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Datatec - Trading update for the six months ended 31 August 2006
DATATEC LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1994/005004/06)
ISIN: ZAE000017745
Share Code: DTC
("Datatec" or "the Group")
Trading update for the six months ended 31 August 2006
Datatec, the international Information and Communications Technology (ICT)
group, announces its trading update for the six months ended 31 August
2006. Datatec has also announced separately today its intention to seek a
listing of its shares on AIM.
Trading during the first half of the year has been in line with
management"s expectations, with the Group delivering a good performance in
terms of overall revenues and margins.
Westcon has continued to make good progress with its European businesses,
in particular, improving financial performance across all of its divisions.
Westcon"s gross margin for the period was 8.2%, remaining constant with
last year (excluding the benefit from non-recurring items last year).
Operating costs have also remained tightly controlled. During the period,
Westcon US acquired the distribution arm of Ronco Communications and
Electronics (now renamed Ronco Distribution). The acquisition expanded
Westcon"s core convergence expertise, specifically in the voice arena, and
resulted in Nortel becoming Westcon"s second largest vendor by revenue
after Cisco.
Trading in Logicalis has also been in line with management"s expectations,
with growth in all regions and a strong performance in the UK. Overall
gross margin for the period remained relatively constant at approximately
20.0% (2005: 20.1%), despite the increase in product-based business as a
result of the strategic acquisitions made over the last 18 months.
Operating costs have remained under tight control and there remains scope
for further improvement, particularly in the US, as the benefits of scale
are realised.
During the period, Logicalis US acquired the US Southwest focused
consulting business of Alliance Consulting Inc., and Computech Resources
Inc., an IBM Premier Business Partner and solutions business. Logicalis
also acquired an equity interest in a small German ICT services
organisation called re:solution, and announced plans to establish offices
in Chile and Peru, to extend the Group"s presence in South America.
Analysys Mason has made good progress during the period, with the impact of
the completion of the Vodafone contract offset by a strong performance by
its strategy consulting business. The EBITDA margin for the period was
10.5% (2005: 10.9%). Opportunities remain to broaden and deepen both the
service offering and the geographic footprint, as well as improve
productivity and operational synergies from the integrated businesses.
The Group"s net working capital at the period end increased to
approximately US$259.7 million (FY06: US$196.9 million), with a significant
proportion of this increase resulting from the investment in working
capital in newly acquired businesses. The Group"s net cash position (after
taking into account long term liabilities) at the period end was US$80.7
million (FY06: US$129.4 million).
The Directors remain confident about the Group"s prospects for the
remainder of the financial year and encouraged by the continued development
of the operations and management of the Group"s businesses. Extracting
further operating efficiencies from recent and planned acquisitions remains
an important driver in the performance expectations of both Westcon and
Logicalis.
Datatec"s interim financial results for the six months ended 31 August 2006
are expected to be released on 1 November 2006.
The financial information in this trading update has not been reviewed and
reported on by Datatec"s auditors.
For further information, please contact:
Datatec Limited (www.datatec.co.za)
Jens Montanana, Group Chief + 44 (0) 1753 797 118
Executive
David Pfaff, Group Finance + 44 (0) 1753 797 118
Director
Wilna de Villiers, Group +27 (0) 11 233 1013
Marketing Manager
Metier
Paul Botha/Greg von Holdt, +27 (0) 11 268 4000
Metier Advisory
College Hill (UK press)
Adrian Duffield/Corinna Dorward + 44 (0) 20 7457 2020
Fleishman-Hillard (SA press)
Michelle de Pons/Lucien Vallun + 27 (0) 11 548 2000
Sandton
2 October 2006
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 02/10/2006 08:01:06 AM Produced by the JSE SENS Department
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