Wrap Text
Audited provisional results for the year ended 28 February 2018
DATATEC LIMITED:
Incorporated in the Republic of South Africa
Registration number 1994/005004/06
Share code JSE: DTC ISIN: ZAE000017745
("Datatec", the "Company" or the "Group")
Audited provisional results for the year ended 28 February 2018
Datatec, the international information and communications technology (ICT) group, is today
publishing its audited provisional results for the year ended 28 February 2018
("the Period" or "FY18").
Features of the year
- Value unlocked through two significant disposals:
- Sale of Westcon Americas and 10% of Westcon International to SYNNEX for US$630 million
- Sale of non-core Logicalis SMC for US$42 million
- US$350 million dividend returned to shareholders in January 2018
- Stronger balance sheet with higher tangible NAV of US$452 million (FY17: US$264 million)
- Solid Logicalis results and positive outlook
Continuing operations
- Revenue US$3.92 billion(FY17: US$3.86 billion)
- EBITDA US$26.7 million (FY17: US$29.0 million)
- Earnings per share 20.5 US cents (FY17: 1.4 US cents)
- Underlying* loss per share 5.6 US cents (FY17 underlying* earnings per share: 11.0 US cents)
COMMENTARY
Jens Montanana, Chief Executive of Datatec, commented:
"This has been a landmark year for Datatec during which we generated exceptional value for shareholders through
the successful sale of Westcon Americas and the disposal of Logicalis SMC.
"We remain focused on closing the valuation gap through strategic initiatives and other corporate actions.
"Logicalis delivered good growth during the year, supported by a much improved performance across our Latin America,
Europe and Asia-Pacific businesses in the second half as well as the strategic acquisitions completed during the
year. We expect Logicalis to deliver a strong financial performance in FY19.
"Westcon International's performance was disappointing, especially in the EMEA region where business disruptions
relating to ERP and BPO processes continued. Our plans to return Westcon International to profitability and growth
are progressing and the central cost base is being actively addressed."
Group activities
Datatec is an international ICT solutions and services group operating in more than 50 countries across North America,
Latin America, Europe, Africa, Middle East and Asia-Pacific. The Group's service offering spans the technology,
distribution, integration and consulting sectors of the ICT market.
Following the sale of the Westcon Americas businesses to SYNNEX in September 2017, Datatec operates two main
divisions:
- Technology distribution - Westcon International: distribution of security, collaboration, networking and data
centre products and solutions; and
- Integration and managed services - Logicalis: ICT infrastructure solutions and services.
The specialist activities of Consulting and Datatec Financial Services are included with the corporate head office
functions in the "Corporate, Consulting and Financial Services" segment of the Group.
Strategic overview
The Board and management are committed to staying focused on closing the valuation gap through strategic initiatives
and other corporate actions.
Datatec's strategy remains to deliver long-term, sustainable and above average returns to shareholders through
portfolio management and the development of its principal subsidiaries providing technology solutions and services
to targeted customers in identified markets around the world.
The Group completed two major disposals during FY18 which generated material shareholder value.
Effective 1 September 2017, the Group sold Westcon-Comstor's businesses in North America and Latin America ("Westcon
Americas"), and a 10% interest in the remaining part of Westcon-Comstor ("Westcon International"), to SYNNEX Corporation
for US$630 million in cash plus an earn-out (based on the gross profit of the Americas businesses). The amount of the
earn-out achieved has not been agreed yet between the parties and a resolution process is currently underway, as provided
for in the Sale and Purchase Agreement.
In October 2017, Logicalis also realised significant value from the sale of its non-core SMC consulting business to
DXC Technology Company (NYSE: DXC) for US$42 million.
Following the disposal of Westcon Americas (the largest profit contributor of Westcon-Comstor), Westcon International,
the remaining business, became directly managed by the Datatec management team. This business has had a poorer
performance in recent years as a result of the significant system and process changes.
The transition to Business Process Outsourcing ("BPO") in the last two years has been very disruptive and costly and
has impacted Westcon's level of customer service and financial performance. We have therefore decided to bring back
internally the work currently outsourced to the BPO provider. This will improve customer experience.
Westcon International currently retains the legacy global central costs (approximately US$63 million in FY17) and
has a transitional services agreement with SYNNEX whereby it provides certain group services to Westcon Americas
until latest August 2018. Westcon International is in the process of implementing cost saving initiatives to
reduce these central costs to approximately $45 million in FY19 and $33 million in FY20. The target is to get
Westcon International central costs to below 1% of revenue.
Logicalis is the largest profit contributor to the Group. The Group intends to continue to develop and grow Logicalis
through self-funded strategic acquisitions similar to those undertaken in the past few years to drive growth in specific
markets such as Asia-Pacific and Latin America.
During the year, Datatec returned US$350 million to shareholders as a special dividend in January 2018 resulted in
US$244.2 million cash being distributed to shareholders who did not elect the scrip distribution alternative.
43 770 095 shares were issued to shareholders who elected the scrip distribution alternative. Subsequently, a
further US$34.6 million was returned via a general repurchase of 12 777 717 shares, representing just under
5% of the issued shares at the time.
The Company limited the repurchase to 5% of the issued share capital. It obtained legal advice that section 48(8) of
the South African Companies Act ("Companies Act") would be applicable to a general repurchase of shares undertaken in
accordance with the JSE Listings Requirements.
Section 48(8) of the Companies Act stipulates that any decision by the board of directors of a company that involves
the repurchase of more than 5% of the company's issued securities of a particular class must be approved by a special
resolution of the shareholders of the company compliant with sections 114 and 115 of the Companies Act, which require,
inter alia, an Independent Expert Report on the repurchase.
The Company therefore only intends to recommence share repurchases after its next Annual General Meeting and will
undertake any share repurchases in a form and manner that is prudent for the Group, taking into account the Group's
ongoing liquidity needs.
Westcon Americas and the Logicalis SMC business are classified as "discontinued operations" in accordance with IFRS 5.
The Group's results for FY18 are reported in the form of the "continuing operations", excluding the discontinued
operations and figures for the year ended 28 February 2017 ("the Comparable Period" or "FY17") are re-presented on the
continuing operations basis for comparative purposes.
Continuing operations had revenues of US$3.92 billion in FY18 (FY17: US$3.86 billion). Continuing EBITDA was
US$26.7 million in FY18 (FY17: US$29.0 million).
Underlying* loss per share was 5.6 US cents compared to 11.0 US cents underlying* earnings per share for FY17.
Earnings per share ("EPS") were 20.5 US cents compared to 1.4 US cents for FY17 reflecting the profits on disposal
of the two businesses sold in the year.
Given the Group's dividend policy and negative underlying* earnings in FY18, the Board is not declaring a final
dividend.
Current trading and outlook
Logicalis is expected to deliver another strong financial performance in FY19, supported by anticipated growth in
all regions, the contribution of PT Packet Systems Indonesia, Inc. ("PSI") and the large multi-year project in
Latin America.
Logicalis will also continue with organic and acquisitive initiatives in line with its strategy. Any acquisitions will
be funded by Logicalis cash and debt resources.
The restructuring of Westcon International is underway with committed plans to cut costs and streamline its operations
to return the business to profitability and resume growth.
The Board expects that the financial performance of Logicalis and the successful restructuring of Westcon
International will enhance the value of the Group going forward.
Group results
Revenue
Group revenues for the year were comparable year on year at US$3.92 billion (FY17: US$3.86 billion).
FY18 FY17
Contribution to Group revenue
Westcon International 59% 61%
Logicalis 40% 38%
Consulting and Financial Services 1% 1%
100% 100%
Revenue contribution by geography
FY18 FY17
North America 10% 12%
Latin America 14% 11%
Europe 49% 50%
Asia-Pacific 18% 17%
MEA 9% 10%
100% 100%
Gross profit contribution by geography
FY18 FY17
North America 17% 20%
Latin America 19% 16%
Europe 40% 42%
Asia-Pacific 19% 17%
MEA 5% 5%
100% 100%
Group EBITDA
FY18 FY17
Westcon International - -
Logicalis 97% 97%
Consulting and Financial Services 3% 3%
100% 100%
Group gross margins in FY18 improved to 16.2% (FY17: 16.1%). Gross profit was US$636.0 million
(FY17: US$622.3 million).
Overall operating costs were US$609.3 million (FY17: US$593.3 million). Included in the operating costs are
total restructuring costs of US$16.9 million (FY17: US$13.1 million). EBITDA was US$26.7 million
(FY17: US$29.0 million) and the EBITDA margin was 0.7% (FY17: 0.8%).
Depreciation and amortisation were lower at US$51.6 million (FY17: US$52.3 million), primarily as a result
of the derecognition of capitalised development expenditure at the time of the SYNNEX transaction.
At year end, a further US$55.1 million of capitalised development expenditure was impaired. The capitalised
development expenditure comprised mainly the Westcon ERP system.
Operating loss was US$81.0 million (FY17: US$23.3 million).
The net interest charge increased to US$18.4 million (FY17: US$13.8 million). The Logicalis net interest charge
increased by US$7.3 million, partly as a result of higher working capital utilisation in Latin America on the
large multi-year project. The Westcon interest expense increased by US$2.5 million and interest income at the
Datatec head office increased by US$5.2 million.
Loss before tax was US$99.4 million (FY17: US$31.8 million).
A tax charge has arisen on a loss before taxation in the continuing operations in both the current year and
comparative numbers. This is largely as a result of tax losses arising in Westcon-International's Asia, Africa,
Middle East and UK operations for which no deferred tax asset has been recognised. In addition, the tax credit
associated with certain management and IT costs of the continuing business have been treated as a credit
arising for the disposal group.
As at February 2018, there are estimated tax loss carry forwards of US$185.4 million with an estimated future tax
benefit of US$42.5 million, of which only US$13.2 million has been recognised as a deferred tax asset.
Cash
The Group generated US$17.6 million of cash from operations during FY18 (FY17: US$37.3 million cash utilised).
A cash consideration of US$672 million was received from the two disposals in the year: Westcon Americas and 10% of
Westcon International for US$630 million; and Logicalis SMC for US$42 million. The special dividend in January 2018
resulted in US$244.2 million cash being distributed to shareholders who did not elect the scrip distribution alternative.
Subsequently a further US$34.6 million was returned to shareholders via a general repurchase of shares.
A net outflow of US$10.8 million related to acquisitions in the year (see below). Additions to property plant and
equipment resulted in a cash outflow of US$26.0 million and US$22.7 million was spent on capitalised development
expenditure and software.
Datatec ended the year with a net debt of US$6.4 million (FY17: US$294.8 million from continuing operations). The net
debt has been calculated as: cash of US$161.3 million (FY17: US$198.7 million net overdraft); short-term borrowings and
current portion of long-term debt of US$106.0 million (FY17: US$ 64.7 million); and long-term debt of US$61.7 million
(FY17: US$31.4 million).
The balance sheet improved from the prior year with tangible net assets of US$452.0 million (FY17: US$263.9 million)
Acquisitions
Effective 1 June 2017, Analysys Mason acquired 100% of the share capital of Nexia Management Consulting AS, a telecoms
management consultancy company registered in Norway. The consideration payable comprised an initial consideration of
US$4.1 million paid as a combination of cash and shares, and deferred cash consideration of up to US$0.9 million. The
acquisition of Nexia Management Consulting AS will enhance Analysys Mason's existing track record in the Nordics, where
telecoms, media and technology (TMT) markets are among the most advanced in the world and have been at the forefront
of many new developments.
Effective 4 July 2017, Logicalis acquired 51% of the share capital in Nubeliu Limited ("NubeliU"), a South American
company specialising in cloud computing projects based on OpenStack. The 51% interest in NubeliU was acquired for
a cash consideration of US$3.8 million. NubeliU's expertise in OpenStack will accelerate the global expansion of
Logicalis' cloud computing and SDx (Software Defined everything) practices, strengthening its position as
a cloud integrator and ensuring its ability to meet its customers' requirements on their journey to digital
transformation.
Effective 4 September 2017, Logicalis acquired 54% of the share capital in PSI, a leading ICT systems integrator and
services company. The 54% interest in PSI was acquired for a cash consideration of US$6.8 million. The acquisition
has allowed Logicalis to strengthen its position within Indonesia and the Asia market.
NubeliU and PSI have been consolidated as subsidiaries of the Group. The directors of Logicalis assessed whether
or not the Group has control over NubeliU and PSI based on whether the Group has the practical ability to direct the
relevant activities of NubeliU and PSI unilaterally. In making their judgement the directors considered the absolute
size of holding in NubeliU and PSI and the relative size of shareholdings owned by other shareholders as well as
Logicalis Group's ability to appoint directors and determine management focus.
As a result of these acquisitions, goodwill and other intangible assets increased by US$7.0 million and US$6.1 million
respectively. None of the goodwill recognised is expected to be deductible for income tax purposes. The revenue and
EBITDA included from these acquisitions in FY18 were US$42.2 million and US$5.1 million respectively; profit after
tax included from these acquisitions was US$3.0 million. Had the acquisition dates been 1 March 2017, revenue and
EBITDA attributable to these acquisitions would have been approximately US$81.8 million and US$7.0 million for FY18
respectively; it is not practical to establish what the profit after tax would have been.
Acquisition-related costs of the above acquisitions of US$0.6 million are included under operating costs in the
summarised consolidated statement of comprehensive income.
An assessment of the fair value of the assets acquired across both the acquisitions made by the Group is shown further
below in the audited provisional results.
Liquidity
The Group is anticipated to generate sufficient cash to settle liabilities as they fall due. Working capital remains
well controlled. Trade receivables and inventory are of a sound quality and adequate provisions are held against both.
The US$375 million syndicated banking facility in Westcon Europe expires in July 2018. The Group is in an advanced
stage of negotiation of a replacement facility of up to US$280 million, which is considered adequate for Westcon Europe's
working capital needs. There is a high probability that the facility will be replaced, as terms have been agreed with
existing and new banks and credit approval for the facility has been received. In addition, the Group has sufficient
cash at the centre, which it will use for working capital funding until the new facility is in place.
Foreign exchange translation
Gains of US$13.9 million (FY17: US$56.9 million) arising on translation to presentation currency are included in total
comprehensive income of US$124.1 million (FY17: income US$58.3 million).
DIVISIONAL REVIEWS
Westcon International
Westcon International accounted for 59% of the Group's continuing revenues (FY17: 61%).
Westcon International is a value-added speciality distributor of industry leading cyber security and network
infrastructure, unified communications products, data centre solutions and channel services with a global network
of service providers, systems integrators and speciality resellers. Westcon International has operations in 50-plus
countries. The company goes to market under the Westcon and Comstor brands. Westcon International's portfolio of
market-leading vendors includes: Cisco, Avaya, Juniper, Check Point, F5, Palo Alto and Symantec.
Westcon Westcon
International International
FY18 FY17
Revenue contribution by geography
Europe 64% 63%
Asia-Pacific 21% 21%
MEA 15% 16%
100% 100%
Gross profit contribution by geography
Europe 60% 65%
Asia-Pacific 27% 22%
MEA 13% 13%
100% 100%
Westcon International's revenues from continuing operations decreased by 1.7% to US$2.32 billion (FY17: US$2.36 billion)
as lower revenue in Europe and MEA were offset by 2% growth in Asia-Pacific.
Westcon International's gross margins from continuing operations were 9.8% (FY17: 10.8%) with the decrease primarily
attributable to lower margins in Europe partially offset by improved margins in Asia-Pacific. Westcon International's
gross profit decreased by 10.6% to US$227.4 million (FY17: US$254.4 million)
There was a decline in the financial performance of the EMEA region, driven by continued business disruption as the
BPO challenges were compounded by the complex conversion to the ERP system. Trading conditions in South Africa
were weak.
Westcon International's revenue by technology category reflected continuing growth in the security sector offset by
decreased unified communications revenue (Avaya, Juniper).
Westcon International revenue % by technology category
FY18 FY17
Security 29% 24%
Networking 31% 29%
Unified communications 24% 29%
Data centre and other 16% 18%
100% 100%
Operating expenses from continuing operations decreased to US$275.5 million (FY17: US$288.1 million). Operating
expenses benefited from US$15 million of central costs which were reclassified and allocated against the profit on
disposal of Westcon Americas to SYNNEX, as these costs are being incurred in providing transitional services to
SYNNEX. This was offset by increased operating expenses in Europe. A further US$15 million has been accrued
against the profit on sale of Westcon Americas for transitional services obligations in H1 FY19, which will
reduce central costs in FY19.
Restructuring costs of US$11.5 million were incurred, mainly relating to central cost reductions and BPO unwind.
EBITDA loss from continuing operations was US$48.1 million (FY17: US$33.7 million) due to a significant decrease in
Europe's profitability. This was offset somewhat by lower costs in the centre and improved results in Asia-Pacific
and MEA.
Depreciation and amortisation was US$23.7 million (FY17: US$27.4 million), declining 13.5% due to impact of FY18
de-recognition of capitalised development expenditure at the start of the second half. At the end of FY18, Westcon
further impaired capitalised development expenditure by US$55.1 million in accordance with IAS 36. This will result
in reduced amortisation expenditure in future years. Operating losses from continuing operations were US$127.9 million
(FY17: US$61.1 million).
Westcon International's net working capital days decreased to 35 days compared to FY17 48 days) primarily due to
improved inventory turns in EMEA and Asia-Pacific. The improvement in net working capital days and cash injections
from Datatec following the SYNNEX transaction was partially offset by lower cash earnings, US$23 million of capital
expenditures and the further purchase of US$2.6 million Angola government bonds which resulted in a decrease of
US$168.4 million in net debt to US$131.8 million (FY17: US$300.2 million) from continuing operations. The net debt
consisted of: net overdrafts of US$113.8 million (FY17: US$256.4 million); short-term borrowing and current portion
of long-term debt of US$0.9 million (FY17: US$28.4 million); and long-term debt of US$17.1 million (FY17: US$15.4 million).
Management has made good progress with reducing the circa US$63 million central cost base to approximately
US$45 million in FY19 and US$33 million in FY20. The target is to get Westcon International central costs to below
1% of revenue.
Westcon International had decided to bring back internally the work currently being outsourced to the BPO provider
to improve customer experience. Westcon has decided to build internal shared services capabilities in South Africa
and the Philippines to service the EMEA and Asia-Pacific regions. Management has taken actions to streamline the
business and expects the turnaround in Westcon International to take approximately 24 months. With a common
business foundation in place, Westcon International is poised to drive top-line growth, improve market share
and relevancy in its chosen markets.
Logicalis
Logicalis accounted for 40% of the Group's continuing revenues (FY17: 38%).
Logicalis is a global IT solutions and managed services provider with expertise in data centre and cloud services,
security and network infrastructure, workspace communications and collaboration, data and information strategies,
and IT operation modernisation.
Revenues from continuing operations were US$1.6 billion (FY17: US$1.5 billion), including US$39.1 million of revenue
from acquisitions made during the period. Services revenues were up 12.1% with strong growth in both professional
services and annuity revenue.
Revenue contribution by geography from continuing operations is shown below:
FY18 FY17
North America 24% 31%
Latin America 34% 29%
Europe and South Africa 28% 29%
Asia-Pacific 14% 11%
100% 100%
Revenue increased in absolute terms in Latin America, Europe and Asia-Pacific. These increases were partially offset
by a decrease in North America.
In Europe, the UK results improved significantly and Germany had a strong year. In addition, the UK benefited from a
large supplier credit. Latin America showed improvements, notably in Brazil, Argentina and a recently set up operation in
Puerto Rico. North America was adversely impacted by weak product sales. Asia-Pacific benefited from the contribution
of the PSI acquisition.
In September 2017, Logicalis won a large multi-year project with a large service provider covering multiple
territories within Latin America which will contribute significantly to the business. FY18 includes revenues of
US$88.8 million from this project and there is initially an adverse working capital impact which will unwind as the
project evolves. This project resulted in an increase to FY18 accounts receivable of US$114.2 million and an increase
to FY18 liabilities of US$86.9 million of which US$71.4 million is interest bearing.
Revenues from product were up 3.5%, with an increase in Cisco solution sales partially offset by decreases in IBM
and HPE.
Logicalis' gross margins from continuing operations were 25.0% (FY17: 24.1%), benefiting from the improved services
mix and a large supplier credit.
Gross profit from continuing operations was up 10.6% to US$391.7 million (FY17: US$354.1 million).
Logicalis gross profit contribution from continuing operations by geography is shown below:
FY18 FY17
North America 27% 34%
Latin America 31% 29%
Europe and South Africa 28% 25%
Asia-Pacific 14% 12%
100% 100%
Operating expenses in Logicalis increased by 10.0% due in part to restructuring costs associated with the UK
business incurred during the year and incremental overheads associated with acquisitions.
EBITDA from continuing operations was US$86.2 million (FY17: US$76.3 million), with a corresponding EBITDA margin of
5.5% (FY17: 5.2%). Operating profit from continuing operations was US$59.5 million (FY17: US$52.0 million). Logicalis
incurred US$5.2 million expenditure in FY18 restructuring its UK operations. EBITDA from continuing operations before
restructuring charges was US$91.4 million with an EBITDA margin of 5.8%. Operating profit from continuing operations
before these restructuring charges was US$64.7 million.
At 28 February 2018, Logicalis had a net debt balance of US$139.5 million (FY17: US$20.4 million). This consisted of:
cash of $7.1 million (FY17: US$16.7 million); short-term borrowings and current portion of long-term debt of
US$102.4 million (FY17: US$22.9 million); and long-term debt of US$44.2 million (FY17: US$14.1 million). The increase
in net debt was caused primarily by the significantly higher working capital requirements of the large multi-year
project in Latin America referred to above. The sale of the SMC business in October 2017 brought US$42 million of
cash into the business in H2 FY18 which was used primarily to support de-leveraging.
Logicalis continues to have a contingent liability in respect of a possible tax liability at its PromonLogicalis
subsidiary in Brazil.
Digital innovation is accelerating and business technology is continuing to undergo a major shift. Logicalis is
transitioning itself into a Digital Enabler for its customers, driven by the explosion of data, the rise of mobile
and the cloud. Many opportunities exist to tap into themes such as security to augment its strong networking heritage.
Logicalis is also investing in areas such as business intelligence and data analytics to grow its data centre
infrastructure offerings for customers. Cloud continues to be a key feature in the business and IT strategies
of customers and Logicalis is well positioned to support customers regardless of their cloud strategy.
Logicalis remains confident about the prospects for the industry and its positioning and expects to build on
the solid progress made in the past year to deliver a strong financial performance in FY19.
Corporate, Consulting and Financial Services
This segment accounted for 1% of the Group's continuing revenues (FY17: 1%).
The Consulting unit comprised Analysys Mason, a provider of strategic, trusted advisory, modelling and market
intelligence services to the TMT industries.
Consulting revenues were US$42.0 million (FY17: US$39.1 million) and EBITDA was US$2.5 million (FY17: US$2.3 million).
The FY17 Consulting revenues and EBITDA include Mason Advisory for the first half but in FY18, the Group's share of
Mason Advisory's profit is included in "share of equity-accounted investment earnings". Both Analysys Mason and Mason
Advisory achieved improved results for FY18 compared to FY17.
Datatec Financial Services is in a development phase of its business providing financing/leasing solutions for ICT
customers. The business recorded revenues of US$1.4 million in FY18 (FY17: US$1.9 million) and an EBITDA loss of
US$1.4 million (FY17: US$1.4 million).
Corporate includes the net operating costs of the Datatec head office entities which were US$13.5 million
(FY17: US$11.2 million). These costs include the remuneration of the Board and head office staff, consulting
and audit fees. In FY18, foreign exchange gains were US$1.0 million (FY17: US$3.3 million foreign exchange loss).
As at 28 February 2018, Datatec head office entities held cash of US$259.0 million (FY17: US$36.1 million).
Subsequent events
On 14 May 2018, Logicalis signed an agreement to acquire 100% of the issued share capital of Coasin Chile S.A. a
Chilean and Peruvian ICT services and solutions provider, for a maximum purchase consideration of US$20.2 million.
The acquisition is subject to certain third party consents as well as approval from the Chilean Competition
Authorities.
Basis of preparation
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, at a minimum contain the requirements of IAS 34 - Interim Financial
Reporting, as well as the requirements of the Companies Act of South Africa and the JSE Limited's Listings Requirements
applicable for provisional reports.
The accounting policies are in terms of IFRS and consistent with those applied in the financial statements for FY17,
except for the adoption of the revised amendments to accounting standards below in FY18.
The adoption of these amendments did not have a material impact on the consolidated financial statements.
- Amendments to IAS 7 Statement of Cash Flows resulting from the Disclosure Initiative (effective for accounting periods
beginning on or after 1 January 2017)
- Amendments to IAS 12 Income Taxes regarding the recognition of deferred tax assets for unrealised losses (effective
for accounting periods beginning on or after 1 January 2017)
- Amendments to IFRS 12 Disclosure of interests in other entities (effective for accounting periods beginning on or
after 1 January 2017)
The preparation of these summarised financial statements and consolidated financial statements for FY18 was supervised
by the Chief Financial Officer, Mr Ivan Dittrich, CA(SA).
Independent auditors' report
The independent auditors, Deloitte & Touche, have issued their unmodified audit opinion on the consolidated financial
statements in accordance with International Standards on Auditing. These summarised consolidated financial statements
have been derived from the consolidated financial statements and are consistent in all material respects, with the
consolidated financial statements. The consolidated financial statements and the auditor's unmodified report on the
consolidated financial statements are available for inspection at the Company's registered office.
The auditors' 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 auditors'
engagement they should obtain a copy of that report together with the accompanying financial information from the Company's
registered office. Any reference to future financial performance included in this announcement, has not been reviewed
or reported on by the Company's auditors.
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 and 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
Chairman
JP Montanana
Chief Executive Officer
IP Dittrich
Chief Financial Officer
17 May 2018
DIRECTORS
SJ Davidson°• (Chairman), JP Montanana• (CEO), IP Dittrich (CFO), O Ighodaro°‡, JF McCartney°†, MJN Njeke°,
CS Seabrooke°, NJ Temple°•
°Non-executive •British †American ‡Nigerian
* Excluding impairments 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 relating to fundamental
reorganisations, SYNNEX deal-related expenses and the taxation effect on all of the aforementioned.
INDEPENDENT AUDITORS' REPORT ON SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS
TO THE SHAREHOLDERS OF DATATEC LIMITED
Opinion
The summarised consolidated financial statements of Datatec Limited, which comprise the summarised consolidated
statement of financial position as at 28 February 2018, the summarised consolidated statements of comprehensive
income, changes in equity and cash flows for the year then ended, and related notes, are derived from the audited
consolidated financial statements of Datatec Limited for the year ended 28 February 2018.
In our opinion, the accompanying summarised consolidated financial statements are consistent, in all material
respects, with the audited consolidated financial statements of Datatec Limited, in accordance with the requirements
of the JSE Limited Listings Requirements for provisional reports, set out in the "Basis of Preparation" notes to
the summarised consolidated financial statements, and the requirements of the Companies Act of South Africa as
applicable to summarised financial statements.
Summarised consolidated financial statements
The summarised consolidated financial statements do not contain all the disclosures required by the International
Financial Reporting Standards ("IFRS") and the requirements of the Companies Act of South Africa as applicable to
annual financial statements. Reading the summarised consolidated financial statements and the auditor's report
thereon, therefore, is not a substitute for reading the audited consolidated financial statements of Datatec
Limited and the auditor's report thereon.
The audited consolidated financial statements and our report thereon
We expressed an unmodified audit opinion on the audited consolidated financial statements in our report dated
16 May 2018. That report also includes the communication of key audit matters as reported in the auditor's report
of the audited consolidated financial statements.
Directors' responsibility for the summarised consolidated financial statements
The directors are responsible for the preparation of the summarised consolidated financial statements in accordance
with the requirements of the JSE Limited Listings Requirements for provisional reports, set out in the "Basis of
Preparation" note to the summarised consolidated financial statements, and the requirements of the Companies Act
of South Africa as applicable to summarised financial statements, and for such internal control as the directors
determine is necessary to enable the preparation of the summarised consolidated financial statements that are free
from material misstatement, whether due to fraud or error.
The Listings Requirements require provisional reports to be prepared in accordance with the framework concepts and the
measurement and recognition requirements of IFRS, the SAICA Financial Reporting Guides as issued by the Accounting
Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council, and to also,
as a minimum, contain the information required by IAS 34 Interim Financial Reporting.
Auditor's responsibility
Our responsibility is to express an opinion on whether the summarised consolidated financial statements are
consistent, in all material respects, with the consolidated audited financial statements based on our procedures,
which were conducted in accordance with International Standard on Auditing ("ISA") 810 (Revised) Engagements to
Report on Summary Financial Statements.
Deloitte & Touche
Registered auditor
Per: M Rayfield
Partner
16 May 2018
Building 1 and 2, Deloitte Place, The Woodlands
Woodlands Drive, Woodmead, Sandton
Riverwalk Office Park, Block B
41 Matroosberg Road, Ashlea Gardens X6
Pretoria
National Executive: *LL Bam Chief Executive Officer *TMM Jordan Deputy Chief Executive Officer *MJ Jarvis Chief
Operating Officer *AF Mackie Audit & Assurance *N Sing Risk Advisory *NB Kadar Tax TP Pillay Consulting S Gwala BPS
*JK Mazzocco Talent & Transformation MG Dicks Risk Independence & Legal *TJ Brown
Chairman of the Board
A full list of partners and directors is available on request
* Partner and registered auditor
BBBEE rating: Level 1 contribution in terms of DTI Generic Scorecard as per the amended Codes of Good Practice
Associate of Deloitte Africa, a member of Deloitte Touche Tohmatsu Limited
Summarised consolidated statement of comprehensive income
for the year ended 28 February 2018
Audited
Audited Re-presented1
Year ended Year ended
US$'000 February 2018 February 2017
CONTINUING OPERATIONS
Revenue 3 923 715 3 861 991
Continued operations 3 881 547 3 859 775
Revenue from acquisitions 42 168 2 216
Cost of sales (3 287 670) (3 239 701)
Gross profit 636 045 622 290
Operating costs (586 277) (579 177)
Restructuring costs (16 873) (13 072)
Share-based payments (6 198) (1 000)
Operating profit before interest, tax, depreciation, amortisation
and impairment ("EBITDA") 26 697 29 041
Depreciation (27 548) (27 440)
Amortisation of capitalised development expenditure (11 375) (13 461)
Amortisation of acquired intangible assets and software (12 640) (11 429)
Impairment of investment in joint venture (1 000) -
Impairment of capitalised development expenditure (55 112) -
Operating loss (80 978) (23 289)
Interest income 8 670 2 912
Finance costs (27 073) (16 733)
Share of equity-accounted investment losses (276) (793)
Acquisition-related fair value adjustments 48 5 565
Fair value movements on put option liabilities - 658
Fair value adjustment on deferred and/or contingent purchase consideration 48 4 907
Other income 257 230
Profit on disposal of associate/loss of control of subsidiary - 319
Loss before taxation (99 352) (31 789)
Taxation (18 465) (21 242)
Loss for the year from continuing operations (117 817) (53 031)
DISCONTINUED OPERATIONS
Profit for the year from discontinued operations 159 608 63 780
Profit for the year 41 791 10 749
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Exchange differences arising on translation to presentation currency 13 942 56 947
Translation of equity loans net of tax effect 8 795 (9 994)
Translation reserve reclassified to profit on disposal of foreign operation 57 345 -
Transfers and other items 2 265 622
Total comprehensive income for the year 124 138 58 324
Profit attributable to:
Owners of the parent 44 359 3 038
Non-controlling interests (2 568) 7 711
41 791 10 749
Total comprehensive income attributable to:
Owners of the parent 130 480 44 732
Non-controlling interests (6 342) 13 592
124 138 58 324
Earnings/(losses) per share ("EPS") (US cents)
Basic 20.5 1.4
Continuing operations (53.3) (28.9)
Discontinued operations 73.8 30.3
Diluted basic 20.3 1.4
Continuing operations (52.6) (28.7)
Discontinued operations 72.9 30.1
1 The prior year has been re-presented to show comparative results from continuing and discontinued operations
in accordance with IFRS 5.
Salient financial features
for the year ended 28 February 2018
Audited
Audited Re-presented1
Year ended Year ended
US$'000 February 2018 February 2017
Headline (losses)/earnings (41 337) 4 293
Continuing operations (64 604) (59 487)
Discontinued operations 23 267 63 780
Headline (losses)/earnings per share (US cents)
Headline (19.1) 2.0
Continuing operations (29.9) (28.3)
Discontinued operations 10.8 30.3
Diluted headline (18.9) 2.0
Continuing operations (29.5) (28.1)
Discontinued operations 10.6 30.1
Underlying (losses)/earnings (12 156) 23 142
Continuing operations (37 135) (44 193)
Discontinued operations 24 979 67 335
Underlying (losses)/earnings per share (US cents)
Underlying (5.6) 11.0
Continuing operations (17.2) (21.0)
Discontinued operations 11.6 32.0
Diluted underlying (5.6) 10.9
Continuing operations (17.0) (20.9)
Discontinued operations 11.4 31.8
Net asset value per share (US cents) 297.0 403.5
KEY RATIOS
Gross margin - continuing operations (%) 16.2 16.1
EBITDA margin - continuing operations (%) 0.7 0.8
Effective tax rate - continuing operations (%) (18.6) (66.8)
Exchange rates
Average Rand/US$ exchange rate 13.0 14.2
Closing Rand/US$ exchange rate 11.8 13.0
Number of shares issued (millions)
Issued 243 212
Weighted average 216 211
Diluted weighted average 219 212
1 The prior year has been re-presented to show comparative results from continuing and discontinued
operations in accordance with IFRS 5.
Summarised consolidated statement of financial position
as at 28 February 2018
Audited Audited
Year ended Year ended
US$'000 February 2018 February 2017
ASSETS
Non-current assets 417 370 786 361
Property, plant and equipment 59 731 73 742
Goodwill 227 321 461 651
Capitalised development expenditure 1 665 80 843
Acquired intangible assets and software 40 661 48 620
Investments 26 613 24 887
Deferred tax assets 41 104 67 644
Finance lease receivables 12 283 8 885
Other receivables 7 992 20 089
Current assets 2 244 228 2 698 539
Inventories 238 537 438 503
Trade receivables 1 192 237 1 548 003
Current tax assets 9 492 17 849
Prepaid expenses and other receivables 322 241 340 696
Finance lease receivables 5 479 7 854
Cash resources 476 242 345 634
Total assets 2 661 598 3 484 900
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent 721 603 854 986
Stated capital 258 461 151 947
Non-distributable reserves 45 331 63 299
Foreign currency translation reserve (58 378) (141 816)
Share-based payment reserve 4 883 2 681
Distributable reserves 471 306 778 875
Non-controlling interests 69 217 51 889
Total equity 790 820 906 875
Non-current liabilities 120 685 127 056
Long-term liabilities 61 723 31 902
Liability for share-based payments 1 517 2 080
Amounts owing to vendors 211 580
Deferred tax liabilities 30 240 78 959
Provisions 10 685 8 376
Other liabilities 16 309 5 159
Current liabilities 1 750 093 2 450 969
Trade and other payables 1 296 578 1 720 391
Short-term interest-bearing liabilities 105 999 64 787
Provisions 16 026 8 634
Amounts owing to vendors 1 029 512
Current tax liabilities 15 561 11 159
Bank overdrafts 314 900 645 486
Total equity and liabilities 2 661 598 3 484 900
Summarised consolidated statement of cash flows
for the year ended 28 February 2018
Audited Audited
Year ended Year ended
US$'000 February 2018 February 2017
Operating profit before working capital changes 91 275 134 535
Working capital changes (60 184) (184 576)
Decrease/(increase) in inventories 28 831 (11 995)
Increase in receivables (258 056) (83 753)
Increase/(decrease) in payables 169 041 (88 828)
Other working capital changes (13 466) 12 720
Cash generated from/(utilised in) operations 17 625 (37 321)
Net finance costs paid (24 784) (25 264)
Taxation paid (43 446) (43 299)
Net cash outflow from operating activities (50 605) (105 884)
Cash outflow for acquisitions (10 749) (1 854)
Net cash inflow from disposal of discontinued operations/investments 744 832 533
Additions to investments (3 002) (9 201)
Additions to property, plant and equipment (26 004) (30 796)
Additions to capitalised development expenditure (20 043) (29 091)
Additions to software (2 668) (1 566)
Proceeds on disposal of property, plant and equipment 821 2 302
Net cash inflow/(outflow) from investing activities 683 187 (69 673)
Proceeds on disposal of 10% of Westcon International 30 000 -
Share repurchases (34 629) -
Dividends paid to shareholders (244 193) (20 949)
Amounts paid to vendors (609) (3 429)
Proceeds from short-term liabilities 93 282 39 185
Repayment of short-term liabilities (39 185) (1 250)
Proceeds from long-term liabilities 51 398 33 472
Repayment of long-term liabilities (31 551) (50 556)
Net cash outflow from financing activities (175 487) (3 527)
Net decrease in cash and cash equivalents 457 095 (179 084)
Cash and cash equivalents at the beginning of the year (299 852) (132 685)
Translation differences on cash and cash equivalents 4 099 11 917
Cash and cash equivalents at the end of the year* 161 342 (299 852)
Cash flows from discontinued operations1 Re-presented1 Re-presented1
Net cash outflow from operating activities (49 747) (18 654)
Net cash outflow from investing activities (2 700) (1 472)
Net cash inflow/(outflow) from financing activities 8 240 (35)
Net (decrease)/increase in cash and cash equivalents (44 207) (20 161)
* Comprises cash resources, net of bank overdrafts.
1 The prior year has been re-presented to show comparative results from continuing and discontinued
operations in accordance with IFRS 5.
Summarised consolidated statement of changes in total equity
for the year ended 28 February 2018
Audited Audited
Year ended Year ended
US$'000 February 2018 February 2017
Balance at the beginning of the year 906 875 869 420
Transactions with equity holders of the parent
Comprehensive income 130 480 44 732
Special dividend (244 193) -
Dividend - (20 949)
Share repurchases (34 629) -
Share-based payments 1 784 837
Disposal of 10% of Westcon International without loss of control 13 175 -
Transactions with non-controlling interests
Comprehensive (loss)/income (6 342) 13 592
Acquisitions of additional interests from non-controlling interests 6 845 -
Disposal of 10% of Westcon International without loss of control 16 825 -
Disposals - (757)
Balance at the end of the year 790 820 906 875
Determination of headline and underlying earnings
for the year ended 28 February 2018
Audited Audited
Year ended Year ended
US$'000 February 2018 February 2017
Profit attributable to the equity holders of the parent 44 359 3 038
Headline earnings adjustments (80 080) 1 262
Impairment of capitalised development expenditure 55 112 -
Property impairment - 1 600
Impairment of investment 1 000 -
Loss on disposal of investment in joint venture associate/loss
in control ofsubsidiary (continued and discontinued operations) (136 341) (319)
Loss/profit on disposal of property, plant and equipment 170 (36)
Tax effect (21) 17
Non-controlling interests (5 616) (7)
Headline (losses)/earnings (41 337) 4 293
Continuing operations1 (64 604) (59 487)
Discontinued operations1 23 267 63 780
DETERMINATION OF UNDERLYING EARNINGS
Underlying earnings adjustments 41 845 24 677
Unrealised foreign exchange losses 11 131 1 854
(continuing and discontinued operations)
Acquisition-related fair value adjustments (48) (5 565)
Restructuring costs (continued and discontinued operations) 18 701 16 559
Amortisation of acquired intangible asset 12 061 11 829
(continuing and discontinued operations)
Tax effect (9 949) (5 488)
Non-controlling interests (2 715) (340)
Underlying (losses)/earnings (12 156) 23 142
Continuing operations1 (37 135) (44 193)
Discontinued operations1 24 979 67 335
1 The prior year has been re-presented to show comparative results from continuing and discontinued operations
in accordance with IFRS 5.
Summarised segmental analysis
for the year ended 28 February 2018
Corporate, Consulting
Westcon International Logicalis and Financial Services Total
Audited Audited Audited Audited
Audited Re-presented1 Audited Re-presented1 Audited Re-presented1 Audited Re-presented1
Year ended Year ended Year ended Year ended Year ended Year ended Year ended Year ended
28 February 28 February 28 February 28 February 28 February 28 February 28 February 28 February
US$'000 2018 2017 2018 2017 2018 2017 2018 2017
Revenue 2 316 650 2 352 752 1 563 714 1 468 238 43 351 41 001 3 923 715 3 861 991
EBITDA (48 123) (33 667) 86 165 76 350 (11 345) (13 642) 26 697 29 041
Reconciliation of
operating(loss)/profit
to (loss)/profit after
taxation
Operating (loss)/profit (127 934) (61 102) 59 483 52 017 (12 527) (14 204) (80 978) (23 289)
Interest income 1 609 1 313 1 444 1 273 5 617 326 8 670 2 912
Finance costs (12 833) (9 996) (14 227) (6 694) (13) (43) (27 073) (16 733)
Share of equity-accounted
investment (losses)/
earnings (440) (933) (51) - 215 140 (276) (793)
Fair value movements on
put option liabilities * 658 - - - - * 658
Fair value adjustments on
deferred and/or contingent
purchase consideration - - 48 4 907 - - 48 4 907
Other income - - - - 257 230 257 230
Profit on disposal of
associate/loss of
control of subsidiary - - - - - 319 - 319
(Loss)/profit before
taxation (139 598) (70 060) 46 697 51 503 (6 451) (13 232) (99 352) (31 789)
Taxation (7 649) (2 697) (7 311) (16 326) (3 505) (2 219) (18 465) (21 242)
(Loss)/profit for
the year from continuing
operations (147 247) (72 757) 39 386 35 177 (9 956) (15 451) (117 817) (53 031)
(Loss)/profit for the year from
discontinued operations (433 629) 62 275 26 340 1 505 566 897 - 159 608 63 780
(Loss)/profit for the year (580 876) (10 482) 65 726 36 682 556 941 (15 451) 41 791 10 749
Total assets 1 088 316 2 405 604 1 253 824 986 291 319 458 93 005 2 661 598 3 484 900
Total liabilities (957 802) (1 861 416) (890 820) (685 867) (22 156) (30 742) (1 870 778) (2 578 025)
* Less than US$1 000.
1 The prior year has been re-presented to show comparative results from continuing and discontinued operations in accordance with IFRS 5.
Sales and purchases between Group companies are concluded at arm's length in the ordinary course of business. The intergroup sales
of goods and provision of services for the year ended 28 February 2018 amounted to US$61.8 million (FY17: US$97.5 million). During the year
the Group entered into a $0.4 million sales transaction and a $40.3 million purchases transaction with SYNNEX, a related party which is not a
member of the Group. $1.4 million was owed to the related party and $0.06 million was owed by the related party at the year end.
Capital expenditure and commitments
as at 28 February 2018
Audited Audited
Year ended Year ended
US$'000 February 2018 February 2017
Capital expenditure incurred in the current year
(including capitalised development expenditure) 48 715 61 453
Capital commitments at the end of the year 23 129 36 155
Lease commitments at the end of the year 128 789 133 202
Payable within one year 31 711 33 894
Payable after one year 97 078 99 308
Acquisitions made during the year
as at 28 February 2018
The following table sets out the assessment of the fair value of assets and liabilities acquired in the acquisition
made by the Group during the year.
Nexia Nubeliu PSI Audited
Fair value on Fair value on Fair value on Fair value on
acquisition acquisition acquisition acquisition
ACQUISITIONS MADE IN FY18 US$'000 US$'000 US$'000 US$'000
Net assets acquired
Current assets 874 2 012 30 405 33 291
Cash and cash equivalents 169 1 854 1 408 3 431
Trade receivables and other receivables 705 158 17 115 17 978
Inventories - - 11 882 11 882
Non-current assets 63 38 2 638 2 739
Plant and equipment 61 27 2 041 2 129
Deferred tax assets 2 11 597 610
Current liabilities (705) (152) (19 715) (20 572)
Trade and other payables (618) (48) (17 814) (18 480)
Bank overdraft - - (1 500) (1 500)
Taxation liabilities (87) (104) (401) (592)
Non-current liabilities (414) (142) (5 269) (5 825)
Deferred tax liabilities (414) (142) (1 132) (1 688)
Other non-current liabilities - - (4 137) (4 137)
Net (liabilities) assets acquired (182) 1 756 8 059 9 633
Intangible assets 1 799 618 4 475 6 892
Goodwill 3 380 2 533 42 5 955
Non-controlling interest - (1 091) (5 754) (6 845)
Fair value of acquisition 4 997 3 816 6 822 15 635
Cash and cash equivalents acquired (169) (1 854) 92 (1 931)
Subsidiary company shares (2 097) - - (2 097)
Deferred purchase consideration (858) - - (858)
Net cash outflow for acquisitions 1 873 1 962 6 914 10 749
The initial accounting for the three acquisitions have been finalised at the date of the finalisation of the
consolidated annual financial statements, with the exception of the resolution of a withholding tax liability in the
acquisition of PSI.
Discontinued operations
for the year ended 28 February 2018
Datatec has completed the sale of its Westcon-Comstor business in North America and Latin America ("Westcon
Americas") and of 10% of the remaining part of Westcon ("Westcon International") to SYNNEX effective on
1 September 2017. The Americas are disclosed as a disposal group in terms of IFRS 5 Non-current assets
held for sale and discontinued operations. In October 2017, Logicalis also realised significant value from
the sale of its non-core SMC consulting business to DXC Technology Company (NYSE: DXC) for US$42 million.
The contribution of discontinued operations included in the Group's results until disposal is as follows:
Westcon Datatec Datatec
Americas SMC consolidation Disposal Westcon consolidation Disposal
Year ended Year ended adjustments group Americas SMC adjustments group
28 February 28 February Year ended Year ended Year ended Year ended Year ended Year ended
US$'000 2018 2018 28 February 28 February 28 February 28 February 28 February 28 February
2018 2018 2017 2017 2017 2017
Revenue 1 151 849 19 331 (21 251) 1 149 929 2 234 659 42 061 (55 328) 2 221 392
Continued operations 1 130 598 19 331 - 1 149 929 2 179 331 42 061 - 2 221 392
Intersegmental revenue 21 251 - (21 251) - 55 328 - (55 328) -
Cost of sales (1 056 453) (15 238) 21 251 (1 050 440) (2 033 077) (32 801) 55 328 (2 010 550)
Gross profit 95 396 4 093 - 99 489 201 582 9 260 - 210 842
Operating costs (62 172) (3 501) - (65 673) (109 463) (6 601) - (116 064)
Impairment of property - - - - (1 600) - - (1 600)
Restructuring costs (1 828) - - (1 828) (3 488) - - (3 488)
Share-based payments (401) - - (401) 139 - - 139
Operating profit before
interest, tax,
depreciation and
amortisation
("EBITDA") and
management fees 30 995 592 - 31 587 87 170 2 659 - 89 829
Management fees
- Westcon (18 109) - 18 109 - (40 027) - 40 027 -
Management fees
- Logicalis - (223) 223 -
Datatec Group
management fees (4 441) - 4 441 - (7 208) - 7 208 -
EBITDA after
management fees 8 445 369 22 773 31 587 39 935 2 659 47 235 89 829
Depreciation (1 555) (106) - (1 661) (3 887) (103) - (3 990)
Amortisation of
capitalised
development expenditure (338) - - (338) (351) - - (351)
Amortisation of acquired
intangible assets
and software (667) (95) - (762) (1 507) (151) - (1 658)
Operating profit 5 885 168 22 773 28 826 34 190 2 405 47 235 83 830
Net finance costs (6 889) (10) 3 (6 896) (9 964) (422) 4 (10 382)
(Loss)/profit before
taxation (1 004) 158 22 776 21 930 24 226 1 983 47 239 73 448
Taxation 1 384 (47) - 1 337 (9 186) (482) - (9 668)
Profit for the year 380 111 22 776 23 267 15 040 1 501 47 239 63 780
The Westcon-Comstor and Logicalis management fees charged are added back as these costs will remain within the Datatec Group as per
the share purchase agreement. Datatec management fees are eliminated at Datatec Group.
Datatec
Westcon consolidation
US$'000 Americas SMC adjustments Total
Gain on disposal of subsidiary
Consideration received 600 000 41 883 - 641 883
Goodwill derecognised (246 097) (1 171) - (247 268)
Capitalised development expenditure derecognised (32 648) - - (32 648)
Other net assets disposed of (94 667) (8 446) - (103 113)
Cumulative loss on disposal group reclassified
from equity on loss of control of subsidiary (57 345) - - (57 345)
Transaction-related costs incurred on the disposal (28 905) (6 263) - (35 168)
Transitional services provided to SYNNEX - FY18 (15 000) - - (15 000)
Transitional services provided to SYNNEX - FY19 (15 000) - - (15 000)
110 338 26 003 - 136 341
US$'000 2018 2017
Profit for the year from discontinued operations
Profit for the year - disposal group 23 267 63 780
Gain on disposal of subsidiary 136 341 -
159 608 63 780
The statements of financial position at the disposal date is as follows:
Westcon
Americas SMC Total
Period ended Period ended discontinued
31 August 12 October operations
US$'000 2017 2017 2017
ASSETS 343 267 1 935 345 202
Property, plant and equipment 12 302 707 13 009
Goodwill 246 097 1 171 247 268
Capitalised development expenditure 32 648 - 32 648
Acquired intangible assets and software 4 785 57 4 842
Deferred tax assets 19 930 - 19 930
Finance lease receivables 11 512 - 11 512
Other receivables 15 993 - 15 993
Current assets 952 557 28 758 981 315
Inventories 173 904 - 173 904
Trade receivables 563 754 3 559 567 313
Current tax assets 10 430 - 10 430
Prepaid expenses and other receivables 44 342 23 508 67 850
Finance lease receivables 5 931 - 5 931
Short-term inter-company loans and receivables 26 806 - 26 806
Cash resources 127 390 1 691 129 081
Total assets 1 295 824 30 693 1 326 517
EQUITY AND LIABILITIES
Equity attributable to the equity holders of the parent
Non-distributable reserves 154 262 - 154 262
Distributable reserves 219 150 9 617 228 767
Total equity 373 412 9 617 383 029
Non-current liabilities 16 259 11 16 270
Long-term liabilities 766 - 766
Liability for share-based payments 133 - 133
Deferred tax liabilities 14 100 11 14 111
Provisions 403 - 403
Other liabilities 857 - 857
Current liabilities 906 153 21 065 927 218
Trade and other payables 589 030 21 000 610 030
Short-interest-bearing debt 8 019 - 8 019
Provisions 688 - 688
Current tax liabilities 438 65 503
Short-term inter-company loans and payables 25 778 - 25 778
Bank overdrafts 282 200 - 282 200
Total equity and liabilities 1 295 824 30 693 1 326 517
Registered office: Ground Floor, Sandown Chambers, Sandown Village, 16 Maude Street, Sandown
Johannesburg
17 May 2018
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 17/05/2018 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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