Wrap Text
Unaudited interim results for the six months ended 31 August 2012 and cash distribution by way of capital reduction
DATATEC LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1994/005004/06)
ISIN: ZAE000017745
('Datatec' or the 'Group', JSE and LSE: DTC)
Unaudited interim results for the six months ended 31 August 2012 and cash distribution by way of capital reduction
The international Information and Communications Technology (ICT) group,
is today publishing its unaudited interim results for the six months ended 31 August 2012.
Solid results in a weak environment underpin earnings and dividend growth
Financial highlights
Group revenue up 7% to $2,62 billion(H1 FY12: $2,44 billion)
Gross margin increases to 14,4%(H1 FY12: 14,1%)
EBITDA up 8% to $91,9 million(H1 FY12: $85,4 million)
Underlying* earnings per share up 8% to 23,5 US cents(H1 FY12: 21,8 US cents)
Increased interim capital distribution up by 14% to 8 US cents per share(H1 FY12: 7 US cents)
*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
Operational highlights
Trading and underlying earnings continue to improve but growth slowing in a weakening economic climate
Group continues to benefit from business and international diversification
Continued improvement in business mix and growing annuity income stream
Afina expands solution set and geographic in high growth markets exposure
Current trading and prospects
2013 Financial Year forecast remains unchanged despite increasingly uncertain economic outlook:
- Revenues of between $5,5 billion and $5,8 billion (FY12: $5,03 billion)
- Underlying* earnings per share of approximately 55 US cents (FY12: 47,9 US cents)
Jens Montanana, Chief Executive of Datatec, commented:
'As we highlighted in our IMS statement in July, overall revenues and underlying earnings are continuing to improve but the rate of
growth has slowed as the macro-economic climate has become more uncertain. This became more pronounced in the second quarter in all regions
with the exception of Latin America.
The diversity of our business streams and our global footprint continue to be strong assets, allowing the Group to deliver a
relatively strong performance against a disappointing market.
Based on current exchange rates and trading conditions our full year forecast remains unchanged but has become more challenging than
we anticipated in May.'
Profile and Group structure
Datatec Group is a global provider of ICT products, solutions and services, with more than 6 000 people worldwide and with operations
in over 50 countries.
The Group's 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 Group's head office entities.
OVERVIEW
Datatec delivered a solid performance during the first half of the financial year given the weaker than expected macro-economic
environment in the second quarter in particular. The Group's revenues and earnings continued to grow and gross margins expanded compared with
the six months ended 31 August 2011 ('Comparative Period').
The Group's business mix and geographic diversity provided resilience as the impact of the Eurozone crisis spread globally. Whilst
organic revenue growth slowed in all regions, the Group benefited from its strategy of expansion into higher growth markets and a strong
first half performance from Logicalis. Westcon had a more challenging six months compared to the recent past, but has still reported
revenue growth across all regions.
North America remains the Group's largest market and, whilst growth was reported there in the second quarter, it was at a slower rate.
Trading conditions in Europe, in particular the UK, remain weak but in line with expectations given the on-going economic turmoil in the
Eurozone.
Latin America, Asia Pacific and the Middle East remain the Group's strongest performing markets, particularly Latin America, although
these markets also experienced slower growth rates. The geographies outside North America and Europe now generate 35% of Datatec's revenues
and 41% of the Group's gross profits.
Trading and operating profitability continued to improve across the Group, driven by top line growth in both Westcon and Logicalis,
with sales up 6% and 13% respectively in these divisions.
Datatec generated revenues of $2,62 billion in the six months to 31 August 2012, up 7% on the prior year (H1 FY12: $2,44 billion) of
which organic growth was 4%. Of the $2,62 billion revenues, some 73% came from Distribution (Westcon); 19% from ICT hardware and
software solutions (Logicalis) and 8% was attributable to revenues derived from Services (Logicalis and Consulting Services).
Overall Group gross margins firmed to 14,4% (H1 FY12: 14,1%). EBITDA grew in line with revenues up 8% to $91,9 million (H1 FY12: $85,4
million).
Underlying* earnings per share rose 8% to 23,5 US cents (H1 FY12: 21,8 US cents).
STRATEGY AND ACQUISITIONS
Datatec continues to pursue its long-term strategy to deliver sustainable above average returns to shareholders by focusing on a
combination of organic growth in the faster-growing sectors of the ICT market, geographic expansion and earnings-enhancing acquisitions.
Datatec enjoys a strong market position with no particular dependency on any single market, territory or technology sector. During the
first half of FY13, the Group announced four new acquisitions which are expected to enhance margins,extend the Group's geographical reach
and strengthen its position in existing markets.
The most notable of these was the acquisition of 100% of the share capital of the Afina Group ('Afina') by Westcon, which was announced
on 2 July 2012 with the same effective date. Afina is a leading Latin American and Iberian multinational security, virtualisation and data
centre distributor. The acquisition significantly expands Westcon's geographic footprint in 12 countries across Latin America, the Caribbean,
Europe and North Africa (including Brazil, Mexico, Spain, Portugal, France and Morocco). The deal broadens Westcon's product portfolio, adding
and enhancing relationships with strategic vendors such as VMware, Riverbed, Symantec and Citrix. Afina's strong services offering and over 400
skilled personnel complement Westcon's existing expertise in security, virtualisation and data centre technologies.
Earlier in the year, on 12 March 2012, Westcon completed the acquisition of PT Netpoleon, an Indonesian value-added distributor of IT
security, networking and convergence solutions and provider of managed and training services. This relatively small acquisition builds on
Westcon's presence in Southeast Asia and gives Westcon its first significant presence in Indonesia, a large and fast growing market in
the region.
On 23 May 2012, Datatec acquired, on behalf of Westcon, the 33,1% interest in its African subsidiaries which it did not already own
(excluding Westcon SA (Pty) Ltd) collectively 'Westcon Africa' in order to secure 100% ownership of those businesses.
On 16 July 2012, Westcon expanded its security product footprint in Europe with the acquisition of Austrian value added security
distributor Triple AcceSSS IT GmbH ('Triple AcceSSS'). The deal expands Westcon's security business footprint in Europe and strengthens or adds
relationships with a portfolio of security vendors including Trend Micro, F5, Blue Coat, BlueCat and Lifesize. Triple AcceSSS also
delivers a broad array of complementary professional services including training, help desk and third level support services.
Logicalis also augmented its footprint and skills base during the period with the acquisition, on 1 June 2012, of Corpnet, a
Brisbane-based provider of IT solutions to the Queensland, Australia mid-sized and enterprise markets. The acquisition brings data centre, cloud
and managed services skills and resources complementary to Logicalis' existing expertise in Australia.
The Group will continue to seek to improve its competitive position and believes that the prevailing economic climate continues to
provide attractive opportunities to enhance margins, to facilitate consolidation in proven markets and to extend the Group's geographical
reach.
FINANCIAL RESULTS
Group revenues increased by 7% to $2,62 billion (H1 FY12: $2,44 billion) with 34% of Group revenue generated from North America (H1
FY12: 33%), 31% from Europe (H1 FY12: 34%), 14% from Latin America (H1 FY12: 12%), 13% from Asia Pacific (H1 FY12: 13%) and 8% from Africa,
India and Middle East ('AIME') (H1 FY12: 8%).
Gross margins improved to 14,4% (H1 FY12: 14,1%). Gross profit increased by 10% to $377,0 million (H1 FY12: $343,7 million), while
operating costs increased at a similar rate as the gross profit to $285,1 million (H1 FY12: $258,3 million).
EBITDA increased by 8% to $91,9 million (H1 FY12: $85,4 million), which includes net unrealised foreign exchange losses of $0,5 million
(H1 FY12: gains of $0,5 million). Depreciation was $13,7 million (H1 FY12: $11,6 million). Amortisation of intangible fixed assets
arising from acquisitions was $7,2 million (H1 FY12: $7,8 million).
The fair value of companies acquired during the year was $72,7 million. As a result, goodwill and intangible assets increased by $41,2 million
and $25,0 million respectively. The revenue and EBITDA included from these acquisitions in H1 FY13 was $29,6 million and $0,4 million respectively.
Had the acquisition dates been 1 March 2012, revenue in H1 FY13 attributable to these acquisitions would have been approximately $135,8 million. It
is not practical to establish the EBITDA that would have been contributed by the acquisitions in H1 FY13 if they had been included for the entire period.
Operating profit increased by 7% to $71,0 million (H1 FY12: $66,2 million). The net interest charge increased to $11,4 million (H1
FY12: $5,9 million), as a result of Logicalis funding higher levels of working capital in Brazil and Westcon's utilisation of prompt pay arrangements and
funding of working capital growth as well as increased borrowing costs in Logicalis, mainly in Brazil.
Profit before tax was $60,4 million (H1 FY12: $60,7 million).
The Group's reported effective tax rate for H1 FY13 is 31,6% (H1 FY12: 34,4%). The normalised effective tax rate was 31,6%
(H1 FY12: 34,4%). The Group's 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 normalised effective tax rate for
the financial year ending 28 February 2013 is expected to be 33,0% (FY12: 35,1%).
Underlying earnings per share increased by 8% to 23,5 US cents (H1 FY12: 21,8 US cents). Headline earnings per share ('HEPS') increased
by 6% to 20,7 US cents (H1 FY12: 19,5 US cents).
The Group's operations generated $57,8 million cash during the period (H1 FY12: $17,0 million).
The Group ended the period with net debt of $135,5 million (H1 FY12: $8,8 million), after deducting long-term debt of $16,7 million and
short-term debt of $18,8 million included in the payables and provisions line on the statement of financial position. Growth in the
Latin American region and the Afina acquisition were the main contributors to this increase in net debt. Consistent with the prior year,
Westcon is taking advantage of vendor supplier prompt pay initiatives which are earnings enhancing. The Group continues to enjoy
comfortable headroom in terms of its working capital lines.
The Group issued 5,1 million new shares during the period. Of this 3,4 million shares were issued as part of consideration for
acquisitions, while a further 1,7 million shares were issued to settle commitments under the terms of Datatec's equity-settled share-based
remuneration schemes.
The Group paid $17,2 million to shareholders during H1 FY13 as a final capital distribution relating to FY12, bringing the total
capital distribution for FY12 to $29,4 million.
Losses of $41,3 million (H1 FY12: $17,4 million gains) arising on translation to presentation currency are included in other comprehensive
income of $7,9 million (H1 FY12: $61,3 million).
DIVISIONAL REVIEWS
Westcon
Westcon accounted for 73% of the Group's revenues (H1 FY12: 74%) and 63% of its EBITDA (H1 FY12: 68%).
Westcon is the world's 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 delivered a solid financial performance, reporting an improvement over prior year in revenues despite more challenging market
conditions particularly in Europe and North America. Overall revenues increased 6% to $1,9 billion (H1 FY12: $1,8 billion) with increases
across all regions. Westcon acquisitions contributed $25,4 million in revenue during the period.
From a geographic perspective, 33% of Westcon's revenue was generated in Europe (H1 FY12: 34%), 34% in North America (H1 FY12: 35%),
14% in Asia Pacific (H1 FY12: 14%), 11% in AIME (H1 FY12: 11%) and 8% in Latin America (H1 FY12: 6%).
Gross margins increased to 11,3% (H1 FY12: 10,9%) with margin pressures in Europe and North America offset by margin expansion in Latin
America, AIME and Asia Pacific. Overall gross margins improved as a result of a more favourable product mix, which saw Cisco products
make up 51% of Westcon's revenue (H1 FY12: 51%), 13% for Avaya/Nortel (H1 FY12: 15%), 20% for security (H1 FY12: 20%) and 16% for
Affinity/other development vendors (H1 FY12: 14%). Gross profit increased 10% to $214,0 million (H1 FY12: $195,4 million).
Operating leverage declined with expenses growing 15% to $151,9 million including one-off costs associated with the Afina acquisition
and the SAP roll-out described below. As a result Westcon's EBITDA decreased slightly by 3% to $62,1 million (H1 FY12: $63,8 million)
while EBITDA margins decreased to 3,3% (H1 FY12: 3,6%). Operating profit decreased by 7% to $53,4 million (H1 FY12: $57,3 million).
Westcon continued its strong working capital management during the year.
On 12 March 2012, Westcon completed the acquisition of PT Netpoleon, an Indonesian value-added distributor of IT security, networking
and convergence solutions and provider of managed and training services. Netpoleon's unaudited revenues for the year ended 31 December
2011 were $11 million.
On 2 July 2012, Westcon acquired the Latin American and Iberian multinational security, virtualisation and data centre distributor,
Afina Group. The transaction, valued at up to 50 million, ($63 million) was the most significant acquisition made during the period. Afina
expects revenues this financial year to approach $300 million.
On 16 July 2012, Westcon acquired Triple AcceSSS IT and its Swiss subsidiary for undisclosed consideration. Triple AcceSSS is an approximately
14 million turnover security product distribution business based in Austria.
Westcon is in the process of transitioning its existing global ERP system to a new SAP-based platform. The upgrade is part of a
programme to improve and optimise Westcon's systems and infrastructure capabilities in support of its growing business and increasing
transaction volumes. Of the increase in capitalised development expenditure in H1 FY13, $9,2 million is attributable to this ERP system transition.
Market conditions are expected to remain challenging in the second half of the year, in the mature markets of North
America and particularly Europe. The management expects to deliver an improved performance notwithstanding the environment driven by
seasonality, leveraging certain vendor relationships and the impact of the Afina acquisition.
Logicalis
Logicalis accounted for 26% of the Group's revenues (H1 FY12: 25%) and 35% of its EBITDA (H1 FY12: 31%).
Logicalis is an international IT solutions and managed services provider with a broad knowledge and expertise in IT infrastructure and
networking solutions, communications and collaboration, data centre and cloud services and managed services.
Overall revenues and profits in the first half were in line with expectations and higher than the first half of the previous year. The
US region had a solid recovery but the rate of growth slowed in the Asia Pacific and Latin America regions. The UK market remained
challenging.
Revenue increased by 13% to $682,3 million (H1 FY12: $602,2 million), including $4,2 million of revenue from the acquisition made in
the period. Organic revenue growth was 10%. Latin America remained the largest revenue contributor at 33% of total revenue (H1 FY12: 32%)
despite a significant depreciation in the Brazilian currency relative to the US dollar. The North America region grew from 30% to 32% of
total revenue whilst the UK's share of revenues fell from 28% to 24%.
Revenues from product sales were up 10%, with robust increases in the HP and Other vendor category. Revenues from total services were
up 25%, with strong growth in both professional and annuity service revenues.
The gross margin was slightly lower at 21,8% (H1 FY12: 22,4%). Both product and services margins were down slightly due to customer
pricing pressure, particularly on high value deals. The gross profit was up 10% to $149,0 million (H1 FY12: $135,0 million). Improved
operational leverage resulted in operating expenses increasing by only 9%. EBITDA increased by 17% to $34,2 million (H1 FY12: $29,2 million),
resulting in an EBITDA margin of 5,0% (H1 FY12: 4,8%).
After charges for depreciation and amortisation of intangible assets, operating profit was up 31% to $22,6 million (H1 FY12: $17,3
million).
Logicalis continues to have a contingent liability in respect of a possible tax liability at its Promon-Logicalis subsidiary in Brazil.
On 1 June 2012, Logicalis acquired Corpnet, a Brisbane-based provider of IT solutions including data centre, cloud and managed services. The
consideration comprised $2,7 million on completion and the business has annualised revenues of approximately $20 million.
Trading conditions are expected to remain challenging. The outlook in the Latin America and Asia Pacific regions remain positive
although overall growth rates have slowed. The UK market remains difficult whilst the US is expected to continue to recover slowly. Logicalis
plans to continue investing in cloud and data centre services and continues to evaluate acquisition opportunities in target markets.
Logicalis expects the second half results to be broadly similar to last year, albeit again impacted by higher interest rates associated with
extended Latin America receivables.
Consulting Services
The Consulting Services division, comprising the majority-owned businesses Analysys Mason, Intact, The Via Group, and an equity stake
in Cornwall Energy, accounted for 1% of Group revenues (H1 FY12: 1%) and 2% of EBITDA (H1 FY12: 1%).
Analysys Mason delivers management consulting, advisory, modelling and market intelligence services to the telecoms, IT and digital
media industries. The company's clients include telecoms operators, financial institutions, media organisations, regulators and a range of
other public sector bodies.
Intact is a services and support consultancy delivering high-end professional services in networking, unified communications, security,
wireless and data centre technologies. Intact's services are offered exclusively through its partner network, which includes value-added
resellers, systems integrators, network integrators and service providers.
The Via Group is a recognised leader in providing professional services supporting Avaya and Microsoft-based unified communications
solutions.
Cornwall Energy provides participants in and customers of the energy markets with research and consulting services focusing on
electricity generation and distribution, including renewable energy, and smart grids (intelligent networked distribution).
Revenues for this division were stable at $38,3 million (H1 FY12: $38,7 million). A solid sales performance at Analysys Mason and the
inclusion of The Via Group was tempered by declining revenues at Intact. The division achieved an expansion in gross margins to 36,3% (H1
FY12: 34,5%).
EBITDA improved by 24% to $1,6 million (H1 FY12: $1,3 million) with the division now benefiting from enhanced operational leverage at
Analysys Mason. The overall improvement was offset by a weakened performance from Intact as a consequence of the top line pressures.
Despite a tough first quarter, The Via Group recorded a small EBITDA profit.
The division's major markets are the United Kingdom and Europe, and despite a particularly good first half performance in Germany, the
management expects the market to remain challenging in the second half. Following a slow start to the year, an improved performance is
expected from Intact and The Via Group to complement anticipated solid performance from Analysys Mason.
Corporate
Corporate encompasses the net operating costs of the Datatec head office entities of $6,4 million (H1 FY12: $8,9 million) and
unrealised gains of $0,3 million and immaterial realised exchange losses (H1 FY12: $0,1 million unrealised gain and immaterial realised exchange
losses). Head office costs are slightly lower than in the Comparative Period due to lower acquisition and other project costs.
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
during the period under review. Afina 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 Afina and Triple AcceSSS acquisitions have been determined
provisionally due to the timing and number of legal entities acquired and this may impact goodwill(). One month's trading has been included
in these results in respect of Afina.
Acquisitions made in H1 FY13
Assets acquired $'000
Non-current assets 8 225
Current assets 103 896
Non-current liabilities (7 170)
Current liabilities (98 454)
Net asset value acquired 6 497
Intangible assets 24 974
Goodwill () 41 201
Fair value of acquisitions 72 672
Purchase consideration
Issue of Datatec shares 13 785
Cash 43 618
Contingent consideration 15 269
Total consideration 72 672
Cash outflows for acquisitions
Cash and cash equivalents acquired (29 887)
Cash consideration paid (43 618)
(73 505)
REPORTING
This interim report complies with International Accounting Standard 34 - Interim Financial Reporting, the South African Statements and
Interpretations of Statements of Generally Accepted Accounting Practice (AC 500 Series), the requirements of the Companies Act of South
Africa, the AIM Rules for Companies and the disclosure requirements of the JSE Limited's 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 Group's consolidated interim results for the
six months ended 31 August 2012 was supervised by the Chief Financial Officer, Mr RP Evans. The financial information has not been audited
or reviewed by Deloitte & Touche.
CURRENT TRADING AND PROSPECTS
The Group is well positioned to support its vendors and customers by virtue of 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 services, which in turn fuels demand for
security, mobility and unified communications solutions.
On 16 May 2012, the Group published a forecast for the 2013 financial year of revenues of between $5,5 billion and $5,8 billion,
profit after tax** of approximately $104 million, underlying* earnings per share of approximately 55 US cents and both earnings** per share
and headline** earnings per share of approximately 50 US cents.
The Board believes the Group is still capable of achieving these forecasts if the anticipated performance improvements in the seasonally better
second half are delivered together with the expected contribution from Afina. However this has become more challenging in the increasingly uncertain
macro-economic environment. The financial information on which this forecast is based has not been reviewed and reported on
by Datatec's external auditors.
SUBSEQUENT EVENTS
There were no significant events.
CHANGES TO DIRECTORATE
Rob Evans was appointed as a Director of the Board of Datatec with effect from 1 May 2012 and became Chief Financial Officer on 1 June
2012 replacing Ivan Dittrich who left the Board on the same date.
CAPITAL DISTRIBUTION IN LIEU OF DIVIDEND POLICY
During the financial year ended 29 February 2012, the Group's dividend/capital distribution policy was amended from making a single
annual payment to making both an interim and a final distribution. The distribution (in lieu of dividend) cover policy of at least three
times relative to underlying* earnings per share now applies to both interim and final distributions.
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
70 RSA cents per share (approximately 8 US cents per share) for the six months ended 31 August 2012.
The salient dates will be as follows:
Last day to trade Friday, 23 November 2012
Shares to commence trading 'ex' the distribution Monday, 26 November 2012
Record date Friday, 30 November 2012
Payment date Monday, 3 December 2012
Share certificates may not be dematerialised or rematerialised between Monday, 26 November 2012 and Friday, 30 November 2012, 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, 28 November 2012.
On behalf of the Board:
SJ Davidson JP Montanana RP Evans
Chairman Chief Executive Officer Chief Financial Officer
17 October 2012
*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 profit and loss
Unaudited Unaudited Audited
six months to six months to year ended
August 2012 August 2011 February 2012
for the six months to 31 August 2012 USD'000 USD'000 USD'000
Revenue 2 621 254 2 437 813 5 033 394
Existing operations 2 591 630 2 423 561 4 940 164
Acquisitions 29 624 14 252 93 230
Cost of sales (2 244 218) (2 094 071) (4 328 814)
Gross profit 377 036 343 742 704 580
Operating costs (284 645) (258 897) (514 974)
Unrealised foreign exchange (losses)/gains (493) 543 585
Operating profit before finance costs, depreciation and amortisation('EBITDA') 91 898 85 388 190 191
Depreciation (13 634) (11 587) (23 861)
Amortisation of acquired intangible assets (7 216) (7 797) (15 686)
Operating profit before acquisition related adjustment 71 048 66 004 150 644
Acquisition related adjustment - 240 -
Operating profit 71 048 66 244 150 644
Interest income 2 611 3 726 7 623
Financing costs (13 979) (9 667) (21 905)
Acquisition-related fair value adjustments - 83 402
Fair value movements on put option liabilities - 83 16
Fair value adjustments on deferred purchase consideration - - 386
Share of equity-accounted investments earnings 573 284 425
Other income 167 - 782
Profit before taxation 60 420 60 670 137 971
Taxation (19 093) (20 842) (48 902)
Profit for the period 41 327 39 828 89 069
KEY RATIOS
Gross margin (%) 14,4 14,1 14,0
EBITDA (%) 3,5 3,5 3,8
Effective tax rate (%) 31,6 34,4 35,4
Normalised effective tax rate (%) 31,6 34,4 35,1
Exchange rates
Average Rand/USD exchange rate 8,1 6,8 7,3
Closing Rand/USD exchange rate 8,4 7,0 7,5
Condensed Group statement of other comprehensive income
Restated (*)
Unaudited Unaudited Audited
six months to six months to year ended
August 2012 August 2011 February 2012
for the six months to 31 August 2012 USD'000 USD'000 USD'000
Other comprehensive income
Profit for the period 41 327 39 828 89 069
Exchange differences arising on translation to presentation currency (41 250) 17 387 (13 778)
Translation of equity loans net of tax effect 7 880 (176) 4 615
Other items (40) 4 253 (2 856)
Total comprehensive income for the period 7 917 61 292 77 050
Profit for the period attributable to:
Owners of the parent 39 292 36 382 80 846
Non-controlling interest 2 035 3 446 8 223
41 327 39 828 89 069
Total comprehensive income attributable to:
Owners of the parent 12 221 56 590 72 282
Non-controlling interest (4 304) 4 702 4 768
7 917 61 292 77 050
Condensed Group statement of changes in total equity
Restated (*)
Unaudited Unaudited Audited
six months to six months to year ended
August 2012 August 2011 February 2012
for the six months to 31 August 2012 USD'000 USD'000 USD'000
Balance at the beginning of the period 879 428 770 379 770 379
Total comprehensive income 7 917 61 292 77 050
New share issues 26 429 293 3 545
Capital distribution (17 218) (24 164) (36 383)
Equity-settled deferred purchase consideration - - 6 667
Share-based payments (6 913) (578) (165)
Derecognition of put option liability 5 102 45 000 45 000
Shares contingently issuable related to acquisitions - 10 000 -
Acquisitions 1 035 - (815)
Disposals - - 5 536
Non-controlling interest (6 221) 7 441 8 614
Balance at the end of the period 889 559 869 663 879 428
(*)The 'Derecognition of put option liability' previously presented under other comprehensive income has been
reclassified to reflect the appropriate attribution between total comprehensive income and other movements in equity.
Determination of headline and underlying earnings
Unaudited Unaudited Audited
six months to six months to year ended
August 2012 August 2011 February 2012
USD'000 USD'000 USD'000
Profit attributable to the equity holders of the parent 39 292 36 382 80 846
Headline earnings adjustments
Profit on disposal of property, plant and equipment and investments - (151) (733)
Tax effect (1) 51 75
Non-controlling interest (1) 7 -
Headline earnings 39 290 36 289 80 188
DETERMINATION OF UNDERLYING EARNINGS
Underlying earnings adjustments 7 709 6 931 14 459
Unrealised foreign exchange (gains)/losses 493 (543) (585)
Fair value movements on acquisition-related financial instruments - (83) (402)
Acquisition-related adjustment - (240) (240)
Amortisation of intangible assets 7 216 7 797 15 686
Tax effect (2 355) (2 654) (5 472)
Non-controlling interest 18 (18) (9)
Underlying earnings 44 662 40 548 89 166
SALIENT FINANCIAL FEATURES
Number of shares issued (millions)
Issued 193 186 188
Weighted average 190 186 186
Diluted weighted average 191 189 189
Earnings per share ("EPS") (US cents)
Basic EPS 20,7 19,6 43,5
Diluted basic EPS 20,5 19,3 42,8
Headline earnings 39 290 36 289 80 188
Headline earnings per share (US cents)
Headline 20,7 19,5 43,1
Diluted headline 20,5 19,2 42,5
Underlying earnings 44 662 40 548 89 166
Underlying earnings per share (US cents)
Underlying 23,5 21,8 47,9
Diluted underlying 23,3 21,5 47,2
Net asset value per share (US cents) 437,7 438,6 438,6
(**)Less than $1 000.
Condensed Group statement of financial position
Unaudited Unaudited Audited
six months to six months to year ended
August 2012 August 2011 February 2012
as at 31 August 2012 USD'000 USD'000 USD'000
ASSETS
Non-current assets 636 432 572 098 574 970
Property, plant and equipment 59 480 55 404 55 145
Capitalised development expenditure 44 248 24 882 34 117
Goodwill 413 515 375 437 377 869
Acquired intangible assets 58 521 48 184 41 772
Investments 6 125 8 260 5 709
Deferred taxation assets 33 959 36 123 37 229
Other receivables and prepayments 20 584 23 808 23 129
Current assets 1 943 192 1 751 598 1 823 437
Inventories 371 463 367 082 412 115
Trade and other receivables 1 301 282 1 139 406 1 163 534
Cash and cash equivalents 270 447 245 110 247 788
Total assets 2 579 624 2 323 696 2 398 407
EQUITY AND LIABILITIES
Ordinary shareholders' funds 844 174 814 843 823 369
Non-controlling interest 45 385 54 820 56 059
Total equity 889 559 869 663 879 428
Non-current liabilities 83 672 79 709 66 083
Long-term liabilities 16 735 19 096 13 915
Amounts owing to vendors 9 507 8 534 2 057
Liability for share-based payment 11 332 17 750 10 423
Deferred taxation liabilities 46 098 34 329 39 688
Current liabilities 1 606 393 1 374 324 1 452 896
Payables and provisions 1 224 468 1 118 951 1 187 967
Amounts owing to vendors 10 390 26 060 14 327
Taxation 1 122 3 122 4 627
Bank overdrafts 370 413 226 191 245 975
Total equity and liabilities 2 579 624 2 323 696 2 398 407
Capital expenditure incurred in the period 21 655 20 584 43 053
Additions to property, plant and equipment 11 735 9 312 20 010
Increase to capitalised development expenditure 9 920 11 272 23 043
Capital commitments in the period 11 733 26 521 10 142
Lease commitments in the period 92 580 92 748 98 213
Payable within one year 30 890 25 689 27 516
Payable after one year 61 690 67 059 70 697
Condensed Group statement of cash flows
Unaudited Unaudited Audited
six months to six months to year ended
August 2012 August 2011 February 2012
for the six months to 31 August 2012 USD'000 USD'000 USD'000
EBITDA 91 898 85 388 190 191
Profit on disposal of property, plant and equipment ** (151) (733)
Non-cash items 13 954 7 073 (832)
Cash generated before working capital changes 105 852 92 310 188 626
Working capital changes (48 065) (75 306) (85 783)
Decrease/(increase) in inventories 40 176 (63 781) (109 479)
Increase in receivables (95 669) (184 575) (188 004)
Increase in payables 7 428 173 050 211 700
Cash generated from operations 57 787 17 004 102 843
Net finance costs paid (11 368) (5 941) (14 282)
Taxation paid (25 100) (27 072) (55 619)
Net cash inflows/(outflows) from operating activities 21 319 (16 009) 32 942
Cash outflows for acquisitions (73 505) (16 746) (27 521)
Net cash outflows from other investing activities (21 428) (20 082) (42 943)
Net cash inflows from disposal of operations and investments - 15 000 14 988
Net cash outflows from other financing activities (8 013) (6 135) (27 684)
Capital distribution (17 218) (24 164) (36 383)
Net decrease in cash and cash equivalents (98 845) (68 136) (86 601)
Cash and cash equivalents at the beginning of the year 1 813 83 219 83 219
Translation differences on opening cash position (2 934) 3 836 5 195
Cash and cash equivalents at the end of the period (#) (99 966) 18 919 1 813
(#) Comprises cash resources, net of bank overdrafts and trade finance advances.
(**) Less than $1 000
Segmental analysis
Unaudited Unaudited Audited
six months to six months to year ended
August 2012 August 2011 February 2012
for the six months to 31 August 2012 USD'000 USD'000 USD'000
Revenue
Westcon 1 900 629 1 796 986 3 719 636
Logicalis 682 338 602 172 1 234 334
Consulting Services 38 287 38 655 79 424
Revenue 2 621 254 2 437 813 5 033 394
EBITDA
Westcon 62 165 63 819 133 257
Logicalis 34 203 29 163 67 395
Consulting Services 1 567 1 263 4 778
Corporate (6 037) (8 857) (15 239)
EBITDA 91 898 85 388 190 191
Operating profit
Westcon 53 461 57 280 120 360
Logicalis 22 622 17 328 42 609
Consulting Services 1 020 572 3 331
Corporate (6 055) (8 936) (15 656)
Operating profit 71 048 66 244 150 644
Total assets
Westcon 1 728 965 1 468 057 1 529 565
Logicalis 792 969 788 465 801 493
Consulting Services 50 614 50 129 53 527
Corporate 7 076 17 045 13 822
Total assets 2 579 624 2 323 696 2 398 407
Directors
SJ Davidson° (Chairman), JP Montanana (CEO), RP Evans (CFO),
O Ighodaro°, JF McCartney°, LW Nkuhlu°, CS Seabrooke°, NJ Temple°
British °Non-executive American Nigerian
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/Morné Reinders (SA) +27 (0) 11 447 3030
www.datatec-group.com
Date: 17/10/2012 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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