DTC
DTC
DTC - Datatec Limited - Audited results for the financial year ended 28 February
2011 and cash distribution by way of capital reduction
Datatec Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1994/005004/06)
ISIN: ZAE000017745
Share Code: DTC
AUDITED RESULTS FOR THE FINANCIAL YEAR ENDED 28 FEBRUARY 2011 AND CASH
DISTRIBUTION BY WAY OF CAPITAL REDUCTION
Datatec Limited ("Datatec" or the "Group", JSE and LSE: DTC), the international
Information and Communications Technology (ICT) group, is today publishing its
audited results for the financial year ended 28 February 2011.
Financial highlights
- Revenue up 15% to $4,3 billion (2010: $3,7 billion)
- EBITDA up 31% to $142,2 million (2010: $108,5 million)
- Underlying* earnings per share up 25% to 37,9 US cents(2010: 30,3 US cents)
- Capital distribution per share up 8% to 13 US cents (2010: 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 acquisition related financial instruments and unrealised foreign
exchange movements
Operational highlights
- Strong performance and operational leverage
- Solid revenue growth in Westcon and Logicalis; up 13% and 25% respectively
- Margin expansion; overall gross margins 13,9% (2010: 13,3%)
- EBITDA increases at 2x revenue growth rate
- Group continues to benefit from international scale and business
diversification
Jens Montanana, Chief Executive of Datatec, commented:
"I am delighted to be able to report on strong results for the year, ahead of
previous guidance.
"Despite an environment which remained challenging in many markets, our focus on
operational performance has meant that we have been able to increase revenues
and expand margins resulting in the bottom line growing at twice the rate of
revenues.
"This performance is being driven by a combination of strong operational
leverage and an improving global economy which is returning to a more
predictable and aligned recovery across the majority of the Group`s geographies.
"We have a robust business model which should deliver further improved results
in the years ahead and we are therefore increasing earnings guidance for the
current financial year."
PROFILE AND GROUP STRUCTURE
Datatec Group is a global provider of ICT products, solutions and services. The
Group was founded by Chief Executive Jens Montanana in 1986 and is celebrating
its 25th anniversary this year. Over the past 25 years, Datatec has grown into a
multi-national organisation employing almost 5 000 people worldwide with
operations in more than 40 countries.
The Group`s main lines of business comprise: the global distribution of advanced
networking and communications convergence products ("Westcon" and Westcon
Emerging Markets, now a region of Westcon defined as Africa, India and Middle
East ("AIME")); ICT infrastructure solutions and services ("Logicalis"); and
Consulting Services ("Analysys Mason" and "Intact"). "Corporate" encompasses the
net operating costs of the Group`s head office entities.
OVERVIEW
Datatec delivered a very encouraging performance during the financial year,
exceeding the underlying earnings per share guidance given at the start of the
financial year by 8,3%. The year was marked by increasing revenues, margin
expansion and strong operational leverage and EBITDA grew at twice the rate of
revenues.
The Group`s geographic diversity and improving business mix continue to
represent a resilient business model. This helped to mitigate the impact of the
economic downturn in prior years, and is now helping to insulate the Group
against variations in the recovery within the geographies Datatec operates.
The improvement in the Group`s trading and profitability continued. The second
half results were better than the results for the first half and better than the
results for the second half of the prior financial year.
This performance is being driven by a combination of strong operational leverage
and an improving global economy, which whilst still showing areas of weakness,
seems to be more predictable with a more synchronised recovery across the
majority of the Group`s geographies. The US, which is the Group`s largest
market, continues to show signs of recovery, whilst Asia, South America and the
Middle East remain the strongest performing markets. Trading conditions in
Europe are also improving, albeit that economic recovery in the UK remains weak.
Trading and profitability continued to improve in all of the Group`s divisions,
driven by robust top line growth in both Westcon and Logicalis, up 13% and 25%
respectively. Overall Group gross margins have firmed and operating margins are
expanding.
Westcon`s gross margins improved in North America, Latin America and AIME.
Logicalis also showed a combination of strong revenue growth, an improving
business mix, and increased product and services margins.
Datatec generated revenues of $4,3 billion, up 15% (2010: $3,7 billion).
Organic growth was 12% and overall gross margins expanded to 13,9% (2010:
13,3%).
The Group continues to benefit strongly from operational leverage, with EBITDA
increasing faster than revenues ($142,2 million, up 31% (2010: $108,5 million)).
Underlying earnings per share rose 25% to 37,9 US cents per share (2010: 30,3 US
cents).
Of the $4,3 billion revenues, some 74% came from Distribution; 19% from ICT
Solutions (Logicalis product sales) and 7% is attributable to revenues derived
from Services (Logicalis and Consulting services).
ANALYSIS BY BUSINESS STREAM
Analysis by business stream Revenue % Gross Profit %
($`million) 2011 20 2011
Distribution 3,184 74% 334 56%
ICT Solutions 815 19% 156 26%
Services 304 7% 108 18%
Total 4,303 598
STRATEGY
Datatec continues to pursue its long term strategy to deliver sustainable above
average returns to shareholders by focusing on a combination of organic growth
in the faster growing sectors of the ICT market, geographic expansion and
earnings enhancing acquisitions.
Datatec enjoys a strong market position with no particular dependency on any
single market, territory or technology sector, as well as improving customer
mix.
During the year the Group has primarily focused on improving operational
performance and reviewing a number of acquisition opportunities to enhance
margins, facilitate consolidation in proven markets and extend the Group`s
geographical reach.
On 31 March 2010 Analysys Mason acquired BDA Connect ("BDA India") based in New
Delhi, which provides Analysys Mason, with a platform to develop its consulting
business in India and to support its existing operations in Singapore and Dubai.
Furthermore, BDA India`s research capabilities will enable Analysys Mason to
deliver global research coverage to its clients.
In September 2010, the Group acquired two small/medium-sized businesses ("SMB")
as part of its strategy to further expand its operations in developing markets;
Biodata, a specialist South African distribution business which enhanced Westcon
South Africa`s security business and Touchbase Singapore, one of Cisco`s leading
Unified Communications and contact centre partners in Asia. This has added
significant expertise to Logicalis and its growing presence in the Asia Pacific
region.
On 30 November 2010, the Group purchased the minority stake in Westcon SA
("WSA") from the previous BEE partner, African Legend Computing (Pty) Ltd
("ALC") and the Mineworkers` Investment Company (Pty) Ltd (`MIC`) subscribed for
new shares in WSA constituting 26% of the equity. This transaction considerably
enhanced WSA`s broad-based BEE credentials.
Two further acquisitions followed, both aimed at enhancing Logicalis` reach and
breadth of product offering. On 2 December 2010 the Group acquired Network
Infrastructure Corporation as part of a move to grow Logicalis` presence in the
Southwest of the USA and on 24 January 2011, the Group acquired Direct Visual,
one of the UK`s leading independent suppliers of video communications. This
acquisition strengthens Logicalis UK`s video offering and broadens its managed
services and cloud computing expertise.
FINANCIAL RESULTS
Group revenues increased by 15% to $4,3 billion (2010: $3,7 billion) with 35% of
Group revenue generated from North America (2010: 38%), 36% from Europe (2010:
39%), 11% from Asia Pacific (2010: 9%), 11% from Latin America (2010: 8%) and 7%
from AIME (2010: 6%).
Gross margins improved to 13,9% (2010: 13,3%). Gross profit increased by 20% to
$597,6 million (2010: $498,4 million), while operating costs increased at a
lower rate than gross profit by 17% to $455,4 million (2010: $389,8 million).
EBITDA increased 31% to $142,2 million (2010: $108,5 million), which includes
net unrealised foreign exchange losses of $0,4 million (2010: $2,1 million).
Amortisation of intangible fixed assets arising from acquisitions as $16,2
million (2010: $15,4 million).
Operating profit increased by 38% to $105,0 million (2010: $76,0 million). The
net interest charge increased slightly to $10,2 million (2010: $9,6 million), as
a result of lower cash balances due to Westcon`s prompt pay arrangements (see
below).
Profit before tax increased 45% to $78,2 million (2010: $54,1 million), after
fair value movements on put option liabilities.
The Group`s reported effective tax rate decreased slightly to 41,2% from 41,5%.
If the fair value movements on put option liabilities are excluded from profit
before tax, the effective tax rate would have been 34,7% (2010: 34,0%). The
Group`s effective tax rate is higher than the South African statutory tax rate
of 28%, primarily due to profits in jurisdictions with higher effective tax
rates, most notably North and South America.
The effective tax rate for the financial year ending 28 February 2012 (excluding
any fair value movements on put option liabilities) is expected to be
approximately 34%.
Underlying earnings per share increased by 25% to 37,9 US cents (2010: 30,3 US
cents). Headline earnings per share ("HEPS") increased by 41% to 23,9 US cents
(2010: 17,0 US cents). HEPS, excluding the effect of put option fair value
adjustments, is 31,9 US cents (2010: 23,8 US cents), reflecting an increase of
34%.
By switching its European vendor financing arrangements to a new more flexible
$200 million bank facility, Westcon can now take advantage of vendor supplier
prompt pay initiatives, which are earnings enhancing. Amounts drawn under the
new banking facility are disclosed under bank overdrafts, and form part of net
debt / cash where previously the vendor financing arrangements were disclosed
with payables on the statement of financial position and included in operating
activities.
The Group`s operations utilised $100,9 million cash during the period (2010:
cash generation of $196,1 million). As anticipated, working capital requirements
increased due to a normalisation of prior year extended credit terms by certain
suppliers and Westcon`s refinancing activities in Europe.
The Group ended the period with net cash of $48 million (2010: $186 million),
after deducting long-term debt of $21,2 million and short-term debt of $13,9
million included in the payables and provisions line on the statement of
financial position. The Group continues to enjoy comfortable head room in terms
of its working capital lines.
The Group issued 3,3 million new shares during the year with 2,9 million shares
issued as part of acquisition activities, while 0,4 million shares were issued
to satisfy exercised share options.
The Group spent $14,7 million on acquisitions, net of cash acquired. As a
result, goodwill and intangible assets increased by $13,7 million and $6,2
million respectively. The revenue and EBITDA included from these acquisitions in
2011 was $9 million and $0,5 million respectively. Had the acquisition dates
been 1 March 2010, revenue attributable to these acquisitions would have been
approximately $28,7 million. It is not practical to establish the EBITDA that
would have been contributed by the acquisitions in 2011 if they had been
included for the entire year.
The Group paid $21,7 million to shareholders as a capital distribution in July
2010.
Outstanding liabilities to vendors of businesses acquired have increased since
last year-end from $52,8 million to a total of $59,5 million, of which $33,1
million is included under short term liabilities. The largest portion of the
total balance relates to two elements of the Promon acquisition - potential
further cash payments of $6 million to the sellers, as well as a liability of
$46,1 million recognised in accordance with IAS 32 Financial Instruments:
Presentation, for a put option held by minority shareholders.
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 statement of comprehensive income. An increase in
put option liabilities represented by a non-operating non-cash charge of $14,7
million being recognised in the year (2010: $12,0 million) was a result of
increased valuation of the underlying subsidiaries.
Gains of $32,4 million (2010: $77,5 million) arising on translation of non-USD
denominated subsidiaries are included in comprehensive income of $76,4 million
(2010: $100,4 million).
DIVISIONAL REVIEWS
Westcon (including AIME, formerly Westcon Emerging Markets)
Westcon accounted for 74% of the Group`s revenues (2010: 76%) and 66,3% of its
EBITDA (2010: 64%).
Westcon is the world`s leading specialty distributor in networking, security,
mobility and convergence for leading technology vendors, including Cisco, Avaya,
Check Point, Bluecoat, Juniper and other complementary manufacturers. Through
its Comstor, Westcon Convergence and Westcon Security business units, Westcon
sells products and services to resellers, systems integrators and service
providers. Westcon has particular expertise in the convergence of voice, data
and video applications and technologies, including voice-over internet protocol
("VoIP"), security for networking and communications systems, data centre
technologies, videoconferencing and wireless connectivity.
Westcon`s AIME subsidiaries were integrated into Westcon during the second half
of this financial year and their performance is now consolidated into Westcon
Group.
Westcon`s revenue increased 13% to $3,2 billion (2010: $2,8 billion) with
increases across all regions. From a geographic perspective, 39% of Westcon`s
revenue was generated in Europe (2010: 40%), 35% in North America (2010: 37%),
11% in Asia Pacific (2010: 12%), 9% in AIME (2010: 7%) and 6% in Latin America
(2010: 4%).
Cisco products made up 52% of Westcon`s revenue (2010: 54%), 16% for Avaya /
Nortel (2010: 16%), 17% for security (2010: 18%) and 15% for Affinity / other
development vendors (2010: 12%).
Gross margins increased to 10,5% (2010: 10,3%) with increased margins in North
America, Latin America and AIME. Gross profit increased 14% to $334 million
(2010: $292 million).
Operating expenses grew 8% to $229 million due to increased headcount levels and
higher outbound freight expenses. Operating expenses grew at a much lower rate
than revenues. As a result, Westcon`s EBITDA increased 31% to $105 million
(2010: $80 million) while EBITDA margins increased to 3,3% (2010: 2,8%), with
increased margins in North America, Europe and AIME offset by lower margins in
Latin America and Asia Pacific.
Operating profit increased 38% to $91 million (2010: $66 million).
Westcon`s operating activities used $83 million of cash compared to $125 million
of cash generated in 2010 due to a decrease in accounts payable resulting from
the expiration of extended payment terms for Cisco product in Europe and the
decision to take advantage of early payment discounts for Cisco product
purchases in Europe. As expected, Westcon`s operating cash flow performance in
the second half showed an improvement over the first half of the financial year.
Management expects solid growth for the next financial year, with stable
margins, better product mix and broadening geographic reach.
In September 2010, the Group acquired a 90% interest in Biodata, a specialist
South African distribution business, to enhance Westcon South Africa`s security
business.
On 6 October 2010 Westcon repurchased 2,6% of its own shares from its remaining
minority shareholder, resulting in Datatec now owning 100% of Westcon.
Logicalis
Logicalis accounted for 24% of the Group`s revenues (2010: 22%) and 33,4% of its
EBITDA (2010: 34%).
Logicalis is an international IT solutions and managed services provider with a
breadth of knowledge and expertise in IT infrastructure and networking
solutions, communications and collaboration, data centre, cloud and professional
and managed services.
The marked improvement in demand in the first half of the financial year
continued into the second half with all regions enjoying revenue growth. In
particular, the strong recovery in the US reported in the first half continued
during the year, with the US region enjoying double digit growth in the second
half.
Growth for the year was particularly strong in the South America region driven
by increased capital investment by telecommunication service providers with
Brazil once again the stand-out market. The performance of the Asia Pacific
region was also very encouraging with good margins from an enhanced services
mix. Despite a weak recovery and difficult trading conditions in the UK,
Logicalis` operations are performing well.
Revenue increased by 25% to $1,05 billion (2010: $0,84 billion), including $85,1
million revenue from the Asia Pacific acquisition. Organic revenue increased by
15%, reflecting the general improvement in demand.
Revenue from product sales was up 26%, with strong increases in the Cisco and
IBM vendor categories, with Cisco revenues also boosted by the Asia Pacific
acquisition of January 2010. Revenues from total services were up 20%, with
strong growth in annuity service revenues of 21%.
The gross margin improved to 23,0% (2010: 22,2%). Product margins were up
slightly, as were services margins. The gross profit was $240,7 million (2010:
$186,4 million).
Operating expenses increased in line with the gross margin growth. EBITDA was
$53,0 million (2010: $42,4 million), resulting in an EBITDA margin of 5,1%
(2010: 5,1%).
After charges for depreciation and amortisation of intangible assets, operating
profit was up 24% to $31,3 million (2010: $25,2 million).
In the next financial year management expects to benefit from the investments
made during 2011 in data centre and cloud-based services assets in the UK, US
and Brazil and from operational leverage.
During the financial year Logicalis completed three acquisitions. In September
2010 it acquired the business of Touchbase Singapore from Touchbase Group.
Touchbase Singapore has annualised revenues of approximately $6 million and is a
unified communications ("UC") solutions provider focusing in the areas of UC and
customer contact centre solutions for enterprise and multinational corporations.
In December 2010 Logicalis acquired Network Infrastructure Corporation ("NIC"),
a Phoenix, Arizona-based Cisco Gold Partner with annualised revenues of
approximately $20 million. NIC provides network consulting and IT services to
the education, state and local government, gaming and hospitality markets across
the Southwest United States. This acquisition expands Logicalis` presence in
this region, reinforces its strategic relationship with Cisco and extends its
expertise into educational markets within which Logicalis previously had limited
exposure.
In February 2011 Logicalis acquired Direct Visual, a UK-based Tandberg (now part
of Cisco) Platinum Partner with annualised revenues of approximately $15
million. Direct Visual is one of the UK`s leading independent suppliers of video
communications solutions and video managed services and is being integrated into
Logicalis` Unified Communications and Collaboration ("UCC") operation to
strengthen its video offering and further broaden its managed services and cloud
computing expertise.
Consulting Services
The Consulting Services division, consisting of Analysys Mason and Intact,
accounted for 2% of Group revenues (2010: 2%) and 0,3% of EBITDA (2010: 2%).
Analysys Mason provides management consulting, advisory and market intelligence
services to the telecoms, IT and digital media industries. Its clients include
telecoms operators, financial institutions, media organisations, regulators and
a range of other public sector bodies. Intact is a networking services and
support consultancy business focussed on providing high end professional
services to its customers. Intact`s services are offered exclusively through its
partner network. Together the businesses have offices across four continents
and while the UK remains a very important market for the division, increasing
levels of revenues are being earned outside the UK.
Total divisional revenues increased by 14% to $72,5 million (2010: $63,9
million), driven mostly by growth in Intact following investments made in Asia
and North America. Analysys Mason had a challenging year and lower than expected
third quarter revenues in the company`s established markets.
Divisional gross profit grew by 17% from $19,1 million to $22,4 million due to
revenue growth and cost reduction measures that drove up margins from 29,9% to
31,0%. Operating costs increased by 28% through geographic expansion and, in
respect of Analysys Mason, restructuring costs arising from fixed cost
reductions in established markets. The division delivered an EBITDA of $0,5
million (2010: $1,9 million).
A period of consolidation is now expected as management seeks to leverage the
recent expansion into new territories. Intact`s track record and product
offering continue to attract the interests of a larger number of global service
providers whilst Analysys Mason`s recent order intake has been strong outside
the UK public sector.
On 31 March 2010 Analysys Mason acquired BDA Connect ("BDA India") based in New
Delhi, which provides Analysys Mason, with a platform to develop its consulting
business in India and to support its existing operations in Singapore and Dubai.
Furthermore, BDA India`s research capabilities will enable Analysys Mason to
deliver global research coverage to its clients.
On 13 December 2010 Datatec acquired a 30% equity stake in Cornwall Energy
Associates Ltd, a UK-based research and consulting business focusing on the
areas of electricity generation and distribution, including renewable energy,
and smart grids (intelligent networked distribution). This investment will
provide the Group with insight and early access to an industry which could be
fundamentally transformed by advances in technology.
Corporate
Corporate encompasses the net operating costs of the Datatec head office
entities of $15,7 million (2010: $10,4 million) and unrealised and realised
foreign exchange losses of $0,2 million and $0.8 million respectively (2010:
$3,6 million and $0,9 million). The increase in head office costs is mainly
attributable to aborted acquisition costs (including aborted acquisitions in
China) and additional corporate finance resources at the head office.
In the prior year this segment also included two months` trading for the Group`s
55% holding in the South African ICT business, ALI, which was sold in April
2009. During the two months ended 30 April 2009, ALI generated revenues of $7,4
million and an EBITDA loss of $0,9 million.
REPORTING
The condensed financial information has been prepared in accordance with the
framework concepts and the measurement and recognition requirements of
International Financial Reporting Standards (IFRS), the AC 500 standards as
issued by the Accounting Practices Board and the information as required by IAS
34: Interim Financial Reporting. The report has been prepared using accounting
policies that comply with IFRS which are consistent with those applied in the
financial statements for the year ended 28 February 2010, except for the
accounting policies related to business combinations achieved in stages and
restructuring of entities under common control. The changes have been applied on
a prospective basis and did not have a significant impact on the presented
results.
The auditors, Deloitte & Touche, have issued their opinion on the Group`s
financial statements for the year ended 28 February 2011. The audit was
conducted in accordance with International Standards on Auditing. They have
issued an unmodified audit opinion. These summarised provisional financial
statements have been derived from the Group financial statements and are
consistent in all material respects, with the Group financial statements. A copy
of their audit report is available for inspection at the company`s registered
office. Any reference to future financial performance included in this
announcement, has not been reviewed or reported on by the Company`s auditors.
SUBSEQUENT EVENTS
On 17 March 2011 Logicalis acquired Inca Software Limited for GBP7,3 million.
Inca is the largest and most successful IBM Cognos partner in the UK. The
acquisition creates one of the first UK systems integrators capable of
delivering the full suite of next generation business transformation tools;
analytics, collaboration and cloud computing. Both Logicalis and Inca are IBM
Premier Partners so this acquisition also helped to strengthen this
strategically important relationship.
DIRECTORATE
Ms Olufunke Ighodaro was appointed as a non-executive Director to the Board of
Datatec with effect from 1 September 2010 and has joined the Audit, Compliance
and Risk Committee.
CURRENT TRADING AND PROSPECTS
The Board expects trading and profitability across all divisions to improve, as
global growth is becoming more aligned across geographies. In particular, the US
economy continues to improve.
The European move by regulators to grade internet traffic and charge for content
is expected to boost the networking industry. Key trends and industry growth
drivers are wireless broadband across 4G/LTE networks, increasing demands for
network security and the adoption of private cloud computing services.
Based on current trading conditions and prevailing exchange rates, the Board
expects revenues for the 2012 financial year of between $4,8 billion and $5,1
billion, with further operating margin expansion. The Board expects underlying*
earnings per share to be approximately 47 US cents and both earnings per share**
and headline earnings per share** to be approximately 42 US cents. Profit after
tax** is expected to be approximately $84 million. The financial information on
which this forecast is based has not been reviewed and reported on by Datatec`s
external auditors.
DIVIDEND/CAPITAL DISTRIBUTION POLICY
The Group`s dividend / capital distribution policy of paying an annual dividend
/ capital distribution, which will represent cover of at least three times
relative to underlying* earnings, remains unchanged.
CASH DISTRIBUTION BY WAY OF CAPITAL REDUCTION
The Group will distribute to shareholders a capital reduction in lieu of a
dividend out of share premium, 88 RSA cents per share (approximately 13 US cents
per share) for the year ended 28 February 2011, in terms of the general
authority granted to directors at the Annual General Meeting held on 11 August
2010. The capital distribution will be paid to shareholders on the Jersey
branch register in GBP translated at the closing exchange rate on Wednesday, 6
July 2011.
The salient dates will be as follows:
Last day to trade Friday, 1 July 2011
Shares to commence trading "ex" the distribution Monday, 4 July 2011
Record date Friday, 8 July 2011
Payment date Monday, 11 July 2011
Share certificates may not be dematerialised or rematerialised between Monday, 4
July 2011 and Friday, 8 July 2011, both days inclusive.
On behalf of the Board:
SJ Davidson JP Montanana IP Dittrich
Chairman Chief Executive Officer Chief Financial Officer
11 May 2011
**Forecasts for profit after tax, earnings per share and headline earnings per
share do not take into account any fair value gains or losses on acquisition
related financial instruments (including put option liabilities), which are
required under IFRS.
Condensed Group statement of comprehensive income for the year
ended 28 February 2011
Audited Audited
year ended year ended
February February
2011 2010
USD`000 USD`000
Revenue 4 302 972 3 738 026
Continuing operations 4 293 955 3 698 134
Acquisitions 9 017 39 892
Cost of sales (3 705 417) (3 239 650)
Gross profit 597 555 498 376
Operating costs (454 949) (387 750)
Unrealised foreign exchange losses (425) (2 090)
Operating profit before finance costs, 142 181 108 536
depreciation and amortisation ("EBITDA")
Depreciation (21 045) (17 132)
Amortisation of acquired intangible (16 160) (15 438)
assets
Operating profit 104 976 75 966
Interest income 6 030 3 904
Financing costs (16 210) (13 478)
Fair value movements on put option (14 701) (12 010)
liabilities
Share of equity accounted investment 118 (278)
profits/(losses)
Loss on disposal of investments (2 035) -
Profit before taxation 78 178 54 104
Taxation (32 238) (22 465)
Profit for the year 45 940 31 639
Other comprehensive income
Translation of foreign subsidiaries 32 399 77 498
Initial recognition and transfers related - 843
to put option liabilities
Translation of equity loans net of tax (2 732) (10 582)
effect
Other items 809 1 075
Total comprehensive income for the year 76 416 100 473
Profit attributable to:
Owners of the parent 41 893 29 974
Non-controlling interests 4 047 1 665
45 940 31 639
Total comprehensive income attributable
to:
Owners of the parent 70 346 92 029
Non-controlling interests 6 070 8 444
76 416 100 473
Number of shares issued (millions)
Issued 186 182
Weighted average 184 177
Diluted weighted average 187 178
Earnings per share ("EPS") (US cents)
Basic EPS 22,8 17,0
Diluted basic EPS 22,4 16,8
SALIENT FINANCIAL FEATURES
Headline earnings 44 020 29 978
Headline earnings per share (US cents)
Headline 23,9 17,0
Diluted headline 23,5 16,8
Underlying earnings 69 705 53 553
Underlying earnings per share (US cents)
Underlying 37,9 30,3
Diluted underlying 37,3 30,0
Net asset value per share (US cents) 392,1 366,4
KEY RATIOS
Gross margin (%) 13,9 13,3
EBITDA (%) 3,3 2,9
Effective tax rate (%) 41,2 41,5
Effective tax rate (%) excluding fair 34,7 34,0
value movements on put option liabilities
Exchange rates
Average Rand/USD exchange rate 7,2 7,9
Closing Rand/USD exchange rate 7,0 7,6
Condensed Group statement of financial
position as at 28 February 2011
Audited Audited
year ended year ended
February February
2011 2010
USD`000 USD`000
ASSETS
Non-current assets 515 590 459 963
Property, plant and equipment 52 915 43 436
Capitalised development expenditure 15 570 12 181
Goodwill 338 320 315 131
Acquired intangible assets 43 796 51 780
Investments 7 914 6 818
Deferred tax assets 35 966 30 617
Other receivables and prepayments 21 109 -
Current assets 1 481 342 1 442 081
Inventories 299 460 277 832
Trade and other receivables 944 230 852 390
Cash and cash equivalents 237 652 311 859
Total assets 1 996 932 1 902 044
EQUITY AND LIABILITIES
Ordinary shareholders` funds 727 702 667 879
Non-controlling interest 42 677 50 900
Total equity 770 379 718 779
Non-current liabilities 97 463 73 360
Long term liabilities 21 171 17 676
Amounts owing to vendors 26 353 19 958
Liability for share-based payment 15 828 12 260
Deferred taxation liabilities 34 111 23 466
Current Liabilities 1 129 090 1 109 905
Payables and provisions 928 866 992 830
Amounts owing to vendors 33 132 32 853
Taxation 12 659 12 197
Bank overdrafts 154 433 72 025
Total equity and liabilities 1 996 932 1 902 044
Capital expenditure incurred in current 23 153 21 531
year
Capital commitments at end of year 23 160 14 675
Lease commitments at end of year 93 412 97 993
Payable within one year 22 858 22 064
Payable after one year 70 554 75 929
Condensed Group statement of cash flows
for the year ended 28 February 2011
Audited Audited
year ended year ended
February February
2011 2010
USD`000 USD`000
EBITDA 142 181 108 536
Loss on disposal of property, plant and 67 6
equipment
Non-cash items (1 172) 23 051
Cash generated before working capital 141 076 131 593
changes
Working capital changes (205 106) 93 902
Increase in inventories (11 051) (7 852)
Increase in receivables (80 441) (27 630)
(Decrease)/increase in payables (113 614) 129 384
Cash (utilised by)/generated from (64 030) 225 495
operations
Net finance costs paid (10 180) (9 574)
Taxation paid (26 687) (19 842)
Net cash (outflow)/inflow from operating (100 897) 196 079
activities
Investment in subsidiaries (14 705) (29 689)
Net cash outflow from other investing (31 295) (23 765)
activities
Net cash inflow from other financing 6 677 8 591
activities
Capital distribution to shareholders (21 713) (21 982)
Net (decrease)/increase in cash and cash (161 933) 129 234
equivalents
Cash and cash equivalents at the 239 834 95 061
beginning of year
Translation differences on opening cash 5 318 15 539
position
Cash and cash equivalents at the end of 83 219 239 834
year #
# Comprises cash resources, net of bank overdrafts and trade
finance advances.
Condensed Group statement of changes in total equity
for the year ended 28 February 2011
Audited Audited
year ended year ended
February February
2011 2010
USD`000 USD`000
Balance at beginning of the year 718 779 622 399
Total comprehensive income 76 416 100 473
New share issues 13 694 21 296
Capital distribution to shareholders (21 713) (21 982)
Share-based payments 277 673
Acquisitions (2 781) -
Non-controlling interest (14 293) (4 080)
Balance at end of the year 770 379 718 779
Determination of headline and underlying earnings
for the year ended 28 February 2011
Audited Audited
year ended year ended
February February
2011 2010
USD`000 USD`000
Profit attributable to equity holders of 41 893 29 974
the parent
Headline earnings adjustments
Loss on disposal of property, plant and 2 103 6
equipment and investments
Tax effect 24 (2)
Headline earnings 44 020 29 978
DETERMINATION OF UNDERLYING EARNINGS
Headline earnings 44 020 29 978
Underlying earnings adjustments 31 286 29 538
Unrealised foreign exchange losses 425 2 090
Fair value movements on put option 14 701 12 010
liabilities
Amortisation of intangible assets 16 160 15 438
Tax effect (5 559) (5 906)
Non-controlling interest (42) (57)
Underlying earnings 69 705 53 553
Segmental analysis for the year ended 28
February 2011
Audited Audited
year ended year ended
February February
2011 2010
USD`000 USD`000
Revenue
Westcon* 3 184 042 2 828 238
Logicalis 1 046 422 838 492
Consulting Services 72 508 63 882
Corporate - 7 414
Revenue from continuing operations 4 302 972 3 738 026
EBITDA
Westcon* 105 328 80 100
Logicalis 53 032 42 357
Consulting Services 541 1 905
Corporate (16 720) (15 826)
EBITDA from ongoing operations 142 181 108 536
Operating profit
Westcon* 91 277 66 040
Logicalis 31 340 25 203
Consulting Services (764) 790
Corporate (16 877) (16 067)
Operating profit from ongoing operations 104 976 75 966
Total assets
Westcon* 1 284 221 1 254 719
Logicalis 641 912 566 711
Consulting Services 48 554 51 542
Corporate 22 245 29 072
1 996 932 1 902 044
* Now combined with Westcon Emerging Markets, comparatives restated
accordingly.
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 (SA) +27 (0) 11 447 3030
Jefferies International Limited
Chris Snoxall +44 (0) 20 7029 8000
Directors
SJ Davidson (Chairman), JP Montanana (CEO), IP Dittrich (CFO),
O Ighodaro, JF McCartney+, LW Nkuhlu, CS Seabrooke, NJ Temple
British Non-executive +American Nigerian
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 11/05/2011 08:00:06 Produced by the JSE SENS Department.
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