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DTC - Datatec Limited - Interim Management Statement
Datatec Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1994/005004/06)
ISIN: ZAE000017745
Share Code: DTC
INTERIM MANAGEMENT STATEMENT
14 January 2010
Datatec, ("Datatec" or the "Group", JSE and LSE: DTC), the international
Information and Communications Technology (ICT) group, is today publishing an
Interim Management Statement ("IMS") covering the period from 1 September 2009
to 31 December 2009 ("the Period").
Group
Based on trading and profitability during the Period, as anticipated the second
half of the current financial year is expected to be sequentially and
comparatively better than the first half of the current financial year and the
second half of the prior financial year.
The Group has now returned to revenue growth in all its divisions during the
second half with the early signs of improvement seen at the end of the second
quarter continuing into the second half of the current financial year. Overall
gross margins have remained stable.
On 14 May 2009 the Group published a forecast for the financial year ending 28
February 2010 of revenues of between $3.7 billion and $4 billion, profit after
tax* of approximately $44 million, underlying** earnings per share of
approximately 29 US cents and earnings* and headline* earnings per share of
approximately 23 US cents. Based on current exchange rates and trading
conditions, all of these forecasts remain unchanged.
Jens Montanana, Chief Executive Officer said:
"We are very pleased to see that all parts of the Group around the world are now
showing revenue growth with Logicalis appearing to pass its inflection point at
the end of 2009. Our cash generation remains strong and margins are steady. The
inherent leverage in our business model is beginning to show through as the cost
reductions initiated over a year ago provide a solid basis for capturing the
benefits of any revenue growth".
Westcon and Westcon Emerging Markets
Westcon`s strong financial performance during the first half of the current
financial year continues to improve steadily. Third quarter revenues showed
sequential growth over the first two quarters, with stable gross margins, EBITDA
margins and improved profitability. Westcon is benefiting strongly from the high
operational gearing that exists as a result of its significantly reduced cost
base and improved operational efficiencies.
Trading in the Americas, particularly in the US, continued to improve over the
first half of the current financial year, with conditions in Europe stable and
the Asia Pacific region remaining strong.
Westcon Emerging Markets (Africa, Middle East and India) is continuing to trade
well with an improved performance over the prior year.
Westcon`s strong working capital and operating cash flow management has
continued.
Logicalis
Trading improved from the first half of the financial year, although the
business continues to be affected by larger projects being delayed with the
resultant impact on attached services. However, all operations appear to have
recently passed an inflection point.
Particularly pleasing was a very strong performance in the UK in December on the
back of the IBM year end and another solid performance in South America.
Logicalis is typically a business that improves later in the economic cycle, in
part due to the longer term nature of its customer contracts. Logicalis is
expected to produce a better second half performance in the current financial
year than the first half.
Consulting Services
Trading in the second half is expected to show a sequential improvement over the
first half of the financial year, and operating profits have improved after a
difficult start to the financial year. Telecommunications operators and service
providers reduced discretionary spend significantly through much of 2009,
resulting in lower strategy consulting revenues.
Acquisition of NetStar
The acquisition of NetStar Group Holding Limited ("NetStar") for $19.8 million
in new Datatec shares, announced on 8 December 2009, is expected to complete
shortly. This is expected to be an earnings enhancing acquisition of an
established independent provider of network integration and managed services
across the Asia-Pacific region, and brings with it an excellent reputation.
It establishes a sizeable presence for Logicalis across South East Asia, China
and Australia and in one transaction provides:
- an ideal pan Asia-Pacific platform to develop the business by further
acquisitions in the region and to roll-out new services in some of the world`s
most dynamic economies and markets;
- the ability to meet the growing requirement from many multinational customers
to provide them with coverage across the region; and
- a presence in mainland China, the most significant developing market in the
world.
Preliminary results
The Group expects to release its preliminary results for the year ending 28
February 2010 on Thursday 13 May 2010.
* The forecasts for profit after tax, earnings per share and headline earnings
per share do not take into account any fair value movements on put / call
options for minority shareholders in subsidiaries, which may be required under
IFRS.
** Underlying earnings per share excludes 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.
The financial information on which this statement is based has not been reviewed
and reported on by Datatec`s auditors.
Enquiries:
Datatec Limited (www.datatec.co.za)
Ivan Dittrich - Chief Financial Officer +27 11 233 1221
Jefferies International Limited
Chris Snoxall / Rupert Mitchell +44 (0) 20 7029 8000
College Hill
Adrian Duffield/Jon Davies (UK) + 44 (0) 20 7457 2020
Fred Cornet / Hayley Crane (SA) +27 (0) 11 447 3030
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 14/01/2010 09:00:01 Produced by the JSE SENS Department.
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