DTC 201310160002A
Unaudited half year results and cash dividend declaration
Datatec Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1994/005004/06)
ISIN: ZAE000017745
Share Code: DTC
Unaudited half year results and cash dividend declaration
Datatec Limited (Datatec or the Group, JSE and LSE: DTC,
Registration number: 1994/005004/06, ISIN: ZAE000017745), the
international Information and Communications Technology (ICT) group,
is today publishing its unaudited half year results for the six
months ended 31 August 2013 (the Period).
Financial highlights
Group revenue $2,77 billion (H1 FY13: $2,62 billion)
Gross margin expands to 15,0% (H1 FY13: 14,4%)
EBITDA $89,2 million (H1 FY13: $91,9 million)
Underlying* earnings per share 19,2 US cents (H1 FY13: 23,5 US cents)
Interim capital distribution maintained at 8 US cents per share (H1 FY13: 8 US cents)
Operational highlights
Westcons contribution continues to be impacted by roll-out of ERP system
Anticipated growth in the US did not materialise
Logicalis delivered another very strong performance - operating profit up 45% to $32,7 million
(H1 FY13: $22,6 million)
Currency weakness in many countries has impacted market demand
Current trading and prospects
Cautious outlook for second half of FY14 in light of Westcons performance
Revised 2014 financial year forecast:
- Revenues between $5,6 billion and $5,8 billion (FY13: $5,25 billion)
- Underlying* earnings per share similar to FY13, approximately 43 US cents per share.
*Excluding goodwill and intangibles impairment, amortisation of acquired intangible assets,
acquisition-related adjustments, profit or loss on sale of assets and businesses, fair value
movements on acquisition-related financial instruments and unrealised foreign exchange movements
Performance in parts of Westcons North American business, where the new ERP system has been
implemented, has been disappointing. The volume shortfall in that region has been the main reason
for the Groups underperformance in the Period.
Logicalis continues to execute strongly and in line with our expectations; Analysys Mason has
also performed well.
We are experiencing varying trading conditions in many parts of the world with Europe recently
showing signs of improvement, while developing markets have been impacted by currency volatility.
Our confidence in our long term strategy has enabled us to maintain the interim dividend (capital
distribution).
Jens Montanana, Chief Executive Officer
Enquiries
Datatec Limited (www.datatec-group.com)
Jens Montanana, Chief Executive Officer +44 (0) 1753 797 118
Rob Evans, Chief Financial Officer +44 (0) 207 395 9012
Wilna de Villiers, Group Marketing Manager +27 (0) 11 233 1013
Jefferies Hoare Govett Nominated Adviser and Broker
Nick Adams/Alex Collins +44 (0) 207 029 8000
finnCap Broker
Tom Jenkins/Henrik Persson +44 (0) 207 220 0500
College Hill
Adrian Duffield/Rozi Morris (UK) +44 (0) 207 457 2020
Frederic Cornet/ Lexi Ball (SA) +27 (0) 11 447 3030
GROUP STRUCTURE
Datatec Group is a global provider of ICT products, solutions and services, with more than 6,500
people worldwide and with operations in over 50 countries.
The Groups main lines of business comprise:
Technology division: global distribution of advanced networking, security and unified
communications products (Westcon)
Integration division: ICT infrastructure solutions and services (Logicalis)
Consulting division: strategic and technical consulting (Consulting Services)
Corporate encompasses the costs of the Groups head office entities.
OVERVIEW
Datatec achieved modest revenue growth with expanding gross margins in the six months ended
31 August 2013.
Across the Group the US market did not grow as much as anticipated.
Westcons performance in the Period was disappointing, impacted adversely by the ERP system roll
out in North America which had a big effect on transaction volumes.
Logicalis performed very well, in line with managements expectations and benefitted from the
acquisition of the European operations of 2e2 in March 2013.
Latin America continues to be the Groups strongest performing region. There have been signs of
nascent economic recovery in Europe, however, the market there remains weak. In many other markets
currency fluctuations contributed to a mixed performance.
The rest of the world outside North America and Europe now generates 39% of Datatecs revenues
and 44% of the Groups gross profits, compared with 35% of revenue and 41% of gross profits in
the Comparative Period.
Group revenues increased 6% to $2,77 billion (H1 FY13: $2,62 billion), of which some 71% came
from Westcon; 28% from Logicalis and 1% from Consulting Services.
Overall Group gross margins expanded to 15,0% (H1 FY13: 14,4%). EBITDA was $89,2 million
(H1 FY13: $91,9 million) while underlying* earnings per share are 19,2 US cents (H1 FY13: 23,5
US cents).
STRATEGY AND ACQUISITIONS
Datatec has a strong market position with no particular dependency on any single market, territory
or technology sector. The Group 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.
During the first half of FY14 the Group made two acquisitions.
On 4 March 2013, Logicalis acquired the European operations of 2e2 in Spain, Ireland, Channel Islands
and Netherlands for $31 million.
On 31 May 2013, Datatec completed the acquisition of Comztek, a South Africa based ICT distribution group
with operations in a range of African countries. The integration of Comztek into the Westcon South Africa
business, which Datatec owns jointly with its BEE partner MIC, is now in progress.
On 31 August 2013, Westcon completed the sale of its 54% holding in Inflow Technologies following Datatecs
decision to exit the distribution market in India in May.
The Group will continue to seek to improve its competitive position. It believes that the prevailing
economic climate continues to provide attractive opportunities to enhance margins, to facilitate
consolidation in proven markets and to extend the Groups geographical reach.
FINANCIAL RESULTS
Group revenues increased by 6% to $2,77 billion (H1 FY13: $2,62 billion) with 27% of Group revenue
generated from North America (H1 FY13: 34%), 34% from Europe (H1 FY13: 31%), 18% from Latin America
(H1 FY13: 14%), 11% from Asia Pacific (H1 FY13: 13%) and 10% from Africa, India and Middle East
(AME) (H1 FY13: 8%).
Gross margins improved to 15,0% (H1 FY13: 14,4%). Gross profit increased by 10% to $413,5 million
(H1 FY13: $377,0 million), while operating costs increased at a higher rate of 14,0% to $324,3 million
(H1 FY13: $285,1 million).
EBITDA was $89,2 million (H1 FY13: $91,9 million), which includes net unrealised foreign exchange gains
of $0,2 million (H1 FY13: losses of $0,5 million). Depreciation was $15,3 million (H1 FY13: $13,7 million).
Amortisation of intangible fixed assets arising from acquisitions was $6,9 million (H1 FY13: $7,2 million).
The fair value of companies acquired during the year was $40,1 million. As a result, goodwill and intangible
assets increased by $11,8 million and $9,5 million respectively. The revenue and EBITDA included from these
acquisitions in H1 FY14 was $90,4 million and $2,3 million respectively; with an after tax loss of $0,4
million. Had the acquisition dates been 1 March 2013, revenue in H1 FY14 attributable to these acquisitions
would have been approximately $113,6 million. It is not practical to establish the EBITDA that would have
been contributed by the acquisitions in H1 FY14 if they had been included for the entire period.
Operating profit was $67,0 million (H1 FY13: $71,0 million). The net interest charge decreased to $10,4
million (H1 FY13: $11,4 million) as a result of improved funding levels for working capital in Logicalis
Brazilian business and the cessation of prompt pay arrangements in parts of the Westcon business.
Profit before tax was $57,7 million (H1 FY13: $60,4 million).
The Groups reported effective tax rate for H1 FY14 is 31,2% (H1 FY13: 31,6%). The Groups effective tax
rate is higher than the South African rate of 28% due to the profits arising in jurisdictions with higher
tax rates, in particular North and Latin America.
The decrease in the effective tax rate in the current half year is due mainly to lower effective rates in
North and Latin America and a reduced statutory rate in the UK. The effective tax rate for the financial
year ending 28 February 2014 is expected to be 34,0% (FY13: 34,9%).
Underlying* earnings per share were 19,2 US cents (H1 FY13: 23,5 US cents). Headline earnings per share
(HEPS) were 18,2 US cents (H1 FY13: 20,7 US cents).
The Groups operations utilised $19,1 million cash during the Period (H1 FY13: $57,8 million cash generated
from operations).
The Group ended the Period with net debt of $56,7 million (H1 FY13: $135,5 million), after deducting
long-term debt of $20,2 million and short-term debt of $19,2 million, included in the payables and provisions
line on the statement of financial position. The Group continues to enjoy comfortable headroom in terms of
its working capital lines.
The Group issued 4,1 million new shares. Of this 3,4 million shares were issued as part of consideration
for acquisitions, while a further 0,7 million shares were issued to settle commitments under the terms
of Datatecs equity-settled share-based remuneration schemes.
The Group paid $16,2 million to shareholders during H1 FY14 as a final capital distribution relating to
FY13, bringing the total capital distribution for FY13 to $31,4 million.
DIVISIONAL REVIEWS
Westcon
Westcon accounted for 71% of the Groups revenues (H1 FY13: 73%) and 50% of its EBITDA (H1 FY13: 63%).
Westcon is the worlds leading specialty distributor in networking, security, mobility and convergence for
leading technology vendors, including Cisco, Avaya, Check Point, Brocade, Polycom and other complementary
manufacturers. Through its Comstor Cisco-dedicated business unit and Westcon Convergence and Westcon
Security divisions, Westcon sells products and services to resellers, systems integrators and service
providers.
Westcon has expertise in the convergence of voice, data and video applications and technologies,
security for networking and communications systems, data centre technologies, videoconferencing and
wireless connectivity.
Westcon had a challenging first half of FY14 as a result of the impact of the ERP implementation on its
North American business and mixed trading conditions across its geographic markets. Overall revenues
increased 3% to $1,96 billion (H1 FY13: $1,90 billion) with increases in Latin America, Europe and AME
offset by lower sales in Asia Pacific and a significant decrease in North America.
Westcon acquisitions contributed $32,0 million in revenue.
Of Westcons revenue, 35% was generated in Europe (H1 FY13: 33%), 28% in North America (H1 FY13: 34%),
12% in Asia Pacific (H1 FY13: 14%), 14% in AME (H1 FY13: 11%) and 11% in Latin America (H1 FY13: 8%).
Gross margin of 11,3% was consistent with H1 FY13 as margin pressures in Latin America, AME and Europe
were offset by margin expansion in North America and Asia Pacific. A decrease in early payment discount
for Cisco product in Europe was offset by a favourable product mix.
The share of lower-margin Cisco products decreased to 48% of Westcons revenue (H1 FY13: 51%) followed
by 12% for Avaya/Nortel (H1 FY13: 13%), 26% for security (H1 FY13: 20%) and 14% for Affinity/other
development vendors (H1 FY13: 16%). Gross profit increased 4% to $222,2 million (H1 FY13: $214,0 million).
Westcons EBITDA decreased to $45,7 million (H1 FY13: $62,1 million) while EBITDA margin was 2,3%
(H1 FY13: 3,3%). Operating profit was $35,0 million (H1 FY13: $53,4 million).
Westcons net working capital days improved eleven days on the strength of increased payables compared
with 31 August 2012 and over the same period net debt improved by $60 million.
Westcon is in the process of transitioning its existing global ERP system to a new platform. The upgrade
is part of a multi-year programme to improve and optimise Westcons systems and infrastructure
capabilities. To date it has been only implemented in North America. All other regions are operating on
legacy systems.
The transition in North America has caused operating disruptions which have adversely impacted revenues,
particularly in the high volume transaction business. The roll-out schedule has been adjusted and the
amount of disruption is expected to decline.
Market conditions are expected to remain challenging in the second half of the year in the mature
markets of Europe and particularly North America. Despite the difficult trading environment, Westcon
management expects to leverage certain vendor relationships to deliver an improved performance in the
second half of FY14.
Logicalis
Logicalis accounted for 28% of the Groups revenues (H1 FY13: 26%) and 48% of its EBITDA (H1 FY13: 35%).
Logicalis is an international IT solutions and managed services provider with a breadth of knowledge and
expertise in communications and collaboration, data centre and cloud services, and managed services.
Overall revenues and profits in the first half were significantly better than the first half of the
previous year. The Latin America region was particularly strong and the performances of the other regions
were in line with expectations.
Revenue increased by 12% to $767,3 million (H1 FY13: $682,3 million), including $58,4 million of revenue
from the 2e2 acquisition. Organic revenue growth was 4%.
Latin America remained the largest revenue contributor at 37% of total revenue (H1 FY13: 33%) despite a
further depreciation in the Brazilian currency relative to the US dollar. The Europe region grew from
26% to 29% of total revenue whilst North Americas share of revenues fell from 32% to 26%.
Revenues from product sales were up 6%, with robust increases in the Cisco and Other vendor categories.
Revenues from total services were up 29%, with strong growth in both professional and annuity service
revenues.
With the strong growth in professional and annuity service revenues, the gross margin improved to 23,1%
(H1 FY13: 21,8%). The gross profit was up 19% to $176,9 million (H1 FY13: $149,0 million) and EBITDA
increased by 28% to $43,7 million (H1 FY13: $34,2 million), resulting in an EBITDA margin of 5,7%
(H1 FY13: 5,0%).
Operating profit was up 45% to $32,7 million (H1 FY13: $22,6 million), after charges for depreciation
and amortisation of intangible assets.
Logicalis continues to have a contingent liability in respect of a possible tax liability at its
PromonLogicalis subsidiary in Brazil.
Despite generally more positive macroeconomic news flow, trading conditions continue to remain
challenging but stable, particularly in the European and North American markets. The outlook in the
Latin America region remains positive with the exception of Argentina where government-imposed import
restrictions are disrupting normal business activities. Logicalis continues to concentrate on
demonstrating the value of ICT to customers by focusing on business benefits while managing cost.
Logicalis expects the second half results to be seasonally better than the first half.
Consulting Services
The Consulting Services division accounted for 1% of Group revenues (H1 FY13: 1%) and 2% of EBITDA
(H1 FY13: 2%).
The division comprises: Analysys Mason, a provider of management consulting, advisory, modelling and
market intelligence services to the telecoms, IT and digital media industries; Intact, a services
and support consultancy delivering high-end professional services in networking, unified
communications, and related security, wireless and data centre connectivity focusing on Cisco
technologies; and The Via Group (Via), a specialist professional services organisation providing
unified communications and integrated voice solutions that encompass Microsoft technology.
Revenues contracted slightly to $37,1 million (H1 FY13: $38,3 million). An exceptional performance
from Analysys Mason and revenue expansion at Via was offset by lower revenues at Intact. Analysys
Masons strong performance contributed to growth in divisional gross profit to $14,4 million
(H1 FY13: $13,9 million), expanding gross margins to 38,8% (H1 FY13: 36,3%).
The strong demand experienced by Analysys Mason for transaction support services in particular, has
resulted in a continuation of enhanced operational leverage which is driving improved profitability.
With the inclusion of Via and despite a tougher trading period at Intact, overall EBITDA improved by
42% to $2,2 million (H1 FY13: $1,6 million).
The division has seen growing demand for core propositions with an emphasis on projects in Emerging
markets. While the division continues to trade well in a few European jurisdictions, the managements
sentiment is that Europe generally, still remains weak. This has been compensated by stronger sales in
the Middle East, Asia and Africa. These trends are expected to continue into the second half.
Corporate
Corporate encompasses the net operating costs of the Datatec head office entities of $5,5 million
(H1 FY13: $6,4 million) and unrealised exchange gains of $2,2 million and realised exchange gains of $0,9
million (H1 FY13: $0,3 million unrealised exchange gains and immaterial realised exchange losses). Head
office costs are slightly lower than in the Comparative Period due to lower acquisition and other
project costs and the weakening of the Rand against the Dollar.
Accounting for acquisitions
The following table sets out the provisional assessment of the fair value of assets acquired across
all acquisitions made by the Group. 2e2 is the largest component of this. The receivables, inventory
and taxation fair value assessments and the amounts recognised in the financial statements in respect
of the 2e2 and Comztek acquisitions have only been determined provisionally due to the timing and number
of legal entities acquired and this may impact goodwill ().
Acquisitions made in H1 FY14
Assets acquired $000
Non-current assets 7 048
Current assets 91 301
Non-current liabilities (13 192)
Current liabilities (65 840)
Net asset value acquired 19 317
Intangible assets 9 542
Goodwill () 11 809
Non-controlling interest (586)
Fair value of acquisitions 40 082
Purchase consideration
Issue of Datatec shares 16 740
Cash 23 342
Total consideration 40 082
Cash outflows for acquisitions
Cash and cash equivalents acquired 22 929
Cash consideration paid (23 342)
(413)
SUBSEQUENT EVENTS
On 14 October 2013, Logicalis acquired iConsult, a Channel Islands based integrator.
CURRENT TRADING AND PROSPECTS
The Group remains very well positioned to support its vendors and customers through its investments to drive
scale and create broad international coverage. Technology innovation remains high in the sectors in which the
Group operates as IT infrastructure migrates to cloud based services, which is fuelling demand for
networking, security, mobility and unified communications solutions.
In light of Westons underperformance and the effect of continued disruption caused by the system
transition, the forecast for the financial year ending 28 February 2014 has been revised down from that
originally presented on 15 May 2013.
The revised forecast for the 2014 financial year is as follows:
revenues of between $5,6 billion and $5,8 billion (previous forecast of between $5,6 billion and $5,9
billion, FY13: $5,25 billion);
profit after tax** of approximately $88 million (previous forecast $102 million, FY13: $85 million);
underlying* earnings per share approximately 43 US cents, the same as the last financial year (previous
forecast 50 US cents, FY13: 43,1 US cents);
earnings** per share of approximately 38 US cents (previous forecast 46 US cents, FY13: 40,8 US cents);
and
headline** earnings per share of approximately 40 US cents (previous forecast 46 US cents, FY13: 40,8 US
cents).
The financial information on which this forecast is based has not been reviewed or reported on by Datatecs
external auditors.
INTERIM CASH DISTRIBUTION BY WAY OF CAPITAL REDUCTION
The Group will distribute to shareholders an interim capital reduction out of contributed tax capital in
lieu of a dividend, of 80 RSA cents per share (approximately 8 US cents per share) for the six months ended
31 August 2013. The issued share capital at the declaration date is 196,534,384 ordinary shares of
ZAR0.01 each.
The salient dates will be as follows:
Last day to trade Friday, 22 November 2013
Shares to commence trading ex the distribution Monday, 25 November 2013
Record date Friday, 29 November 2013
Payment date Monday, 2 December 2013
Share certificates may not be dematerialised or rematerialised between Monday, 25 November 2013 and Friday,
29 November 2013, both days inclusive.
The capital distribution will be paid to shareholders on the Jersey branch register in pounds sterling
translated at the closing exchange rate on Wednesday, 27 November 2013.
REPORTING
This interim report complies with International Accounting Standard 34 - Interim Financial Reporting, the
SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting
Pronouncements as issued by the Financial Reporting Standards Council, the requirements of the Companies Act
of South Africa, the AIM Rules for Companies and the disclosure requirements of the JSE Limiteds 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. The
preparation of the Groups consolidated interim results for the six months ended 31 August 2013 was supervised
by the Chief Financial Officer, Mr RP Evans. The financial information has not been audited or reviewed by
Deloitte & Touche.
On behalf of the Board:
SJ Davidson JP Montanana RP Evans
Chairman Chief Executive Officer Chief Financial Officer
16 October 2013
Directors
SJ Davidson° (Chairman), JP Montanana (CEO), RP Evans (CFO), O Ighodaro°, JF McCartney°, LW Nkuhlu°,
CS Seabrooke°, NJ Temple°
°Non-executive British American Nigerian
*Excluding goodwill and intangibles impairment, amortisation of acquired intangible assets,
acquisition-related adjustments, profit or loss on sale of assets and businesses, fair value movements on
acquisition-related financial instruments and unrealised foreign exchange movements.
**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 six months to 31 August 2013 Unaudited Unaudited Audited
six months to six months to year ended
August 2013 August 2012 February 2013
US$000 US$000 US$000
Revenue 2 765 508 2 621 254 5 246 667
Existing operations 2 675 108 2 591 630 5 063 855
Acquisitions 90 400 29 624 182 812
Cost of sales (2 351 991) (2 244 218) (4 466 333)
Gross profit 413 517 377 036 780 334
Operating costs (324 435) (284 645) (593 151)
Unrealised foreign exchange gains/(losses) 167 (493) (1 645)
Operating profit before finance costs, depreciation
and amortisation (EBITDA) 89 249 91 898 185 538
Depreciation (15 330) (13 634) (28 657)
Amortisation of acquired intangible assets (6 917) (7 216) (15 508)
Operating profit 67 002 71 048 141 373
Interest income 2 075 2 611 5 086
Financing costs (12 474) (13 979) (26 993)
Acquisition-related fair value adjustments 2 469 - 6 443
Fair value movements on put option liabilities 2 469 - (505)
Fair value adjustments on deferred purchase
consideration - - 6 948
Share of equity-accounted investment earnings 301 573 1 078
Other income 106 167 260
Loss on disposal of investments (1 778) - -
Profit before taxation 57 701 60 420 127 247
Taxation (18 015) (19 093) (42 163)
Profit for the period 39 686 41 327 85 084
Other comprehensive income
Items that may be reclassified subsequently
to profit and loss
Exchange differences arising on translation
to presentation currency (55 643) (41 250) (45 925)
Other items 481 (40) -
Translation difference on equity loans 10 119 9 519 13 646
Tax effect of equity loans translation (3 047) (1 639) (2 386)
Total comprehensive (loss)/income for the period (8 404) 7 917 50 419
Profit for the period attributable to:
Owners of the parent 33 925 39 292 78 077
Non-controlling interests 5 761 2 035 7 007
39 686 41 327 85 084
Total comprehensive (loss)/income attributable to:
Owners of the parent (7 065) 12 221 48 555
Non-controlling interests (1 339) (4 304) 1 864
(8 404) 7 917 50 419
Number of shares issued (millions)
Issued 197 193 193
Weighted average 196 190 191
Diluted weighted average 198 191 193
Earnings per share (EPS) (US cents)
Basic EPS 17,3 20,7 40,8
Diluted basic EPS 17,1 20,5 40,4
SALIENT FINANCIAL FEATURES
Headline earnings 35 720 39 290 78 071
Headline earnings per share (US cents)
Headline 18,2 20,7 40,8
Diluted headline 18,0 20,5 40,4
Underlying earnings 37 584 44 662 82 424
Underlying earnings per share (US cents)
Underlying 19,2 23,5 43,1
Diluted underlying 19,0 23,3 42,6
Net asset value per share (US cents) 436,2 437,7 448,2
KEY RATIOS
Gross margin (%) 15,0 14,4 14,9
EBITDA (%) 3,2 3,5 3,5
Effective tax rate (%) 31,2 31,6 33,1
Normalised effective tax rate (%) 31,6 31,6 34,9
Exchange rates
Average Rand/US$ exchange rate 9,7 8,1 8,4
Closing Rand/US$ exchange rate 10,3 8,4 8,8
Condensed Group statement of financial position
as at 31 August 2013 Unaudited Unaudited Audited
six months to six months to year ended
August 2013 August 2012 February 2013
US$000 US$000 US$000
ASSETS
Non-current assets 674 477 636 432 661 324
Property, plant and equipment 63 804 59 480 62 476
Capitalised development expenditure 52 696 44 248 49 599
Goodwill 430 650 413 515 426 622
Acquired intangible assets 52 910 58 521 50 684
Investments 6 914 6 125 6 613
Deferred tax assets 53 365 33 959 49 961
Other receivables and prepayments 14 138 20 584 15 369
Current assets 2 155 576 1 943 192 2 028 740
Inventories 409 097 371 463 362 172
Current tax asset 11 367 - 18 586
Trade and other receivables 1 416 922 1 301 282 1 334 136
Cash and cash equivalents 318 190 270 447 313 846
Total assets 2 830 053 2 579 624 2 690 064
EQUITY AND LIABILITIES
Ordinary shareholders funds 859 878 844 174 865 433
Non-controlling interest 50 925 45 385 51 578
Total equity 910 803 889 559 917 011
Non-current liabilities 95 590 83 672 84 324
Long-term liabilities 20 117 16 735 10 419
Amounts owing to vendors 1 567 9 507 3 050
Liability for share-based payments 9 687 11 332 12 317
Deferred tax liabilities 63 104 46 098 57 147
Other liabilities 1 115 - 1 391
Current liabilities 1 823 660 1 606 393 1 688 729
Payables and provisions 1 458 873 1 224 468 1 417 181
Amounts owing to vendors 9 468 10 390 9 649
Current tax liabilities 19 768 1 122 21 369
Bank overdrafts 335 551 370 413 240 530
Total equity and liabilities 2 830 053 2 579 624 2 690 064
Capital expenditure incurred in the current period
(including capitalised development expenditure) 19 863 21 655 45 523
Capital commitments at the end of the period 25 163 11 733 13 283
Lease commitments in the period 115 858 92 580 99 275
Payable within one year 30 830 30 890 31 095
Payable after one year 85 028 61 690 68 180
Condensed Group statement of cash flows
for the six months to 31 August 2013 Unaudited Unaudited Audited
six months to six months to year ended
August 2013 August 2012 February 2013
US$000 US$000 US$000
EBITDA 89 249 91 898 185 538
Profit on disposal of property, plant and equipment 27 ** (13)
Non-cash items (5 733) 13 954 6 539
Cash generated before working capital changes 83 543 105 852 192 064
Working capital changes (102 593) (48 065) 124 702
(Increase)/decrease in inventories (55 995) 40 176 45 321
Increase in receivables (79 019) (95 669) (125 387)
Increase in payables 32 421 7 428 204 768
Cash (utilised in)/generated from operations (19 050) 57 787 316 766
Net finance costs paid (10 399) (11 368) (21 907)
Taxation paid (17 429) (25 100) (53 195)
Net cash (outflows)/inflows from operating activities (46 878) 21 319 241 664
Cash outflows for acquisitions (413) (73 505) (74 509)
Net cash outflows from other investing activities (19 172) (21 428) (44 896)
Net cash inflows from disposal of operations
and investments 18 - -
Net cash inflows/(outflows) from other financing
activities 199 (8 013) (13 664)
Capital distributions (16 214) (17 218) (32 394)
Net (decrease)/increase in cash and cash equivalents (82 460) (98 845) 76 201
Cash and cash equivalents at the beginning of
the year 73 316 1 813 1 813
Translation differences on opening cash position (8 217) (2 934) (4 698)
Cash and cash equivalents at the end of the period (*) (17 361) (99 966) 73 316
(*) Comprises cash resources, net of bank overdrafts
and trade finance advances.
(**) Less than $1 000.
Condensed Group statement of changes in total equity
for the six months to 31 August 2013 Unaudited Unaudited Audited
six months to six months to year ended
August 2013 August 2012 February 2013
US$000 US$000 US$000
Balance at the beginning of the period 917 011 879 428 879 428
Total comprehensive (loss)/income (8 404) 7 917 50 419
New share issues 20 561 26 429 29 508
Capital distributions (16 214) (17 218) (32 394)
Equity-settled deferred purchase consideration - - (3 333)
Share-based payments (1 217) (6 913) (6 227)
Derecognition of put option liability 84 5 102 5 102
Recognition of put option liability (984) - -
Acquisitions (720) 1 035 853
Non-controlling interest 686 (6 221) (6 345)
Balance at the end of the period 910 803 889 559 917 011
Determination of headline and underlying earnings
for the six months to 31 August 2013 Unaudited Unaudited Audited
six months to six months to year ended
August 2013 August 2012 February 2013
US$000 US$000 US$000
Profit attributable to the equity holders of the
parent 33 925 39 292 78 077
Headline earnings adjustments -
Profit on disposal of property, plant and equipment
and investments 1 804 ** (13)
Tax effect (9) (1) 8
Non-controlling interest - (1) (1)
Headline earnings 35 720 39 290 78 071
DETERMINATION OF UNDERLYING EARNINGS
Underlying earnings adjustments 4 281 7 709 10 710
Unrealised foreign exchange (gains)/losses (167) 493 1 645
Acquisition-related fair value adjustments (2 469) - (6 443)
Amortisation of acquired intangible assets 6 917 7 216 15 508
Tax effect (2 479) (2 355) (6 460)
Non-controlling interest 62 18 103
Underlying earnings 37 584 44 662 82 424
Segmental analysis
for the six months to 31 August 2013 Unaudited Unaudited Audited
six months to six months to year ended
August 2013 August 2012 February 2013
US$000 US$000 US$000
Revenue
Westcon 1 961 127 1 900 629 3 822 193
Logicalis 767 268 682 338 1 350 442
Consulting Services 37 113 38 287 74 032
Revenue 2 765 508 2 621 254 5 246 667
EBITDA
Westcon 45 690 62 165 117 320
Logicalis 43 738 34 203 78 593
Consulting Services 2 230 1 567 3 174
Corporate (2 409) (6 037) (13 549)
EBITDA 89 249 91 898 185 538
Operating profit
Westcon 35 030 53 461 98 200
Logicalis 32 655 22 622 54 697
Consulting Services 1 743 1 020 2 081
Corporate (2 426) (6 055) (13 605)
Operating profit 67 002 71 048 141 373
Total assets
Westcon 1 867 726 1 728 965 1 864 079
Logicalis 885 770 792 969 769 075
Consulting Services 49 298 50 614 48 813
Corporate 27 259 7 076 8 097
Total assets 2 830 053 2 579 624 2 690 064
Total liabilities
Westcon (1 267 277) (1 121 590) (1 240 133)
Logicalis (610 276) (530 868) (497 151)
Consulting Services (19 983) (19 686) (18 692)
Corporate (21 714) (17 921) (17 077)
Total liabilities (1 919 250) (1 690 065) (1 773 053)
Sandton
16 October 2013
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
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