DTC 201505130008A
Audited provisional results for year ended 28 February 2015, declaration of scrip distribution with cash alternative
Datatec Limited: Incorporated in the Republic of South Africa
Registration number 1994/005004/06
Share code JSE and LSE: DTC
ISIN: ZAE000017745 (“Datatec” or the “Group”)
AUDITED PROVISIONAL RESULTS FOR THE FINANCIAL YEAR ENDED 28 FEBRUARY 2015 AND
FINAL SCRIP DISTRIBUTION WITH CASH DIVIDEND ALTERNATIVE
Datatec Limited (“Datatec” or the “Group”, JSE and LSE: DTC), the international information and
communications technology (ICT) group, is today publishing its audited provisional summary consolidated results
for the financial year ended 28 February 2015 (“FY15”).
Financial Results
• Group revenue up 13.3% to $6.4 billion (FY14: $5.7 billion)
• Gross profit at $932.9 million (FY14: $841.4 million)
• EBITDA up 17.7% to $206.4 million (FY14: $175.3 million)
• Underlying* earnings per share up 17.1% to 41.8 US cents (FY14: 35.7 US cents)
• Scrip distribution with cash dividend alternative maintained at 17 US cents per share for the full year
Group performance
• Strong recovery in Westcon’s performance
• Logicalis improved in the second half of FY15
• Better operating margins across all divisions
Current trading and prospects
• Continued growth in networking, mobile communications, security and ICT infrastructure managed services
• Dollar strength expected to hinder growth in some markets and increase relative contribution from the US
• The Group continues to focus on improving operational efficiency
Jens Montanana, Chief Executive of Datatec, commented:
“Our revenue growth continued this year, driven by a strong recovery in sales and market share at Westcon.
Logicalis delivered an improvement in the second half, leading to profitable growth year-over-year. We are
also pleased with the improved operating efficiency across all divisions.
“We have maintained our dividend over the past three years despite volatile earnings and have delivered
long-term sustainable returns to shareholders.
"We expect our diverse operating portfolio to continue to deliver revenue growth, as Logicalis adapts its
capabilities to address cloud-based infrastructure opportunities and Westcon increases its
momentum with global vendors."
OVERVIEW
Datatec is an international ICT solutions and services group operating in more than 60 countries across
North America, Latin America, Europe, Africa, Middle East and Asia Pacific. The Group’s service offering
spans the technology, integration and consulting sectors of the ICT market.
Datatec operates through three core divisions:
Technology - Westcon: distribution of networking, security, unified communications and data centre products;
Integration - Logicalis: ICT infrastructure solutions and services; and
Consulting Services - Analysys Mason, Mason Advisory and The Via Group: strategic and technical consulting.
“Corporate” encompasses the costs of the Group’s head office entities including Datatec Financial Services,
a new capital/leasing business under development.
The Group’s businesses are managed on a standalone basis, able to respond quickly to technology changes and
focused on collective strategic initiatives based on a shared strategy.
Datatec’s strategy is to deliver long-term, sustainable and above average returns to shareholders through
portfolio management and the development of its principle subsidiaries in technology solutions and services
to targeted customers in identified markets.
GROUP RESULTS
Group revenues increased 13.3% to $6.4 billion (FY14: $5.7 billion) reflecting a 19.4% increase in Westcon
revenues, partially offset by a 1.1% decline in Logicalis.
North America generated 32% of Datatec’s revenues (FY14: 27%) and 25% of gross profits (FY14: 23%) mainly
due to a strong performance in Westcon North America.
Revenue % contribution by geography
FY15 FY14
North America 32% 27%
Latin America 17% 18%
Europe 32% 34%
Asia-Pacific 9% 11%
Africa & Middle East (AME) 10% 10%
100% 100%
Gross profit % contribution by geography
FY15 FY14
North America 25% 23%
Latin America 25% 25%
Europe 31% 33%
Asia-Pacific 10% 11%
Africa & Middle East (AME) 9% 8%
100% 100%
Group gross margins were marginally lower at 14.5% (FY14: 14.8%) due to the increased contribution of
Westcon to overall revenues. Gross profit increased by 10.9% to $932.9 million (FY14: $841.4 million)
while operating costs grew, as expected by 9.1% to $726.5 million (FY14: $666.1 million).
EBITDA increased by 17.7% to $206.4 million (FY14: $175.3 million), which includes unrealised foreign
exchange gains of $1.0 million (FY14: $3.4 million loss).
The Group’s EBITDA margin of 3.2% was up slightly (FY14: 3.1%) due to operating leverage and increased
efficiency across all divisions. Depreciation was $26.3 million (FY14: $26.4 million).
Amortisation of acquired intangible assets and software was $15.2 million (FY14: $15.1 million) and
amortisation of capitalised development expenditure was $7.2 million (FY14: $6.3 million). Depreciation
and amortisation includes a favourable impact arising from a revision of the amortisation period of the ERP
system to terminate two years later than originally estimated.
Operating profit was up 29.2% to $157.8 million (FY14: $122.1 million).
The net interest charge decreased to $17.6 million (FY14: $21.6 million) mainly as a result of improved
working capital management that led to reduced levels of average net debt during FY15.
Profit before tax was $140.2 million (FY14: $101.8 million).
The Group’s reported effective tax rate for FY15 is 36.8% (FY14: 36.8%). This 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.
Underlying* earnings per share (“UEPS”) were up 17.1% to 41.8 US cents (FY14: 35.7 US cents). Headline
earnings per share (“HEPS”) were 37.0 US cents (FY14: 31.6 US cents).
The Group generated $186.2 million cash from operations during FY15 (FY14: $32.2 million) and ended the
year with net debt of $87.1 million (FY14: net debt $86.7 million), taking into account long-term debt
of $21.6 million and short-term debt of $43.5 million, included in payables and provisions. The Group
continues to enjoy comfortable headroom in its working capital facilities.
During FY15 the Group completed the following transactions:
• 30 August 2014 - Westcon acquired the assets of Verecloud, Inc. (“Verecloud”), for $12.0 million
(including $1.0 million deferred purchase consideration);
• 1 September 2014 - Logicalis acquired a 51% shareholding in ITUMA GmbH (“Ituma”) for $1.4 million;
• 2 January 2015 - Logicalis acquired a 100% shareholding in inforsacom Holding GmbH (“Inforsacom”)
for $17.3 million; and
• December 2014 and January 2015 - Logicalis increased its holding in PromonLogicalis Latin America
Limited from 60% to 65%.
The fair value of companies acquired during the year was $30.0 million. As a result of the acquisitions,
goodwill and intangible assets increased by $24.4 million and $10.4 million respectively. The revenue
and EBITDA included from these acquisitions in FY15 was $21.9 million and $0.6 million, respectively.
Had the acquisition dates been 1 March 2014, revenue attributable to these acquisitions would have
been approximately $138.8 million. It is not practical to establish the EBITDA that would have been
contributed by the acquisitions in FY15 if they had been included for the entire year. An assessment
of the fair value of assets acquired across all acquisitions made by the Group, Inforsacom being the
largest component, is set out in a table below.
There is both a put and call option (level 2 financial instruments) for Datatec to purchase all the
shares held by the management shareholders in Comztek Holdings (Pty) Ltd at a defined strike price. During FY15
a fair value adjustment of $0.3 million was charged to the statement of comprehensive income and the
closing balance included in amounts due to vendors is $1.8 million. This was valued using a
discounted cash flow valuation.
The Group issued 6.5 million new shares during the year: 4.4 million shares as part of acquisition
activities; 2.0 million shares for the FY15 interim scrip distribution; and 0.1 million shares to
satisfy exercised share options.
The Group paid $33.3 million to shareholders during the year: a final capital distribution in
respect of FY14 of $17.2 million in July 2014 and an interim scrip distribution with cash
dividend alternative in respect of FY15 in November 2014.
The total value returned to shareholders in the FY15 interim distribution was $16.1 million of
which $10.0 million (61.8%) was distributed to shareholders in the form of scrip (new shares)
and $6.1 million (38.2%) was settled in cash to those shareholders who had elected the cash
dividend alternative.
A final scrip distribution with cash dividend alternative for FY15 has been declared as set out
below.
Losses of $67.8 million (FY14: $48.3 million) arising on translation to presentation currency
are included in comprehensive income of $17.1 million (FY14: $24.9 million).
DIVISIONAL REVIEWS
Contribution to Group revenue
FY15 FY14
Westcon 75% 72%
Logicalis 24% 27%
Consulting Services 1% 1%
100% 100%
Contribution to Group EBITDA
FY15 FY14
Westcon 56% 50%
Logicalis 43% 49%
Consulting Services 1% 1%
100% 100%
Westcon
Westcon accounted for 75% of the Group's revenues (FY14:72%) and 56% of its EBITDA (FY14: 50%).
Westcon is a value added distributor of category-leading unified communications, network
infrastructure, data centre and security solutions with a global network of specialty resellers.
The division goes to market under the Comstor and Westcon brands.
Westcon’s operations are located in more than 60 countries and create unique programmes and provide
support to accelerate the business of its global partners. Westcon’s portfolio of market-leading
vendors includes: Cisco, Avaya, Polycom, Juniper, Check Point, F5, Palo Alto and Blue Coat.
Revenues increased by 19.4% to $4.9 billion (FY14: $4.1 billion). Most notably revenues improved
in North America where sales increased 41.9% through a return to efficient execution following
the resolution of post-ERP confronts in that region.
Westcon revenue: % geographic split
FY15 FY14
North America 34% 29%
Latin America 12% 11%
Europe 32% 35%
Asia Pacific 10% 12%
AME 12% 13%
100% 100%
Westcon revenue: % by product category
FY15 FY14
Cisco 46% 47%
Unified Communications 21% 22%
Security 25% 22%
Data Centre and Other 8% 9%
100% 100%
Gross margins were 11.2% (FY14: 11.2%) with higher margins across all regions except Europe which
was impacted by lower profit from maintenance and renewal sales. Gross profit increased by 19.6%
to $542.2 million (FY14: $453.4 million).
Operating expenses increased by 15.2% to $417.1 million (FY14: $362.1 million) while operating
expenses as a proportion of revenue decreased to 8.6% (FY14: 8.9%).
EBITDA was up 37.0% to $125.1 million (FY14: $91.3 million) with increased results in North America,
Latin America and AME while EBITDA margins were 2.6% (FY14: 2.3%), with increased margins across
all territories except Europe.
Operating profit was $100.2 million (FY14: $62.0 million).
Net working capital days decreased to 27 days (FY14: 35 days) resulting in a decrease of $29.6
million in net debt to $165.2 million.
Of the $14.8 million capitalised development expenditure in FY15, the majority is attributable to
the ERP system transition.
In April 2014, Westcon established its Services Solution Practice followed by the transfer of Intact
Integrated Services Limited and Intact Integrated Services GmbH from Consulting Services in July 2014.
Services include project, support and managed services to the ICT and Cisco channel industry. Growing
Westcon’s services is a strategic priority for the business.
In August 2014, Westcon acquired the assets of Verecloud, a developer of an advanced distribution
platform for cloud and services solutions. The platform is being incorporated into Westcon’s Cloud
Solution Practice and will help resellers drive significant revenue from cloud-enabled services.
Westcon also continued globalisation of core vendor relationships, including Palo Alto Networks.
The expanded partnership opens new markets for the industry’s fastest-growing enterprise security
platform, permitting resellers to leverage highly integrated global distribution capabilities.
Westcon’s management remains focused on improving operational efficiency through the global roll-out
of its ERP system, with implementation in New Zealand, Singapore and Australia during FY15.
The roll-out is expected to continue in FY16, in conjunction with further operational efficiency measures.
Logicalis
Logicalis accounted for 24% of the Group's revenues (FY14: 27%) and 43% of its EBITDA (FY14: 49%).
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 solutions and managed services.
Logicalis revenue % geographic split
FY15 FY14
North America 25% 25%
Latin America 36% 35%
Europe 31% 31%
Asia Pacific 8 % 9%
100% 100%
Revenue was $1.5 billion (FY14: $1.6 billion), including $21.9 million of revenue from the
acquisitions made during the year. Organic revenue was down 3%. This reduction reflected lower
product sales (down 4.9% year-on-year) across the main vendor categories, Cisco, IBM and HP, and
only partially offset by increases in other vendor categories.
Revenues from total services were up 7.9%, with increases in both professional services and
annuity service revenues. This change reflects customers’ increasing shift towards, and Logicalis’
response to, services-based solutions.
Revenues were sequentially 14.7% higher in the second half driven by higher professional services
and product revenues (and up 4.6% on the second half of FY14).
Revenue growth for the year was mixed across the regions with marginal increases in North and
Latin America offset by Asia-Pacific, which was adversely impacted by difficult trading conditions
in Australia and a weakening in the macroeconomic environment. In Europe, the UK results were
significantly impacted by the loss of a long-term contract with the Welsh Assembly Government.
The strengthening of the US dollar against the Brazilian Real in particular and continued import
restrictions in Argentina continued to moderate revenue growth expectations.
Gross margins increased to 24.2% (FY14: 23.3%). Overall service margins were down slightly but
product margins were up on better transaction margins. Gross profit was up 3% to $371.6 million
(FY14: $360.9 million) and operating expenses increased by 1%.
EBITDA increased 7.4% to $97.0 million (FY14: $90.3 million), reflecting an improved EBITDA margin
of 6.3% (FY14: 5.8%).
Operating profit was up 9.9% to $74.2 million (FY14: $67.5 million), driven primarily by a much
improved performance in the Southern Cone region of Latin America.
Net working capital days improved, despite an increase in days sales outstanding. This reflects
a change in customer mix. Approximately $35.0 million of cash was deployed in corporate finance
investment activities. In September 2014, Logicalis acquired a 51% shareholding in Ituma, a
speciality software developer based in Germany which is focused on Wi-Fi enabled-services such
as in-location navigation, product and service offerings access, product promotions and analytics.
In January 2015 Logicalis acquired Inforsacom, a German provider of database, storage and
infrastructure solutions and services with operations across the major economic centres of Germany.
The acquisition will significantly enhance Logicalis’ scale and capabilities in the German IT
market.
Logicalis continues to have a contingent liability in respect of a possible tax liability at its
PromonLogicalis subsidiary in Brazil.
The ICT market is adjusting to a transition to cloud-based infrastructure solutions. Logicalis
continues to adapt its go-to-market model and develop its services to address this change.
Logicalis UK is going through a reorganisation pursuant to the completion of a major seven-year
contract.
Consulting Services
The Consulting Services division accounted for 1% of Group revenues (FY14: 1%) and 1% of EBITDA
(FY14: 1%).
The Consulting Services division comprises Analysys Mason, a provider of strategic, trusted advisory,
modelling and market intelligence services to the telecoms, IT and digital media industries; Mason
Advisory (“Mason”), an independent and impartial IT consultancy providing related strategic,
technical and operational advice to the public and private sectors; and The Via Group (“Via”), a
specialist professional services organisation providing unified communications and integrated
voice solutions that encompass Microsoft technology. Intact Integrated Services was transferred
to Westcon in July 2014.
Despite strong demand from projects originating in Latin America for Analysys Mason, most regions
experienced significant sales pressure resulting in reduced revenues. Mason, following its
incorporation, performed well, but had a challenging fourth quarter due to sales pressure earlier
in the year. Via has experienced a modest increase in sales.
Divisional revenues were $55.2 million (FY14: $72.6 million). EBITDA has improved to $3.2 million
(FY14: $2.1 million) due to the transfer of Intact to Westcon, operating improvements at Via and
cost saving initiatives. The FY14 comparatives include Intact revenues of $15.4 million and
EBITDA loss of $1.6 million. From FY15, Intact is included in the Westcon results.
The current sales pipeline indicates that the good demand for Latin American-based projects is
expected to continue into FY16.
Corporate
Corporate encompasses the net operating costs of the Datatec head office entities of $19.6 million
(FY14: $13.2 million), including share-based payments, and net foreign exchange gains of $0.6 million
(FY14: $4.7 million). Included in Corporate operating costs is expenditure associated with the
start-up of Datatec Financial Services which is developing financing/leasing solutions for ICT
customers. Other than the significant movements in foreign exchange, head office costs are higher
than in FY14 due to additional employee costs and corporate finance expenses.
SUBSEQUENT EVENTS
There are no material subsequent events to report. On 6 May 2015 Logicalis acquired Trovus, a small
UK Business Intelligence consultancy, which provides business insight solutions, professional
services and managed services to large enterprise clients.
CURRENT TRADING AND PROSPECTS
The Group remains well positioned to support its vendors and customers through its scale and broad
international coverage. Technology innovation remains high in the sectors in which the Group
operates as IT infrastructure migrates to cloud-based delivery, often requiring managed services.
This continues to create demand for networking, security, mobility and unified communications
solutions.
The shift to cloud-based solutions is impacting the timing of product revenue recognition as
infrastructure is delivered as a service. This is also changing competition in some market
segments. Westcon and Logicalis are capitalising on these trends through continued vendor and
customer alignment and innovation.
The Board has decided to discontinue specific forward guidance due to, inter alia, the size and
diversification of the business today as well as the volatility of the multiple currencies in
which the Group operates.
Based on market conditions, revenue growth will be driven by industry trends, market share expansion,
exploiting new technology solutions and the continuing increase in services. Datatec expects
earnings to be positively impacted by the growth momentum at Westcon offset by reorganisation
in Logicalis UK and continued dollar strength.
The performance in FY16 to date is in line with the Board’s expectations.
SCRIP DISTRIBUTION AND CASH DIVIDEND ALTERNATIVE
Notice is hereby given that the Board has declared a final distribution for the year ended 28 February 2015,
by way of the issue of fully-paid Datatec ordinary shares of one cent each (“the Scrip Distribution”) payable
to ordinary shareholders (“Shareholders”) recorded in the register of the Company at the close of business on
the Record Date, being Friday, 17 July 2015.
Shareholders will be entitled, in respect of all or part of their shareholding, to elect to receive a gross
cash dividend of 108 RSA cents per ordinary share in lieu of the Scrip Distribution, which will be paid
only to those Shareholders who elect to receive the cash dividend, in respect of all or part of their
shareholding, on or before 12h00 on Friday, 17 July 2015. (“the Cash Dividend”). The Cash Dividend has been
declared from income reserves. A dividend withholding tax of 15% will be applicable to all shareholders not
exempt therefrom after deduction of which the net Cash Dividend is 91.8 RSA cents per share.
The new ordinary shares will, pursuant to the Scrip Distribution, be settled by way of capitalisation of the
Company’s distributable retained profits.
The Company’s total number of issued ordinary shares as at 13 May 2015 is 203 614 644. Datatec’s income tax
reference number is 9999/493/71/2.
1.Terms of the Scrip Distribution
The number of Scrip Distribution shares to which each of the Shareholders will become entitled pursuant to
the Scrip Distribution (to the extent that such Shareholders have not elected to receive the Cash Dividend)
will be determined by reference to such Shareholder’s ordinary shareholding in Datatec (at the close of
business on the Record Date, being Friday, 17 July 2015) in relation to the ratio that 108 RSA cents
bears to the volume weighted average price (“VWAP”) of an ordinary Datatec share traded on the JSE during
the 30-day trading period ending on Thursday, 2 July 2015. Where the application of this ratio gives rise
to a fraction of an ordinary share, the number of shares will be rounded up to the nearest whole number
if the fraction is 0.5 or more and rounded down to the nearest whole number if the fraction is less than
0.5.
Details of the ratio will be announced on the Stock Exchange News Service (“SENS”) of the JSE in accordance
with the timetable below.
2.Circular and salient dates
A circular providing shareholders with full information on the Scrip Distribution and the Cash Dividend
alternative including a Form of Election to elect to receive the Cash Dividend alternative will be posted
to Shareholders on or about Friday, 19 June 2015. The salient dates of events thereafter are as follows:
EVENT 2015
Announcement released on SENS in respect of the ratio applicable to the
Scrip Distribution, based on the 30-day volume weighted average price
ending on Thursday, 2 July 2015 Friday, 3 July
Announcement published in the press of the ratio applicable to the
Scrip Distribution as above Monday, 6 July
Last day to trade in order to be eligible for the Scrip Distribution and the
Cash Dividend alternative Friday, 10 July
Ordinary shares trade “ex” the Scrip Distribution and the Cash
Dividend alternative Monday, 13 July
Last day to elect to receive the Cash Dividend alternative instead of the
Scrip Distribution, Forms of Election to reach the Transfer Secretaries
by 12h00 (11h00 UK time) Friday, 17 July
Record Date in respect of the Scrip Distribution and the Cash
Dividend alternative Friday, 17 July
Cash Dividend payments made and Scrip Distribution shares issued
to shareholders on the South African register and Scrip Distribution,
certificates posted and CSDP/broker accounts credited/updated,
as applicable Monday, 20 July
Cash Dividend payments made by BACS (direct credit) to shareholders
on the Jersey register, Scrip Distribution shares and depositary interests
issued to shareholders on the Jersey register, CREST accounts credited
with the new Scrip Distribution shares and depositary interests,
as applicable Monday, 20 July
Announcement relating to the results of the Scrip Distribution and
the Cash Dividend alternative released on SENS Monday, 20 July
Announcement relating to the results of the Scrip Distribution and
the Cash Dividend alternative published in the press Tuesday, 21 July
All times provided are South African local times. The above dates and times are subject to change. Any
change will be announced on SENS.
Share certificates may not be dematerialised or rematerialised, nor may transfers between registers take
place, between Monday, 13 July 2015 and Friday, 17 July 2015, both days inclusive.
REPORTING
The provisional summarised consolidated financial statements are prepared in accordance with the framework
concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS),
the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, the Financial Reporting
Pronouncements as issued by the Financial Reporting Standards Council, as well as the requirements of the
Companies Act of South Africa and the JSE Limited’s Listings Requirements applicable for provisional reports.
The summarised consolidated financial statements also contain the minimum requirements of IAS34 - Interim
Financial Reporting.
The accounting policies are in terms of IFRS and consistent with those applied in the financial statements
for FY14, except for the adoption of various amendments to accounting standards in FY15.
The Group adopted the following amendments to accounting standards. The adoption of these amendments did not
have a material impact on the Group annual financial statements.
• IAS 32 Financial Instruments: Presentation (effective for accounting periods beginning on or after
1 January 2014)
• IAS 39 Financial Instruments: Recognition and Measurement (effective for accounting periods beginning on
or after 1 January 2014)
The summarised financial information has been correctly extracted from the underlying audited consolidated
financial statements. The preparation of these summarised financial statements for FY15 was supervised by the
Chief Financial Officer, Mr Jurgens Myburgh.
The consolidated financial statements from which the summarised consolidated financial statements have been
extracted have been audited by the Company’s auditors, Deloitte & Touche. The consolidated financial statements
and the auditor’s unmodified report on the consolidated and separate financial statements as well as the
auditor’s unmodified report on the summarised consolidated financial statements are available for inspection
at the Company’s registered office.
The auditor’s report does not necessarily report on all of the information contained in this announcement /
financial results. Shareholders are therefore advised that in order to obtain a full understanding of the
nature of the auditor’s engagement they should obtain a copy of that report together with the accompanying
financial information from the issuer’s registered office.
DISCLAIMER
This announcement may contain statements regarding the future financial performance of the Group which may
be considered to be forward-looking statements. By their nature, forward-looking statements involve risk
and uncertainty, and although the Group has taken reasonable care to ensure the accuracy of the information
presented, no assurance can be given that such expectations will prove to have been correct.
The Group has attempted to identify important factors that could cause actual actions, events or results to
differ materially from those described in forward-looking statements, there may be other factors that cause
actions, events or results not to be as anticipated, estimated or intended. It is important to note, that:
(i) unless otherwise indicated, forward-looking statements indicate the Group’s expectations and have not
been reviewed or reported on by the Group’s external auditors;
(ii) actual results may differ materially from the Group’s expectations if known and unknown risks or
uncertainties affect its business, or if estimates or assumptions prove inaccurate;
(iii)the Group cannot guarantee that any forward-looking statement will materialise and, accordingly,
readers are cautioned not to place undue reliance on these forward-looking statements; and
(iv) the Group disclaims any intention and assumes no obligation to update or revise any forward-looking
statement even if new information becomes available, as a result of future events or for any other
reason, other than as required by the JSE Limited Listings Requirements.
On behalf of the Board:
SJ Davidson JP Montanana PJ Myburgh
Chairman Chief Executive Officer Chief Financial Officer
13 May 2015
*Excluding impairment of goodwill and intangible assets, profit or loss on sale of investments and assets,
amortisation of acquired intangible assets, unrealised foreign exchange movements, acquisition-related
adjustments, fair value movements on acquisition-related financial instruments and the taxation effect on
all of the aforementioned
Summarised consolidated statement of comprehensive income
for the year ended 28 February 2015
US$’000 Audited Audited
Year ended Year ended
February 2015 February 2014
Revenue 6 443 536 5 688 054
Existing operations 6 421 646 5 464 474
Acquisitions 21 890 223 580
Cost of sales (5 510 605) (4 846 618)
Gross profit 932 931 841 436
Operating costs (716 454) (660 624)
Share-based payments (10 084) (5 547)
Operating profit before interest, tax, depreciation and
amortisation (“EBITDA”) 206 393 175 265
Depreciation (26 256) (26 360)
Amortisation of capitalised software development expenditure (7 216) (6 309)
Amortisation of acquired intangible assets and software (15 163) (15 066)
Intangible impairment - (5 473)
Operating profit 157 758 122 057
Interest income 4 324 3 580
Finance costs (21 930) (25 168)
Share of equity-accounted investment earnings 450 441
Acquisition-related fair value adjustments (317) 2 400
Fair value movements on put option liabilities (317) 2 421
Fair value adjustment on deferred purchase consideration - (21)
Other income 14 264
Loss on disposal of investments and subsidiary company (137) (1 778)
Profit before taxation 140 162 101 796
Taxation (51 534) (37 496)
Profit for the year 88 628 64 300
Other comprehensive income
Items that may be reclassified subsequently to profit and loss
Exchange differences arising on translation to
presentation currency (67 757) (48 271)
Translation difference on equity loans (5 279) 12 700
Tax effect of equity loans translation 1 480 (3 301)
Transfers and other items 41 (566)
Total comprehensive income for the year 17 113 24 862
Profit attributable to:
Owners of the parent 73 772 55 780
Non-controlling interests 14 856 8 520
88 628 64 300
Total comprehensive income attributable to:
Owners of the parent 11 014 22 882
Non-controlling interests 6 099 1 980
17 113 24 862
Number of shares issued (millions)
Issued 204 197
Weighted average 199 197
Diluted weighted average 200 198
Earnings per share (“EPS”) (US cents)
Basic 37.1 28.4
Diluted basic 36.9 28.2
SALIENT FINANCIAL FEATURES
Headline earnings 73 674 62 083
Headline earnings per share (US cents)
Headline 37.0 31.6
Diluted headline 36.9 31.3
Underlying earnings 83 131 70 165
Underlying earnings per share (US cents)
Underlying 41.8 35.7
Diluted underlying 41.6 35.4
Net asset value per share (US cents) 427.8 442.1
KEY RATIOS
Gross margin (%) 14.5 14.8
EBITDA (%) 3.2 3.1
Effective tax rate (%) 36.8 36.8
Normalised effective tax rate (%) 36.6 37.1
Exchange rates
Average Rand/US$ exchange rate 11.0 10.1
Closing Rand/US$ exchange rate 11.7 10.7
Summarised consolidated statement of financial position
as at 28 February 2015
US$’000 Audited Audited
Year ended Year ended
February 2015 February 2014
ASSETS
Non-current assets 701 809 673 650
Property, plant and equipment 73 328 65 282
Goodwill 450 884 438 198
Capitalised software development expenditure 49 573 45 099
Acquired intangible assets and software 45 854 53 664
Investments 6 342 7 054
Deferred tax assets 54 555 53 909
Other receivables 21 273 10 444
Current assets 2 572 773 2 318 374
Inventories 442 612 432 594
Trade receivables 1 532 820 1 312 771
Current tax asset 15 626 14 197
Prepaid expenses and other receivables 215 585 180 144
Cash and cash equivalents 366 130 378 668
Total assets 3 274 582 2 992 024
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent 870 850 871 617
Share capital and premium 126 886 122 936
Non-distributable reserves 50 179 49 697
Foreign currency translation reserve (105 307) (40 989)
Share-based payment reserve 739 (351)
Distributable reserves 798 353 740 324
Non-controlling interest 41 599 52 868
Total equity 912 449 924 485
Non-current liabilities 103 710 94 131
Long-term liabilities 21 555 17 359
Liability for share-based payments 9 848 7 501
Amounts owing to vendors 1 842 2 447
Deferred tax liabilities 69 833 66 052
Other liabilities 632 772
Current liabilities 2 258 423 1 973 408
Trade and other payables 1 795 783 1 490 238
Short-term interest-bearing liabilities 43 468 27 611
Provisions 13 979 13 416
Amounts owing to vendors 2 750 7 497
Current tax liabilities 14 212 14 208
Bank overdrafts 388 231 420 438
Total equity and liabilities 3 274 582 2 992 024
Capital expenditure incurred in the current year
(including capitalised development expenditure) 51 104 43 528
Capital commitments at the end of the year 33 909 20 422
Lease commitments at the end of the year 153 258 129 966
Payable within one year 34 348 32 319
Payable after one year 118 910 97 647
Summarised consolidated statement of cash flows
for the year ended 28 February 2015
US$’000 Audited Audited
Year ended Year ended
February 2015 February 2014
Operating profit before working capital changes 215 346 183 437
Working capital changes (29 147) (151 210)
Increase in inventories (32 038) (82 917)
Increase in receivables (324 540) (150 710)
Increase in payables 327 431 82 417
Cash generated from operations 186 199 32 227
Net finance costs paid (17 606) (21 588)
Taxation paid (53 193) (45 073)
Net cash inflows/(outflows) from operating activities 115 400 (34 434)
Cash outflows for acquisitions (1 979) (16 544)
Net cash outflows from other investing activities (49 498) (42 583)
Net cash inflows from other financing activities 13 500 19 563
Capital distributions and dividends (49 525) (35 921)
Net increase/(decrease) in cash and cash equivalents 27 898 (109 919)
Cash and cash equivalents at the beginning of the year (41 770) 73 316
Translation differences on opening cash position (8 229) (5 167)
Cash and cash equivalents at the end of the year* (22 101) (41 770)
*Comprises cash resources, net of bank overdrafts and trade finance advances.
Summarised consolidated statement of changes in total equity
for the year ended 28 February 2015
US$’000 Audited Audited
Year ended Year ended
February 2015 February 2014
Balance at the beginning of the year 924 485 917 011
Total comprehensive income 17 113 24 862
New share issues 31 076 22 546
Capital distributions (17 226) (31 594)
Dividend (16 060) -
Equity-settled deferred purchase consideration - (3 333)
Share-based payments 1 855 (109)
Derecognition of put option liability - 131
Recognition of put option liability - (1 864)
Other - (201)
Acquisitions (10 623) (2 009)
Disposals (803) (265)
Non-controlling interest (17 368) (690)
Balance at the end of the year 912 449 924 485
Determination of headline and underlying earnings
for the year ended 28 February 2015
US$’000 Audited Audited
Year ended Year ended
February 2015 February 2014
Profit attributable to the equity holders of the parent 73 772 55 780
Headline earnings adjustments (98) 6 303
Intangible impairment - 5 473
(Profit)/loss on disposal of investment (106) 1 844
Loss on disposal of property, plant and equipment 36 -
Tax effect (18) (1 013)
Non-controlling interest (10) (1)
Headline earnings 73 674 62 083
DETERMINATION OF UNDERLYING EARNINGS
Underlying earnings adjustments 13 009 14 411
Unrealised foreign exchange (gains)/losses (1 012) 3 443
Acquisition-related fair value adjustments 317 (2 400)
Amortisation of acquired intangible assets 13 704 13 368
Tax effect (3 546) (6 406)
Non-controlling interest (6) 77
Underlying earnings 83 131 70 165
Summarised Segmental analysis
for the year ended 28 February 2015
US$’000 Audited Audited
Year ended Year ended
February 2015 February 2014
Revenue
Westcon 4 854 507 4 065 112
Logicalis 1 533 777 1 550 322
Consulting Services 55 242 72 620
Corporate 10 -
Revenue 6 443 536 5 688 054
EBITDA
Westcon 125 141 91 301
Logicalis 97 039 90 318
Consulting Services 3 158 2 094
Corporate (18 945) (8 448)
EBITDA 206 393 175 265
Operating profit
Westcon 100 207 61 974
Logicalis 74 165 67 523
Consulting Services 2 362 1 041
Corporate (18 976) (8 481)
Operating profit 157 758 122 057
Total assets
Westcon 2 289 764 2 036 245
Logicalis 920 295 886 131
Consulting Services 39 694 53 258
Corporate 24 829 16 390
Total assets 3 274 582 2 992 024
Total liabilities
Westcon (1 690 252) (1 443 233)
Logicalis (641 932) (585 037)
Consulting Services (12 702) (22 167)
Corporate (17 247) (17 102)
Total liabilities (2 362 133) (2 067 539)
Intact’s results are included in Consulting Services’ results in FY14; but in Westcon’s results in FY15.
The following table sets out the assessment of the fair value of assets acquired across all acquisitions
made by the Group; Inforsacom is the largest component of this.
Acquisitions made in FY15
Assets acquired US$’000
Non-current assets 677
Current assets 49 880
Non-current liabilities (5 022)
Current liabilities (50 273)
Net liabilities acquired (4 738)
Intangible assets 10 418
Goodwill 24 378
Non-controlling interest (77)
Fair value of acquisitions 29 981
Purchase consideration
Issue of Datatec shares 17 942
Amounts due to vendor 1 000
Cash 11 039
Total consideration 29 981
Cash outflows for acquisitions
Cash and cash equivalents acquired 9 060
Cash consideration paid (11 039)
Net cash outflow for acquisitions (1 979)
Enquiries:
Jens Montanana - Chief Executive Officer +44 (0) 1753 797118
Jurgens Myburgh - Chief Financial Officer +27 (0) 11 233 3301
Wilna de Villiers - Group Investor Relations Manager +27 (0) 11 233 1013
Jefferies International Limited - Nominated Advisor and Broker
Nick Adams/Alex Collins +44 (0) 20 7029 8000
finnCap - Broker
Instinctif Partners
Adrian Duffield/Chantal Woolcock (UK) +44 (0) 20 7457 2020
Frederic Cornet (SA) +27 (0) 11 447 3030
Directors:
SJ Davidson#^ (Chairman), JP Montanana^ (CEO), PJ Myburgh (CFO), RP Evans^,
O Ighodaro#*, JF McCartney#+, LW Nkuhlu#, CS Seabrooke#, NJ Temple#^
#Non-executive ^British +American *Nigerian
Datatec Limited (www.datatec.com)
Sponsor:
Rand Merchant Bank (a division of FirstRand Bank Limited),
1 Merchant Place, Corner Fredman Drive
and Rivonia Road, Sandton
13 May 2015
Date: 13/05/2015 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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