DTC 201510210002A
Unaudited results for the six months ended 31 August 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 Limited (“Datatec” or the “Group”, JSE and LSE: DTC), the international information and communications
technology (ICT) group, is today publishing its unaudited results for the six months ended 31 August 2015
(“the Period” or “H1 FY16”).
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2015, DECLARATION OF SCRIP DISTRIBUTION
WITH CASH ALTERNATIVE
Financial Results
• Group revenue up 10.1% to $3.3 billion (H1 FY15: $3.0 billion)
• EBITDA at $80.6 million (H1 FY15: $90.1 million)
• Underlying* earnings per share 16.6 US cents (H1 FY15: 18.2 US cents)
• Interim distribution maintained at 8 US cents per share (H1 FY15: 8 US cents)
Group performance
• Good revenue growth driven by Westcon North America
• Decline in contribution from emerging markets
• Profitability impacted by foreign exchange losses, reorganisation and BPO project
Current trading and prospects
• Continued revenue growth
• On-going reorganisation at Logicalis UK and BPO transformation in Westcon EMEA
• Expecting second half sequential improvement in EBITDA (excluding foreign exchange)
• Targeted acquisitions in strategic markets
Jens Montanana, Chief Executive of Datatec, commented:
“We continue to deliver revenue growth from a sound base of diversified businesses and geographies. North America
was the primary contributor to this growth in H1 FY16.
“The strong US dollar impacted the revenue and earnings contribution of emerging markets. The impact of foreign
exchange losses at Westcon Angola was particularly disappointing.
“The restructuring of Westcon’s EMEA region through business process outsourcing and the reorganisation of
Logicalis’ UK business are important internal initiatives that will affect profitability in FY16 but position these
units for better performance in the future.
“We remain confident of our positioning in the ICT market and are pleased with the continued development of the
Datatec Financial Services division in our portfolio.”
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’s strategy is to deliver long-term, sustainable and above average returns to shareholders through portfolio
management and the development of its principal subsidiaries in technology solutions and services to targeted customers
in identified markets.
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: strategic and technical consulting.
A fourth division, Datatec Financial Services, is continuing its development through proof of concept to business model
and growth prospects. For FY16 it will remain included in the “Corporate” sector of the business which encompasses the
costs of the Group’s head office entities.
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.
GROUP RESULTS
For the six months ended 31 August 2015, Datatec delivered good revenue growth, offset by a reduction in gross margins
and foreign exchange losses, particularly in Angola. As a result, underlying earnings per share decreased by 8.8% to 16.6
US cents compared to 18.2 US cents in the prior financial period (“H1 FY15”).
Westcon performed strongly throughout H1 FY16 and delivered good revenue growth, notably 31.5% in North America. The
division’s profitability was affected by emerging market currency weakness, lower gross margins, foreign exchange losses
and restructuring and BPO transformation of Westcon’s Europe, Middle East and Africa (EMEA) operations, offset by savings
in operating costs.
Logicalis’ growth in revenue in H1 FY16 was driven by a strong performance in the US and the impact of the acquisition
in H2 FY15 of inforsacom Holding GmbH (“Inforsacom”) in Germany. Lower annuity services revenue contribution and reduced
product margins led to lower gross margins. Logicalis continues its evolution into a services-orientated business as it
responds to growing cloud adoption of “Infrastructure as a Service” (IaaS) solutions. A reorganisation of its UK business
is underway post the completion of the long-term Welsh Assembly Government ("WAG") contract.
Revenue % contribution by division
H1 FY16 H1 FY15
Westcon 76% 75%
Logicalis 23% 24%
Consulting 1% 1%
100% 100%
Revenue % contribution by geography
H1 FY16 H1 FY15
North America 35% 30%
Latin America 14% 16%
Europe 32% 33%
Asia-Pacific 10% 11%
Africa & Middle East (AME) 9% 10%
100% 100%
Gross profit % contribution by geography
H1 FY16 H1 FY15(1)
North America 28% 24%
Latin America 22% 25%
Europe 32% 32%
Asia-Pacific 10% 11%
Africa & Middle East (AME) 8% 8%
100% 100%
(1) adjusted representation of Westcon freight out costs (see further below)
Group revenues increased 10.1% to $3.3 billion (H1 FY15: $3.0 billion) reflecting a 12.0% increase in Westcon revenues and
a 5.2% increase in Logicalis revenues. Organic revenue growth was 8.5% overall.
North America generated 35% of Datatec’s revenues (H1 FY15: 30%) and 28% of gross profits (H1 FY15: 24%) mainly due to the
strong performance of Westcon North America.
Group gross margins were 13.1% (H1 FY15: 15.0%). Group gross margins were impacted by: the increased contribution of
Westcon to overall revenues; changes in the mix of geographic contribution; and lower annuity services revenues at
Logicalis. From FY16 onwards, Westcon is disclosing outbound freight as part of cost of sales rather than operating costs
as this more appropriately matches the expense with corresponding revenues. Gross profit decreased by 3.6% to $430.2 million
(H1 FY15: $446.2 million). Adjusted for the reclassification of outbound freight costs, gross profit increased by
0.5% (adjusted H1 FY15: $428.0 million).
Contribution to Group EBITDA
H1 FY16 H1 FY15
Westcon 60% 57%
Logicalis 40% 42%
Consulting 0% 1%
100% 100%
Overall operating costs were $349.6 million (H1 FY15: $356.1 million). This reduction reflects the reclassification of
outbound freight costs and various cost saving initiatives offset by a $10.0 million increase in foreign exchange losses to
$10.6 million (H1 FY15: $0.6 million). Included in operating costs are total restructuring costs of $5.3 million, the
majority of which relates to Westcon EMEA’s BPO transformation.
EBITDA was $80.6 million (H1 FY15: $90.1 million) and the EBITDA margin of 2.5% was down (H1 FY15: 3.0%) reflecting the
lower gross margins, foreign exchange losses and restructuring costs.
Depreciation and amortisation were similar to the prior period and operating profit was 14.3% lower at $56.3 million
(H1 FY15: $65.7 million).
The net interest charge increased to $11.3 million (H1 FY15: $8.9 million) mainly as a result of increased net debt in
PromonLogicalis Brazil.
Profit before tax was $44.9 million (H1 FY15: $57.5 million).
The Group’s reported effective tax rate for H1 FY16 is 37.5% (H1 FY15: 33.5%). 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. The
increase from H1 FY15 reflects the increased proportion of profits earned in North America and unrecognised tax losses
in Angola.
Underlying* earnings per share (“UEPS”) were down 8.8% to 16.6 US cents (H1 FY15: 18.2 US cents). Headline earnings per
share (“HEPS”) were 12.0 US cents (H1 FY15: 16.0 US cents).
The Group generated $21.6 million cash from operations during H1 FY16 (H1 FY15: $204.5 million) and ended the period with
net debt of $145.8 million (H1 FY15: net cash $48.9 million) as a result of revenue growth and reduction in days payable
outstanding. The Group continues to enjoy comfortable headroom in its working capital facilities.
On 6 May 2015, Logicalis acquired 100% of the shares and voting rights of Trovus, a UK Business Intelligence consultancy,
which provides business insight solutions, professional services and managed services to large enterprise clients. The
acquisition will strengthen Logicalis’ Business Analytics and Information Management offering. The fair value of Trovus
was $2.2 million, with an initial cash consideration of $1.6 million and deferred cash consideration up to a maximum of
$0.6 million, split into three payments over three years. As a result of the acquisition, goodwill and intangible assets
increased by $1.4 million and $0.8 million respectively. The revenue and EBITDA included from this acquisition in H1
FY16 was $0.2 million and a loss of $0.1 million, respectively. Had the acquisition dates been 1 March 2015, revenue
attributable to this acquisition would have been approximately $0.4 million for H1 FY16. The acquisition had a negligible
effect on H1 FY16 earnings. The fair value assessment of assets and liabilities acquired and the amounts recognised as
goodwill and intangible assets in respect of the Trovus acquisition have only been determined provisionally due to the
timing of the acquisition and future amendments may impact classification in these asset categories.
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. This was valued using a discounted cash
flow valuation as at 28 February 2015. During H1 FY16, a foreign exchange movement of $0.2 million was recorded in the
statement of comprehensive income and the closing balance included in amounts due to vendors is $1.6 million.
During the period, the Group paid a final scrip distribution with cash dividend alternative in respect of FY15. The total
value returned to shareholders in the FY15 final distribution was $17.7 million of which $9.0 million (51.1%) was
distributed to shareholders in the form of scrip (1.7 million new shares issued) and $8.7 million (48.9%) was settled in
cash to those shareholders who had elected the cash dividend alternative.
The Board has maintained an interim scrip distribution with cash dividend alternative at 8 US cents (H1 FY15: 8 US cents)
details of which are set out below.
Losses of $44.7 million (H1 FY15: gain of $9.5 million) arising on translation to presentation currency are included in
total comprehensive loss of $16.8 million (H1 FY15: income of $46.7 million).
DIVISIONAL REVIEWS
Westcon
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 operates in more than 60 countries and creates unique programmes and provides 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.
Westcon revenue % by geography
H1 FY16 H1 FY15
North America 37% 31%
Latin America 9% 12%
Europe 33% 33%
Asia-Pacific 10% 11%
AME 11% 13%
100% 100%
Westcon revenue % by product category
H1 FY16 H1 FY15
Cisco 45% 44%
Unified Communications 19% 22%
Security 29% 25%
Data centre and Other 7% 9%
100% 100%
Westcon’s revenues increased by 12.0% to $2.5 billion (H1 FY15: $2.2 billion) with revenue growth across all regions
except Latin America where local currency growth was achieved but did not translate into US dollar growth.
Gross margins were 10.1% (H1 FY15: 11.5%) with the decrease in margin partly attributable to the reclassification of
outbound freight costs from operating expenses to cost of sales in H1 FY16 (discussed above). Adjusting H1 FY15 in a
similar manner results in a comparable H1 FY15 margin of 10.7% with the remaining year-on-year decrease attributable
to an unfavourable product and geographic mix as well as challenging trading conditions. Gross profit decreased by
1.5% to $253.7 million (H1 FY15: $257.5 million).
Adjusting H1 FY15 for the outbound freight cost reclassification results in a gross profit increase of 6.0% (adjusted
H1 FY15: $239.3 million).
Operating expenses were $201.4 million (H1 FY15: $201.8 million). Adjusting H1 FY15 for the impact of the freight
reclassification in a similar manner results in an adjusted H1 FY15 operating expense total of $183.6 million. The
underlying 10% increase in operating expenditure is due to a combination of higher headcount, $5.0 million of costs
associated with the EMEA transformation and $8.9 million of foreign exchange losses associated with the devaluation
of the Angolan Kwanza. Operating expenses as a proportion of revenue decreased to 8.0% (H1 FY15: 9.0%).
EBITDA decreased 6.1% to $52.3 million (H1 FY15: $55.7 million) with lower results in Latin America, Europe and AME
while EBITDA margins were 2.1% (H1 FY15: 2.5%), with lower margins in the same three regions. Operating profit was
$39.5 million (H1 FY15: $42.9 million).
Net working capital days increased to 28 days (H1 FY15: 21 days) driven by lower payable days. The combination of
increasing sales volumes and lower payable days resulted in an increase of $124.5 million in net debt to $158.6
million.
Of the $8.2 million capitalised development expenditure in H1 FY16, the majority is attributable to the SAP ERP
system transition.
Angola in recent years has been an important contributor to the AME region within Westcon. In FY15, revenue in the
country totalled $61.1 million. The weakened economic outlook for Angola mainly as a consequence of the fall in the
price of crude oil has led to a decline in the exchange rate of the Kwanza to the US Dollar. The National Bank of
Angola has instituted capital controls that render the timing and quantum of conversion from Kwanza to US Dollar
unpredictable. This has resulted in foreign exchange losses of $8.9 million in H1 FY16, of which $8.1 million has
been classified as realised. Management has instituted a series of actions to control the exposure and seek to
reduce further losses. Total current assets in Angola at 31 August 2015 were $43.2 million. The classification of
these losses as realised/unrealised will be re-evaluated at the end of the financial year. This reclassification
may have a positive effect on reported UEPS which excludes unrealised foreign exchange losses but will
have no effect on EPS and HEPS.
Westcon is in the process of implementing a restructuring and BPO transformation of its EMEA operations aimed at
delivering future improvements in operational efficiency. The scope of this project has now been finalised and will
include elements of the finance and operations functions, affecting approximately 300 full time employees. Total
costs in FY16 are expected to be approximately $13 million of which $5.0 million was incurred in H1 FY16. This
project will serve as a blueprint for scale and efficiency within the whole of Westcon going forward and is
expected to deliver a payback within three years.
The roll-out of SAP across Westcon Asia-Pacific has progressed well. The remaining few countries in Asia are
expected to go live in H1 FY17, with the EMEA roll-out planned for H2 FY17 which will now follow the BPO transformation.
Logicalis
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
H1 FY16 H1 FY15
North America 32% 27%
Latin America 29% 32%
Europe 31% 32%
Asia-Pacific 8% 9%
100% 100%
Revenue was $751.4 million (H1 FY15: $714.4 million), including $0.2 million of revenue from the acquisition made
during the Period, and $49.3 million of revenue from acquisitions made in H2 of FY15. Organic revenue was down 2%.
Product sales were up 11% with strong growth in the Cisco and HP vendor categories. Oracle revenue was also up due
to the Inforsacom acquisition in H2 FY15.
Revenue growth for H1 FY16 was mixed across the regions with strong increases in continental Europe and North America
offset by Latin America and Asia-Pacific, which were adversely impacted by difficult trading conditions in Brazil
and Australia respectively and a weakening in the macroeconomic environment. In Europe, the UK results were impacted
by the loss of the long-term WAG contract and the continuing reorganisation of the business.
Revenues from services were down 5%, with decreases in both professional and annuity services revenues due to the
completion of the WAG contract, weakening demand in Brazil and the strength of the impact of translation into
US Dollar reporting currency.
Gross margins were 22.5% (H1 FY15: 25.1%), impacted by a lower services contribution and lower product margins. Gross
profit was down 5.8% to $169.2 million (H1 FY15: $179.6 million) and operating expenses decreased by 3%.
EBITDA was $35.5 million (H1 FY15: $41.6 million), with a corresponding EBITDA margin of 4.7% (H1 FY15: 5.8%).
Operating profit was down 20.0% to $24.4 million (H1 FY15: $30.5 million).
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.
Consulting
The Consulting division comprises: Analysys Mason, a provider of strategic, trusted advisory, modelling and market
intelligence services to the telecoms, media and technology 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 voice solutions.
The division experienced a decline in revenues due to delayed projects and currency weakness. Operating profits have
fallen due to reduced revenues and the fixed cost base.
Divisional revenues were $23.7 million (H1 FY15: $27.8 million). EBITDA is negative at $(0.5) million (H1 FY15: $1.4
million). Analysys Mason and Mason have maintained a break-even EBITDA whilst Via has reported an EBITDA loss.
The division is focused on increasing sales and utilisation of its resources in order to improve operating margins.
Corporate
Corporate encompasses the net operating costs of the Datatec head office entities of $8.8 million (H1 FY15: $8.3
million), including share based payments, and a net foreign exchange gain of $2.0 million (H1 FY15: $0.3 million
loss). Included in Corporate operating costs is expenditure of $1.1 million associated with Datatec Financial Services
which is developing financing/leasing solutions for ICT customers.
SUBSEQUENT EVENTS
In September 2015, Logicalis completed the acquisition of Advanced Technology Integration Group, a solution provider
offering system integration and professional services to enterprise and commercial customers across the Midwest region
of the United States. The acquisition will consolidate Logicalis’ presence in the key Midwest region and present
significant cross-selling opportunities for its services offering. Its offering is highly complementary to Logicalis’.
The acquisition consideration of up to $42 million was settled with $18.5 million cash and the issue of 3.7 million new
Datatec shares worth $18.5 million as a vendor consideration placing with the remainder being deferred consideration
payable in cash on the achievement of certain gross margin targets.
On 5 October 2015, Logicalis acquired Lekscom Limited, a Channel Islands based provider of networking and collaboration
services to large enterprise and commercial 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 ICT infrastructure migrates
to cloud-based delivery, often requiring increased managed services. This creates demand for networking, security and
unified communications solutions.
Westcon North America is expected to continue its good revenue and earnings growth through the second half of the year.
Overall profitability will, however, continue to be impacted by restructuring in Westcon EMEA and reorganisation at
Logicalis UK as well as the continued weakness of emerging market currencies relative to the US Dollar.
Excluding the effect of foreign exchange, EBITDA is expected to show a sequential improvement in H2 FY16 compared to
H1 FY16.
SCRIP DISTRIBUTION AND CASH DIVIDEND ALTERNATIVE
1. Introduction
Notice is hereby given that the Board has declared an interim distribution for the six months ended 31 August 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 Datatec Limited ("the Company") at the close of
business on the record date, being Friday, 27 November 2015.
Shareholders will be entitled, in respect of all or part of their shareholding, to elect to receive a gross cash
dividend of 105 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
12:00 on Friday, 27 November 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 89.25 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 19 October 2015 is 208 983 794. Datatec’s income tax
reference number is 9999/493/71/2.
2. 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, 27 November 2015) in relation to the ratio that 105 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, 12 November 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.
3. 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 Thursday, 5 November 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, 12 November 2015 Friday, 13 November
Announcement published in the press of the ratio applicable to the Scrip
Distribution as above Monday, 16 November
Last day to trade in order to be eligible for the Scrip Distribution and the
Cash Dividend alternative Friday, 20 November
Ordinary shares trade “ex” the Scrip Distribution and the Cash Dividend
alternative Monday, 23 November
Maximum number of shares listed on the JSE Monday, 23 November
Last day to elect to receive the Cash Dividend alternative instead of the
Scrip Distribution, Forms of Election to reach the Transfer Secretaries
by 12:00 noon (10:00 UK time) Friday, 27 November
Record date in respect of the Scrip Distribution and the Cash Dividend
alternative Friday, 27 November
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, 30 November
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, 30 November
Announcement relating to the results of the Scrip Distribution and the Cash
Dividend alternative released on SENS Monday, 30 November
Announcement relating to the results of the Scrip Distribution and the
Cash Dividend alternative published in the press Tuesday, 1 December
JSE listing of ordinary shares in respect of the Scrip Distribution adjusted
to reflect the actual number of ordinary shares issued in terms of the Scrip
Distribution and AIM listing of the actual number of ordinary shares issued
in terms of the Scrip Distribution; at the commencement of business on or about Wednesday, 2 December
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, 23 November 2015 and Friday, 27 November 2015, both days inclusive.
REPORTING
The condensed consolidated interim financial statements have been prepared under the supervision of Jurgens Myburgh,
Chief Financial Officer, and in accordance with International Financial Reporting Standards, IAS 34 Interim Financial
Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, Financial
Pronouncements as issued by Financial Reporting Standards Council, the JSE Listing Requirements, the AIM Rules for
Companies, and the requirements of the South African Companies Act No 71 of 2008.
The accounting policies and methods of computation applied in the preparation of these interim financial statements
are in terms of International Financial Reporting Standards and are consistent with those accounting policies applied
in the preparation of the previous consolidated annual financial statements. The adoption of certain amendments to
existing standards did not have an impact on the accounting policies of the Group.
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 and/or the AIM Rules.
On behalf of the Board:
SJ Davidson
Chairman
JP Montanana
Chief Executive Officer
PJ Myburgh
Chief Financial Officer
21 October 2015
* Excluding impairment and write-off 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,
restructuring costs and the taxation effect on all of the aforementioned.
Condensed consolidated statement of comprehensive income
for the six months to 31 August 2015
US$’000 Unaudited Unaudited Audited
Six months to Six months to Year ended
31 August 31 August 28 February
2015 2014 2015
Revenue 3 285 932 2 983 592 6 443 536
Existing operations 3 285 688 2 983 592 6 421 646
Acquisitions 244 - 21 890
Cost of sales (2 855 719) (2 537 362) (5 510 605)
Gross profit 430 213 446 230 932 931
Operating costs (340 295) (350 731) (716 454)
Restructuring costs (5 261) - -
Share-based payments (4 087) (5 400) (10 084)
Operating profit before interest, tax, depreciation and
amortisation (“EBITDA”) 80 570 90 099 206 393
Depreciation (13 672) (12 855) (26 256)
Amortisation of capitalised software development expenditure (3 534) (4 076) (7 216)
Amortisation of acquired intangible assets and software (6 942) (7 465) (15 163)
Goodwill adjustment (81) - -
Operating profit 56 341 65 703 157 758
Interest income 2 088 2 422 4 324
Finance costs (13 349) (11 283) (21 930)
Share of equity-accounted investment earnings (150) 421 450
Acquisition-related fair value adjustments (14) 81 (317)
Fair value movements on put option liabilities - 81 (317)
Fair value adjustment on deferred purchase consideration (14) - -
Other income 13 106 14
Loss on disposal of investments - - (137)
Profit before taxation 44 929 57 450 140 162
Taxation (16 827) (19 246) (51 534)
Profit for the period 28 102 38 204 88 628
Other comprehensive income
Items that may be reclassified subsequently to profit and loss
Exchange differences arising on translation to
presentation currency (44 674) 9 548 (67 757)
Translation difference on equity loans (1 758) (347) (5 279)
Tax effect of equity loans translation 1 328 (150) 1 480
Transfers and other items 244 (513) 41
Total comprehensive (loss)/income for the year (16 758) 46 742 17 113
Profit attributable to:
Owners of the parent 24 384 31 476 73 772
Non-controlling interests 3 718 6 728 14 856
28 102 38 204 88 628
Total comprehensive (loss)/income attributable to:
Owners of the parent (13 975) 40 599 11 014
Non-controlling interests (2 783) 6 143 6 099
(16 758) 46 742 17 113
Number of shares issued (millions)
Issued 205 198 204
Weighted average 204 197 199
Diluted weighted average 206 198 200
Earnings per share (“EPS”) (US cents)
Basic 12.0 16.0 37.1
Diluted basic 11.9 15.9 36.9
SALIENT FINANCIAL FEATURES
Headline earnings 24 394 31 481 73 674
Headline earnings per share (US cents)
Headline 12.0 16.0 37.0
Diluted headline 11.9 15.9 36.9
Underlying earnings 33 877 35 816 83 131
Underlying earnings per share (US cents)
Underlying 16.6 18.2 41.8
Diluted underlying 16.5 18.1 41.6
Net asset value per share (US cents) 413.4 459.1 427.8
KEY RATIOS
Gross margin (%) 13.1 15.0 14.5
EBITDA (%) 2.5 3.0 3.2
Effective tax rate (%) 37.5 33.5 36.8
Exchange rates
Average Rand/US$ exchange rate 12.4 10.6 11.0
Closing Rand/US$ exchange rate 13.3 10.6 11.7
Condensed consolidated statement of financial position
as at 31 August 2015
US$’000 Unaudited Unaudited Audited
Six months to Six months to Year ended
31 August 31 August 28 February
2015 2014 2015
ASSETS
Non-current assets 705 165 680 680 701 809
Property, plant and equipment 73 317 68 803 73 328
Goodwill 447 269 450 214 450 884
Capitalised software development expenditure 53 195 44 058 49 573
Acquired intangible assets and software 40 222 46 666 45 854
Investments 6 412 7 475 6 342
Deferred tax assets 52 243 53 793 54 555
Other receivables 32 507 9 671 21 273
Current assets 2 526 313 2 503 050 2 572 773
Inventories 419 234 490 188 442 612
Trade receivables 1 478 930 1 404 600 1 532 820
Current tax asset 13 197 17 591 15 626
Prepaid expenses and other receivables 244 898 213 821 215 585
Cash and cash equivalents 370 054 376 850 366 130
Total assets 3 231 478 3 183 730 3 274 582
EQUITY AND LIABILITIES
Equity attributable to equity holders
of the parent 848 731 906 980 870 850
Share capital and premium 119 592 108 487 126 886
Non-distributable reserves 66 759 57 737 50 179
Foreign currency translation reserve (143 969) (31 340) (105 307)
Share-based payment reserve 1 325 295 739
Distributable reserves 805 024 771 801 798 353
Non-controlling interests 38 816 56 699 41 599
Total equity 887 547 963 679 912 449
Non-current liabilities 118 563 121 077 103 710
Long-term liabilities 37 661 43 441 21 555
Liability for share-based payments 6 235 8 750 9 848
Amounts owing to vendors 2 023 2 793 1 842
Deferred tax liabilities 72 196 65 931 69 833
Other liabilities 448 162 632
Current liabilities 2 225 368 2 098 974 2 258 423
Trade and other payables 1 726 986 1 782 603 1 795 783
Short-term interest-bearing liabilities 66 643 12 322 43 468
Provisions 12 416 14 636 13 979
Amounts owing to vendors 2 955 1 750 2 750
Current tax liabilities 4 832 15 507 14 212
Bank overdrafts 411 536 272 156 388 231
Total equity and liabilities 3 231 478 3 183 730 3 274 582
Capital expenditure incurred in the current
year (including capitalised development expenditure) 24 790 19 747 51 104
Capital commitments at the end of the period 37 408 29 790 33 909
Lease commitments at the end of the period 140 106 132 962 153 258
Payable within one year 32 943 31 140 34 348
Payable after one year 107 163 101 822 118 910
Condensed consolidated statement of cash flows
for the six months to 31 August 2015
US$’000 Unaudited Unaudited Audited
Six months to Six months to Year ended
31 August 31 August 28 February
2015 2014 2015
Operating profit before working capital changes 84 670 96 817 215 346
Working capital changes (40 566) 107 653 (29 147)
Decrease/(increase) in inventories 7 229 (56 979) (32 038)
Increase in receivables (42 927) (113 749) (324 540)
(Decrease)/increase in payables (4 868) 278 381 327 431
Prepaid maintenance (22 505) - -
Cash generated from operations 21 599 204 470 186 199
Net finance costs paid (11 261) (8 861) (17 606)
Taxation paid (24 286) (20 675) (53 193)
Net cash (outflows)/inflows from operating activities (13 948) 174 934 115 400
Cash outflows for acquisitions (1 342) - (1 979)
Net cash outflows from other investing activities (24 763) (18 694) (49 498)
Net cash inflows from other financing activities 38 672 5 930 13 500
Capital distributions and dividends paid to shareholders (8 662) (17 162) (23 459)
Capital distributions and dividends paid to - (1 800) (26 066)
non-controlling interests
Net (decrease)/increase in cash and cash equivalents (10 043) 143 208 27 898
Cash and cash equivalents at the beginning (22 101) (41 770) (41 770)
of the year
Translation differences on net cash (9 338) 3 256 (8 229)
Cash and cash equivalents at the end of the period* (41 482) 104 694 (22 101)
*Comprises cash resources, net of bank overdrafts and trade finance advances.
Condensed consolidated statement of changes in total equity
for the six months to 31 August 2015
US$’000 Unaudited Unaudited Audited
Six months to Six months to Year ended
31 August 31 August 28 February
2015 2014 2015
Balance at the beginning of the period 912 449 924 485 924 485
Transactions with equity holders of the parent
Comprehensive (loss)/income (13 975) 40 599 11 014
New share issues - 1 894 31 076
Capital distributions - (17 162) (17 226)
Dividends (8 672) - (16 060)
Equity-settled deferred purchase consideration - 10 280 -
Share-based payments 528 659 1 855
Acquisitions of additional interests from
non-controlling interests - (907) (10 623)
Disposals of additional interests from
non-controlling interests - - (803)
Transactions with non-controlling interests
Comprehensive (loss)/income (2 783) 6 143 6 099
Acquisitions of additional interests from
non-controlling interests - - 9 210
Disposals of additional interests from
non-controlling interests - (512) (512)
Dividends - (1 800) (26 066)
Balance at the end of the period 887 547 963 679 912 449
Determination of headline and underlying earnings
for the six months to 31 August 2015
US$’000 Unaudited Unaudited Audited
Six months to Six months to Year ended
31 August 31 August 28 February
2015 2014 2015
Profit attributable to the equity holders of the parent 24 384 31 476 73 772
Headline earnings adjustments 10 6 (88)
Loss on disposal of investment - - (106)
Loss on disposal of property, plant and equipment 15 10 36
Tax effect (5) (4) (18)
Non-controlling interests - (1) (10)
Headline earnings 24 394 31 481 73 674
DETERMINATION OF UNDERLYING EARNINGS
Underlying earnings adjustments 13 401 6 389 13 009
Unrealised foreign exchange losses/(gains) 1 665 (237) (1 012)
Acquisition-related fair value adjustments 14 (81) 317
Goodwill adjustment 81 - -
Restructuring costs 5 261 - -
Amortisation of acquired intangible assets 6 380 6 707 13 704
Tax effect (3 690) (2 166) (3 546)
Non-controlling interests (228) 112 (6)
Underlying earnings 33 877 35 816 83 131
Condensed Segmental analysis for the six months to 31 August 2015
US$’000 Unaudited Unaudited Audited
Six months to Six months to Year ended
31 August 31 August 28 February
2015 2014 2015
Revenue
Westcon 2 510 597 2 241 380 4 854 507
Logicalis 751 446 714 378 1 533 777
Consulting 23 697 27 834 55 242
Corporate 192 - 10
Revenue 3 285 932 2 983 592 6 443 536
EBITDA
Westcon 52 257 55 743 125 141
Logicalis 35 485 41 575 97 039
Consulting (543) 1 356 3 158
Corporate (6 629) (8 575) (18 945)
EBITDA 80 570 90 099 206 393
Operating profit
Westcon 39 516 42 847 100 207
Logicalis 24 347 30 491 74 165
Consulting (881) 956 2 362
Corporate (6 641) (8 591) (18 976)
Operating profit 56 341 65 703 157 758
Total assets
Westcon 2 277 558 2 236 026 2 289 764
Logicalis 864 092 894 094 920 295
Consulting 37 354 40 938 39 694
Corporate 52 474 12 672 24 829
Total assets 3 231 478 3 183 730 3 274 582
Total liabilities
Westcon (1 700 742) (1 602 993) (1 690 252)
Logicalis (595 849) (590 607) (641 932)
Consulting (11 340) (10 720) (12 702)
Corporate (36 000) (15 731) (17 247)
Total liabilities (2 343 931) (2 220 051) (2 362 133)
Physical address
Datatec Limited
Ground Floor
Sandown Chambers
Sandown Village
16 Maude Street
Sandown
South Africa
2146
Postal address
Datatec Limited
P.O. Box 76226
Wendywood
South Africa
2144
Contact numbers
Telephone: +27 (0)11 233 1000
Fax: +27 (0)11 233 3300
E-mail: info@datatec.co.za
Enquiries:
Datatec Limited (www.datatec.com)
Jens Montanana - Chief Executive Officer +44 (0) 1753 797 118
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 Limited - Broker
Stewart Andrews
+44 (0) 20 7220 0500
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), O Ighodaro#^, JF McCartney#+,
LW Nkuhlu#, CS Seabrooke#, NJ Temple#*
#Non-executive *British +American ^Nigerian
www.datatec.com
www.westcongroup.com
www.logicalis.com
www.analysysmason.com
www.theviagroup.com
www.masonadvisory.com
Sponsor:
Rand Merchant Bank (a division of FirstRand Bank Limited),
1 Merchant Place, Corner Fredman Drive
and Rivonia Road, Sandton
21 October 2015
Date: 21/10/2015 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS. |