AUDITED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2009 AND CASH DISTRIBUTION BY WAY
OF CAPITAL REDUCTION
Financial highlights
Revenue $4,2 billion (2008: $4,0 billion)
EBITDA $126 million (2008: $151 million)
Cash generated from operations ("operating cash"): $195 million (2008: $77
million)
Underlying* earnings per share 33,1 US cents (2008: 47,3 US cents)
Capital distribution per share 12 US cents (2008: 12 US cents)
*Excluding goodwill and intangibles 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
Scale and diversity of Group continues to mitigate the impact of the current
economic climate
Relative resilience in tough market
Year of further internationalisation and business diversification
Approximately 50% of EBITDA derived from integration, services and consulting
Very strong performance from Logicalis in all regions - EBITDA up 57% to $57
million
Jens Montanana, Chief Executive of Datatec, commented:
"Despite very tough market conditions that impacted our second half, the Group
has delivered a solid performance with further improvements in revenues and
increased operating cash flows.
We have responded swiftly and effectively to reduce and adjust our cost base to
cope with an economic slowdown which has impacted globally. Our divisional
structure, with multiple lines of business and geographic diversification has
proved to be a strong asset in the current climate.
We have achieved a particularly strong performance in Logicalis, where all
regions contributed strongly, breaking through $1 billion revenue and 5% EBITDA
margin. As a result, integration services and consulting activities now account
for approximately 50% of the Group EBITDA.
Sound working capital management across the Group has resulted in a substantial
improvement in operating cash flow. Westcon in particular had an outstanding
period of cash generation during the second half of the year.
The Group completed the year with improved working capital and a net cash
position of $36,2 million illustrating both the defensive nature of our business
model and the positive actions taken across the business to adapt to the sharp
deterioration in economic activity in many of the markets in which we operate."
PROFILE AND GROUP STRUCTURE
Datatec Group ("Datatec" or the "Group", JSE and LSE: DTC) 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" and "Westcon Emerging
Markets"); ICT infrastructure solutions and services ("Logicalis"); and
Consulting Services ("Analysys Mason" and "Intact"). "Other Holdings"
encompasses the Group`s Head Office, as well as its holding in the South African
ICT services business, African Legend Indigo.
OVERVIEW
Despite tough market conditions, the Group has delivered a solid performance
with further improvements in revenues and cash flow. Datatec`s geographic
diversity, global presence and improving mix of business are continuing to help
mitigate the impact of the global economic crisis. The problems which started
in the US have spread to the UK and the rest of Europe, while all markets have
been affected by credit contraction and lower economic growth, South America,
the Middle East and Asia have remained relatively robust.
Against this backdrop, Datatec`s revenues increased by 5% to $4,2 billion (2008:
$4,0 billion) (organically revenue contracted by 3%) following a very strong
performance in the first half of the year. However, even in the challenging
conditions of the second half, the Group produced revenues of $1,9bn. Gross
margins remained stable (decreasing slightly from 13,7% to 13,5%).
Product revenues have recently followed trends seen in many of the world`s major
economies, tracking between 10% and 15% lower than for the same period last
year. However, there are still growth opportunities in advanced technologies
such as those used in data centres, telecommunications, cloud computing,
mobility and security. Furthermore, services and consulting revenues have been
less severely impacted and in some areas, such as managed services, revenues
have actually improved year-on-year.
Reported EDITDA was $125,6 million (2008: $150,7 million), and EBITDA margins
reduced to 3,0% from 3,8%. Profit after tax was $60,0 million (2008: $80,0
million).
Of the $4,2bn revenues generated during 2009, some 73% came from Distribution;
21% from ICT Solutions and 6% is attributable to revenues derived from
Consulting and Services. The spread of activities across these three business
activities not only provides the Group with multiple points of leverage in the
ICT market, but also with industry diversification with no particular vendor,
technology, geography or industry sector dependency. Collectively Datatec`s
higher value added business streams such as ICT Solutions, Consulting & Services
generated revenues of $1,1 billion and contributed approximately 50% of the
Group`s EBITDA.
Analysis by business Revenue 2009 % Gross Profit 2009 %
stream ($`million)
Distribution 3 063 73 306 54
ICT Solutions 863 21 165 29
Consulting & Services 266 6 93 17
4 192 564
The acquisition of Promon Tecnologia in South America earlier this year and the
pre-emptive action taken last year to restructure the US operations, helped to
produce a particularly strong performance in Logicalis, where all regions
contributed profitably.
The Group remains focused on reducing operating expenses in all areas and on
continuing to improve its cash generation.
Sound working capital and cash management across the Group resulted in a
substantial improvement in operating cashflow. The Group completed the year with
improved working capital and a net cash position, following strong cash
generation, particularly from Westcon, in the second half of the year.
STRATEGY
The Group continues to make 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.
During the year, Datatec completed two key acquisitions that helped to
significantly broaden the Group`s international scale and reach. The
strategically significant acquisition of Promon Tecnologia ("Promon"), a leading
Brazilian network integration business, was completed in May 2008. In September
2008 Datatec acquired a 50,01% stake in Inflow Technologies Private Limited
("Inflow"), an Indian ICT distribution business. The acquisition of Promon
helped to transform Logicalis` operations, whilst Inflow, with its presence in
nine key Indian cities, provides Datatec with an excellent entry point and
initial footprint in India. Both acquisitions are important steps in the
Group`s international strategy to increase its exposure to the world`s major
emerging and developing markets.
Datatec`s increasing geographic diversity, global presence and improving mix of
business helped to mitigate the impact of the global economic slowdown. In all
areas of the business and in each of the divisions Datatec has mitigated slower
growth in some markets with faster growth in others.
The Group`s increasing scale and international reach is attracting significant
vendor and customer interest as Datatec broadens its solutions and services
offering, and improves its presence in higher growth emerging markets and
developing economies. This is evidenced by Westcon`s appointment as Cisco`s
first global distributor in April 2009, which will enable both companies to
conduct international and multi-regional transactions more efficiently in any
country, whilst at the same time increasing both organisations` ability to
access emerging market opportunities in many parts of Africa and the Middle
East, South America and across Asia.
During the second half of the year the Group`s primary focus has been on
improving operational performance and cash generation. Datatec has adopted a
very cautious approach to merger and acquisition ("M&A") activity and 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 attractive M&A opportunities may present themselves
and that Datatec will be able to exploit its resilient performance, strong cash
flow and balance sheet strength.
FINANCIAL RESULTS
Group revenue increased by 5% to $4,2 billion (2008: $4,0 billion), while gross
margin decreased slightly from 13,7% to 13,5%. Revenues decreased by 3%
organically, mainly as a result of a decrease in Westcon revenues.
Of the Group`s $4,2 billion revenue in the period, 35% was generated from North
America (2008: 42%), 41% from Europe (2008:43%), 7% from Asia Pacific (2008:
6%), 9% from South America (2008:3%) and 8% from Middle East and Africa(2008:
6%).
Gross profit increased by 3% from $547,1 million to $563,8 million, while
operating costs were $438,2 million (2008: $396,4 million). Operating costs
increased over the prior year as a result of higher operating costs in Westcon
where the business had been sized for higher revenues than achieved, and
restructuring costs and additional bad debt provisions being included in
operating costs.
Group revenues and profits were adversely impacted by the rapid appreciation of
the US Dollar particularly against Sterling, the Australian Dollar, the
Brazilian Real, the Turkish Lira and South African Rand. On a constant currency
basis, revenues for the year would have been $4.3 billion, and EBITDA $141
million.
EBITDA was $125,6 million (2008: $150,7 million), which includes unrealised
foreign exchange gains of $0,4 million (2008: $5,3 million). Amortisation of
intangible fixed assets arising from acquisitions rose to $17,7 million (2008:
$10,3 million) as a result of intangible assets recognised on the acquisitions
made during the past and prior years.
The impairment of acquired intangible assets of $6,4 million relates to the
impairment of certain European intangibles previously acquired by Westcon.
Operating profit was $84,8 million (2008: $123,5 million). The net interest
charge in the period was $16,6 million (2008: $15,3 million). Financing costs
reduced as a result of working capital leverage, cash flow generation and
decreased debt levels. Interest income reduced mainly as a result of cash
outflows associated with acquisitions.
Profit before tax was $85,5 million (2008: $108,3 million).
The Group`s effective tax rate increased to 30% from 26% in 2008, primarily due
to profits being realised for a number of business units in jurisdictions with
higher effective tax rates, most notably North and South America. If the profits
arising from the fair value movements on put option liabilities are excluded
from profit before tax, the effective tax rate would have been 37%. The
effective tax rate for the financial year ended 28 February 2010 is expected to
be approximately 34%.
Underlying* earnings per share were 33,1 US cents (2008: 47,3 US cents).
Headline earnings per share ("HEPS") were 36,3 US cents (2008: 45,6 US cents).
This includes the effects of the fair value adjustments of the put option
liabilities detailed below. HEPS, excluding the effect of these put option fair
value adjustments, is 26,6 US cents.
The Group issued 7,5 million new shares during the year. In May 2008, 6,7
million shares were issued as part of the Promon acquisition, and 0,8 million
shares were issued for exercised share options. During the year the Group
repurchased 1,2 million shares at a cost of $4 million.
Following the increased cash generation for the year, the Group plans to
maintain its cash distribution in lieu of a dividend of 12 US cents per share
(2008: 12 US cents per share) out of share premium.
Working capital remained tightly controlled. Receivables decreased 11% over the
year, inventory decreased by 27% and payables and provisions decreased by 11%.
The Group enjoys comfortable head room in terms of its working capital lines.
Outstanding liabilities to vendors of businesses acquired have increased since
last year-end from $2.0 million to a total of $51 million, of which $27,3
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 of $21,6 million to the sellers, based on future profitability and
the performance of the Datatec share price, as well as a liability of $22,2
million initially recognised against equity in accordance with IAS 32 Financial
Instruments: Presentation, for a put option held by minority shareholders. The
total amount of put option liabilities initially raised against equity across
the Group was $43.1 million. Under IAS 39 Financial Instruments: Recognition and
Measurement, companies are required to re-measure such liabilities at each
reporting date, with changes in the fair values booked in the income statement.
A reduction in put option liabilities has resulted in a non-operating profit of
$16,8 million being recognised in the period.
Operating cash flows have continued to improve as the Group de-leveraged on the
back of lower than expected revenues and improvements in working capital. Cash
generated from operating activities (after working capital changes) amounted to
$151,7 million which represents an increase of 370% over 2008 which had cash
generated of $32,3 million.
The Group paid $20,5 million to shareholders as a capital distribution in July
2008.
The Group ended the year with net cash of $36,2 million, including long-term and
short-term debt (28 February 2008: net debt of $31,9 million).
The Group spent approximately $42,4 million on acquisitions (net of cash
acquired). As a result, goodwill and intangible assets increased by $59,5
million and $37,8 million, respectively. Investments increased to $6,6 million
from $3,7 million in 2008, as a result of the joint venture transaction in
respect of The Via Group in the US.
The revenue included from these acquisitions in 2009 was $211 million. Had the
acquisition date been 1 March 2008, the pro-forma revenue would have been
approximately $260 million. Since these acquisitions are fully integrated into
existing operations, it is not practical to establish the profit after tax
contributed by the acquisitions in 2009, or the profit after tax which the
acquisitions would have contributed to the Group if they had been included for
the entire year.
DIVISIONAL REVIEWS
Westcon
Westcon accounted for 66% of the Group`s revenues and 50% of EBITDA.
Westcon is the world`s leading speciality distributor in networking, security,
mobility and convergence for leading technology vendors, including Cisco,
Nortel, Avaya, Juniper and Polycom.
During the year, Westcon`s revenue decreased 3% from $2,9 billion in 2008 to
$2,8 billion, with decreases in the US and Europe offset by increases in Asia
Pacific and Brazil. Gross margins were 10.1% (2008: 10.4%), with gross profit of
$281 million (2008: $297 million). The decrease is attributable to reduced gross
margins in Europe and the Americas which were offset by increasing gross margins
in Asia Pacific.
Westcon`s EBITDA was $68 million (2008: $102 million), while EBITDA margins were
2,4% (2008: 3,6%), as lower EBITDA margins in Europe and the Americas were
partly offset by improving EBITDA margins in Asia Pacific.
After charges for depreciation and amortisation of intangible assets, operating
profit was $53,8 million (2008: $86,6 million). Westcon`s net working capital
days decreased 22% from 41 days to 32 days in 2009 as a result of increased
inventory turns and higher days payable outstanding. Net debt decreased as
reduced working capital needs increased cash and drove down debt balances.
Westcon`s operating cash generation for the year was outstanding, generating
$126 million of cash compared to cash usage of $5 million in 2008 as effective
working capital management resulted in lower accounts receivable and inventory
balances.
For the year Cisco products made up 54% of Westcon`s revenue with 10% for
Nortel, 10% for Avaya, 16% for security and 10% for other developing vendors.
From a geographic perspective, 49% of Westcon`s revenue was generated in
Europe,42% in the Americas and 9% in Asia-Pacific.
In April 2009 Westcon was appointed as Cisco`s first global distributor. This
partnership agreement will enable both Westcon and Cisco to conduct
international and multi-regional transactions more efficiently in any country,
while increasing both organisations` ability to access emerging market
opportunities in many parts of Africa and the Middle East, South America and
across Asia.
While IT markets contracted on a global basis overall, some technology sectors,
particularly security and unified communications, have continued to display
modest growth. The end user community remains under intense pressure to become
more efficient both across the enterprise and within the mobile workforce and
demand still exists for productivity-enhancing applications. Given the increased
regulatory environment businesses are operating in and the increased security
threats they face, it is incumbent on every organisation to protect their
informational assets, regardless of where they may reside on the network. This
has led to strong sales of security solutions.
Westcon Emerging Markets ("WEM")
Datatec`s WEM operations made up 7% of the Group`s revenue and 1% of EBITDA.
WEM represents Datatec`s distribution subsidiaries operating in Africa, the
Middle East and India. These subsidiaries previously formed part of the Group`s
"Other Holdings". Consolidation of these operations under the WEM umbrella is
ensuring a more regional approach towards management and reporting, with a
strong focus on existing business development and cross-group operational
efficiencies.
Westcon SA revenues were $74.5 million (2008: $85,0 million), mainly as a result
of the weakening of the South African Rand. EBITDA was $2,2 million (2008: $3,5
million)
WEM`s Africa operations revenues were $101,7 million in its first full reporting
period as part of the Group (2008: $50,8 million). These operations generated an
EBITDA loss of $5,6 million (2008: profit of $0,1 million).
Westcon Middle East revenues increased by 17% to $65,3 million (2008: $55,6
million) while EBITDA increased by 14% to $3,3 million (2008: $2,9 million).
Comstor Middle East, Datatec`s Cisco business in the Middle East, started
operations in February 2007. Comstor revenues increased by 120% to $28,7 million
(2008: $13,1 million) and achieved EBITDA of $1,0 million (2008: EBITDA loss of
$0,4 million).
Since acquisition, Inflow Technologies in India has contributed $13,1 million to
revenues and $0,2 million to EBITDA.
Logicalis
Logicalis accounted for 24% of the Group`s revenues and 43% of EBITDA.
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, Logicalis focuses on three
main areas of integration: data centre solutions, unified communications and
managed services.
The performance in the US, Europe and Latin America was very encouraging despite
the difficult economic environment. Strong revenue growth in the first half of
the financial year was offset by revenue declines and adverse currency movements
in the second half. However, with close attention to the cost base together with
the contribution from the acquisition in Brazil, a significant improvement in
operating performance and ratios was achieved.
Revenue for the year increased by 19% to $1 005,4 million (2008: $845,1
million), including a $197 million contribution from acquisitions. Excluding the
impact of acquisitions made in 2008 and 2009, organic revenue increased by 2% in
constant currency terms.
On the 2 May 2008 Logicalis acquired Promon for a maximum purchase consideration
of $77,2 million in cash and new Datatec shares, plus 30% of Logicalis` existing
operations in South America. The acquisition created a regional market leader
with a presence in six countries. Logicalis holds 70% of the shares of the
enlarged holding company which owns all of the Latin America operations with
Promon S.A., retaining the remaining 30% shareholding. Goodwill and intangible
assets recognised were $54,0 million and $37,6 million respectively. The
combined operation is one of the largest network integrators in Latin America
with total revenues in the last financial year of $278 million.
Revenue from product sales was up 20% year on year (down 5% excluding the
benefit of acquisitions) with growth mainly in Cisco products. Revenue from HP
products was relatively flat but revenue from IBM products was down reflecting
the overall market. The focus on services yielded excellent results, with
professional services growing 26% and annuity revenues (comprising maintenance
and managed services) growing 25%.
The gross margin percentage for the year was 22,1% (2008: 22,9%). The slight
decrease in gross margin was driven mainly by the mix, with a slight increase in
product sales due to a number of large Cisco projects, mostly in South America.
Product margins remaining steady but improved services margins were offset by
lower annuity revenue margins due to mix. The gross profit increased 14% to
$221,7 million (2008: $193,8 million).
Operating expenses increased by only 5%, significantly lower than the 19% growth
in revenues with the effective management of operating costs. EBITDA rose 57% to
$57,0 million (2008: $36,2 million).
After charges for depreciation and amortisation of intangible assets, which
increased significantly due to the intangible assets arising on the acquisition
in Brazil, operating profit was up 50% to $39,3 million (2008: $26,1 million).
Consulting Services
The Group`s Consulting Services division, consisting of Analysys Mason and
Intact, accounted for 2% of Group revenues and 5% of EBITDA.
Analysys Mason provides management consulting advice and market intelligence
services to the telecoms, IT and digital media industries. It advises clients
across the full business development cycle, from corporate strategy, financial
transactions, and policy issues to product development, marketing and network
operations. Its clients include telecoms operators, media organisations,
financial institutions, regulators and other public sector bodies.
On a local currency basis (Sterling) Analysys Mason revenue grew by 2,2%, but
the strengthening of the US dollar resulted in revenue of $55,8 million (2008:
$63,5 million).
This reflects the relative resilience of the telecoms services sector in the
current global recession. As a result of lower than expected consulting
utilisation, gross margin was 33,3% (2008: 40,0%), resulting in EBITDA of $4,6
million (2008: $6,9 million) at a margin of 8,5% (2008: 10,9%).
Intact is a networking services and support consultancy business focused on
providing high end professional services to its customers. Intact`s services are
offered exclusively through its partner network, which includes Value Add
Resellers, Systems Integrators, Network Integrators and Service Providers Intact
generated revenues of $17,1 million during the 2009 financial year and generated
$2 million of EBITDA. Intact previously formed part of Logicalis.
OTHER HOLDINGS
Included in Other Holdings are the operating costs of the Datatec head office
entities which also include unrealised and realised foreign exchange gains of
$1,3 million and $0,8 million respectively (2008: $5,8 million and $2,6
million).
African Legend Indigo was 55% owned by Datatec in 2009, in partnership with
African Legend Technologies as part of South Africa`s Black Economic Empowerment
programme. This business generated revenue of $50,7 million (2008: $51,1
million) and EBITDA of $1,8 million (2008: $1,7 million).
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 for Companies and the disclosure requirements of the JSE
Limited`s Listings Requirements. These condensed financial statements have been
derived from the Group financial statements and are consistent in all material
respects, with the Group financial statements. 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. The financial information has been audited by
Deloitte & Touche whose unmodified audit report is available for inspection at
the Group`s registered office.
SUBSEQUENT EVENTS
On 24 April 2009 Datatec increased its shareholding in Westcon SA from 55% to
74,9% through the disposal of its 55% stake in African Legend Indigo and the
issue of 275 578 Datatec shares.
On 5 May 2009, Logicalis` German subsidiary acquired Minters, a Cisco Partner
which will double the revenue of its operations in Germany. The enlarged
Logicalis operation will become a substantial mid-market focused ICT integrator
and provide a platform for further growth in Germany.
CURRENT TRADING AND PROSPECTS
What started as a concentrated crisis in credit markets and financial services
has now become a full blown economic crisis with a global impact. Trading so far
in the 2010 financial year has been consistent with the latter part of the 2009
financial year and despite the economic slow down, trading has not deteriorated
further and the Group`s performance remains stable.
Even in these tough market conditions the Board believes that the Group`s
divisional structure, multiple lines of business and geographic diversification
will enable it to deliver a relatively resilient performance.
Encouragingly, Datatec has not seen further deterioration, but rather business
conditions remaining soft. The Board is adopting a cautious approach, making
the assumption that all major developed markets will shrink this year.
Datatec`s biggest areas of focus remain cash generation and conservative balance
sheet management. The Group remains vigilant to its cost base and has continued
to reduce costs in the first half of the current financial year in order to
improve operating efficiencies.
Based on current trading conditions, the Board expects revenues for the 2010
financial year to be between $3,7 and $4 billion, with margins consistent with
the current year. The Board expects underlying earnings per share to be
approximately 29 US cents and both earnings per share and headline earnings per
share to be approximately 23 US cents. Profit after tax is expected to be
approximately $44 million. The financial information on which this forecast is
based has not been reviewed and reported on by Datatec`s auditors.
DIVIDEND / CAPITAL DISTRIBUTION POLICY
Following the increased cash generation for the year, the Group maintained its
capital distribution for 2009. The Board has adopted a policy to pay an annual
dividend / capital distribution, which will provide cover of at least three
times relative to underlying* earnings.
CASH DISTRIBUTION BY WAY OF CAPITAL REDUCTION
The Group will distribute to shareholders out of share premium, in lieu of a
dividend, 102 RSA cents per share (approximately 12 US cents per share) for the
year ended 28 February 2009, in terms of the general authority granted to
directors at the Annual General Meeting held on 4 August 2008. The capital
distribution will be paid to shareholders on the Jersey branch register in GBP
translated at the closing exchange rate on Thursday 9 July 2009.
The salient dates will be as follows:
Last day to trade Friday 3 July 2009
Shares to commence trading "ex" the distribution Monday 6 July 2009
Record date Friday 10 July 2009
Payment date Monday 13 July 2009
Share certificates may not be dematerialised or rematerialised between Monday, 6
July 2009 and Friday, 10 July 2009, both days inclusive.
On behalf of the Board:
SJ Davidson JP Montanana IP Dittrich
Chairman Chief Executive Officer Chief Financial Officer
14 May 2009
Condensed Group income statement for the year ended February 2009
Audited Audited
year ended year ended
February 09 February 08
USD`000 USD`000
Revenue 4 191 671 4 007 932
Continuing operations 3 980 830 3 623 024
Acquisitions 210 841 384 908
Cost of sales (3 627 835) (3 460 802)
Gross profit 563 836 547 130
Operating costs (438 574) (401 750)
Unrealised foreign exchange gains 386 5 315
Operating profit before finance costs, 125 648 150 695
depreciation and amortisation ("EBITDA")
Depreciation (16 751) (16 460)
Amortisation of acquired intangible assets (17 711) (10 345)
Operating profit before goodwill adjustment 91 186 123 890
Goodwill adjustment - (421)
Impairment of acquired intangible assets (6 375) -
Operating profit 84 811 123 469
Interest income 6 194 11 533
Financing costs (22 655) (26 841)
Fair value movements on put option liabilities 16 829 -
Share of equity accounted investment earnings 333 121
Profit before taxation 85 512 108 282
Taxation (25 493) (28 246)
Profit for the year 60 019 80 036
Attributable to:
Minority interests 1 323 4 382
Equity holders of the parent 58 696 75 654
60 019 80 036
Number of shares issued (millions)
Issued 176 169
Weighted average 174 166
Diluted weighted average 176 170
Earnings per share ("EPS") (US cents)
Basic EPS 33,7 45,4
Diluted basic EPS 33,4 44,6
SALIENT FINANCIAL FEATURES
Headline earnings 63 258 75 910
Headline earnings per share (US cents)
?Headline 36,3 45,6
?Diluted headline 36,0 44,7
Underlying earnings 57 655 78 796
Underlying earnings per share (US cents)
?Underlying 33,1 47,3
?Diluted underlying 32,8 46,4
Net asset value per share (US cents) 328,0 386,9
Operating cash generation per share (US cents) 111,0 52,7
KEY RATIOS
Gross margin (%) 13,5% 13,7%
EBITDA on ongoing operations (%) 3,0% 3,8%
Effective tax rate (%) 29,8% 26,1%
Exchange rates
Average Rand/US exchange rate 8,7 7,1
Closing Rand/US exchange rate 10,1 7,7
Condensed Group balance sheet as at February 2009
Audited Audited
year ended year ended
February 09 February 08
USD`000 USD`000
ASSETS
Non-current assets 429 998 421 074
Property, plant and equipment 29 938 32 220
Capitalised development expenditure 15 268 16 638
Goodwill 292 033 284 348
Other intangible assets 53 356 54 956
Investments 6 646 3 652
Deferred tax assets 32 757 29 260
Current assets 1 246 001 1 463 245
Inventories 249 910 341 036
Trade and other receivables 777 606 877 527
Cash and cash equivalents 218 485 244 682
Total assets 1 675 999 1 884 319
EQUITY AND LIABILITIES
Ordinary shareholders` funds 575 863 654 707
Minorities` interest 46 536 23 576
Total equity 622 399 678 283
Long-term liabilities 49 904 58 761
Amounts owing to vendors 27 337 -
Deferred taxation liabilities 22 006 24 498
Current liabilities 954 353 1 122 777
Payables and provisions 794 338 893 879
Amounts owing to vendors 23 736 2 000
Taxation 12 855 16 395
Bank overdrafts 123 424 210 503
Total equity and liabilities 1 675 999 1884 319
Capital expenditure incurred in current year 15 025 18 502
Capital commitments at end of year 7 021 11 283
Lease commitments at end of year 89 843 116 686
Payable within one year 19 870 20 320
Payable after one year 69 973 96 366
Condensed Group cash flow statement for the year ended February 2009
Audited Audited
year ended year ended
February 09 February 08
USD`000 USD`000
Operating profit before finance costs, 125 648 150 695
depreciation and amortisation (EBITDA)
Loss/(profit) on disposal of property, plant 66 (80)
and equipment
Non-cash items 27 023 12 135
Cash generated before working capital changes 152 737 162 750
Working capital changes 42 162 (85 335)
Decrease/(increase) in inventories 77 074 (65 598)
Decrease/(increase) in receivables 20 923 (88 049)
(Decrease)/increase in payables (55 835) 68 312
Cash generated from operations 194 899 77 415
Net finance costs paid (16 586) (15 308)
Taxation paid (26 643) (29 809)
Net cash inflow from operating activities 151 670 32 298
Investment in subsidiaries (42 430) (180 744)
Net cash outflow from other investing (21 482) (27 640)
activities
Net cash inflow from disposal of operations 78 -
and investments
Net cash inflow from financing activities 15 731 70 574
Capital distribution to shareholders (20 485) (16 775)
Net increase/(decrease) in cash and cash 83 082 (122 287)
equivalents
Cash and cash equivalents at the beginning of 34 179 141 392
year
Translation difference on opening cash (22 200) 15 074
position
Cash and cash equivalents at the end 95 061 34 179
of year (*)
(*) Comprises cash resources, net of bank overdrafts and trade finance
advances.
Condensed statement of changes in total equity for the year ended
February 2009
Audited Audited
year ended year ended
February 09 February 08
USD`000 USD`000
Balance at the beginning of the year 678 283 552 596
Translation of foreign subsidiaries (98 362) (4 934)
Translation difference on equity loans net of 2 779 2 236
tax effect
Recognised directly in equity (95 583) (2 698)
Attributable profit for the year 58 696 75 654
Total income/expense recognised for the year (36 887) 72 956
New share issues 26 540 64 605
Capital distribution to shareholders (20 485) (16 775)
Share buy-back (4 014) (6 131)
Share-based payments (873) 2 308
Initial recognition of put option liabilities (43 125) -
raised against equity
Minority interests 22 960 8 724
Balance at end of the year 622 399 678 283
Determination of headline earnings for the year ended
February 2009
Audited Audited
year ended year ended
February 09 February 08
USD`000 USD`000
Profit attributable to equity holders of the 58 696 75 654
parent per the income statement
Headline earnings adjustments 6 441 234
Intangible impairment 6 375 -
Goodwill adjustments - 314
Loss/(profit) on disposal of property, plant 66 (80)
and equipment
?Tax effect (1 764) 24
?Minorities` interest (115) (2)
Headline earnings 63 258 75 910
DETERMINATION OF UNDERLYING EARNINGS
Headline earnings 63 258 75 910
Underlying earnings adjustments 496 5 030
Unrealised foreign exchange gains (386) (5 315)
Fair value movements on put option arrangements (16 829) -
Amortisation of intangible assets 17 711 10 345
?Tax effect (5 689) (3 074)
?Minorities` interest (410) 930
Underlying earnings 57 655 78 796
Segmental analysis for the year ended February 2009
Audited Audited
year ended year ended
February 09 February 08
USD`000 USD`000
Revenue
Westcon 2 779 410 2 853 636
Westcon Emerging Markets 283 294 194 608
Logicalis 1 005 355 845 112
Consulting Service 72 885 63 476
Corporate and other 50 727 51 100
Revenue from ongoing operations 4 191 671 4 007 932
EBITDA
Westcon 67 758 101 834
Westcon Emerging Markets 601 6 485
Logicalis 56 959 36 195
Consulting Services 6 582 6 944
Corporate and other (6 252) (763)
EBITDA from ongoing operations 125 648 150 695
Operating profit before goodwill adjustment
Westcon 53 804 86 588
Westcon Emerging Markets (487) 6 108
Logicalis 39 313 26 141
Consulting Services 5 352 6 240
Corporate and other (6 796) (1 187)
Operating profit from ongoing operations 91 186 123 890
Total assets
Westcon 1 058 118 1 270 967
Westcon Emerging Markets 99 281 144 401
Logicalis 415 142 391 979
Consulting Services 63 140 55 594
Corporate and other 40 318 21 378
1 675 999 1 884 319
Directors: SJ Davidson*# (Chairman), JP Montanana# (CEO), IP Dittrich, JF
McCartney^, LW Nkuhlu*, DB Pfaff, CML Savage*, CS Seabrooke*, NJ Temple*#
#British *Non-executive ^American
Enquiries: Datatec Limited (www.datatec.co.za) Jens Montanana, Chief Executive
Officer +44 (0) 1753 797118, Ivan Dittrich, Chief Financial Officer +27 (0) 11
233 1221, Wilna de Villiers, Group Marketing Manager +27 (0) 11 233 1013 College
Hill Adrian Duffield/Jon Davies (UK) + 44 (0) 20 7457 2020,
Fred Cornet/Hayley Crane (SA) +27 (0) 11 447 3030 Jefferies International
Limited Chris Snoxall/Rupert Mitchell, +44 (0) 20 7029 8000
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 14/05/2009 08:00:07 Produced by the JSE SENS Department.
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