Datatec Group Audited results for the year ended 29 February 2008 1
Datatec Group Highlights Revenue up 27% (12.2% organic) to over $4.0 billion Improved geographic spread of business helps to mitigate weakness in US Significant H2 turnaround in performance for Logicalis US post restructuring Major acquisitions transform Westcon s European business and improve vendor mix 58% of revenue now derived from outside North America Underlying earnings per share up 21% to 47.3 US cents 2
Datatec Group Market conditions US economy remains weak but with little impact on overall corporate IT market Continuing weak US dollar is a catalyst for IT capex growth in the rest of the world Most technology sectors are robust especially wireless and security Latin America, Asia-Pacific and Middle East are the strongest regions Good opportunities for further consolidation 3
Datatec Group Financial performance summary Another year of improving financial performance Continuing strong revenue growth of over $840 million or 27% to $4 billion (12.2% organic) Gross margin percentage improved to 13.7% from 13.1% EBITDA increases by $32 million or 26% to $150.8 million Underlying* earnings per share up 21% to 47.3 US cents Working capital continues to be tightly managed * excluding goodwill impairment, i amortisation of intangible ibl fixed assets, profit or loss on sale of assets and businesses and unrealised foreign exchange movements on inter-company loans. 4
Datatec Group Business stream analysis Distribution ICT Solutions Consulting & Services Revenue Gross profit $721m 18% $258m 6% $164m 30% $66m 12% $3,029m $317m 76% 58% FY2008 FY2008 5 Revenues grew by 27% (12.2% organic) Gross profit grew by 32%
Datatec Group Revenue % by geography North America Europe Asia Pac Africa Middle East South America 7 5 2 6 6 3 48 42 38 43 FY2007 FY2008 6 European revenues exceed North American revenues for the first time
Datatec Group Gross profit contribution % by geography North America Europe Asia Pac Africa Middle East South America 7 3 5 5 6 4 37 48 43 42 FY2007 FY2008 7 Gross profit contribution from Europe grew by 52%
Datatec Group Financial performance ($m) FY2007 FY 2008 Growth Sales 3,167.8 4,007.9 27% Gross margin 415 547 32% Gross margin % 13.1% 13.7% 5% Operating costs 295.8 396.3 34% Operating cost margin % 93% 9.3% 99% 9.9% EBITDA 119.3 150.8 26% EBITDA% 3.8% 3.8% Depreciation 13.6 16.5 21% Amortisation of intangible assets 5.4 10.3 91% Operating profit 99.1 123.6 25% Operating profit % 3.1% 3.1% 8
Datatec Group Financial performance ($m) FY2007 FY 2008 Growth Operating profit 99.1 123.6 25% Net finance costs 9.7 15.3 58% Profit before tax 89.4 108.3 21% Underlying * EPS (US cents) 39.2 47.3 21% HEPS (US cents) 40.8 45.6 12% Issued number of shares (million) 155 169 9 Weighted average number of shares (million) 150 166
Datatec Group Cash flow ($m) FY2007 FY2008 EBITDA 119 151 Working capital changes (60) (85) Net finance costs (10) (15) Taxation paid (14) (30) Other non-cash items 11 25 Business acquired (45) (180) Other investing activities (15) (28) Net cash inflow from financing activities 31 71 Capital distribution to shareholders (7) (16) Decrease in cash and cash equivalents (31) (107) Cash and cash equivalents at beginning of period 172 141 Cash and cash equivalents at end of period 141 34 10
Datatec Group Balance sheet summary ($m) FY2007 FY2008 Equity and liabilities Shareholders funds 537.7 654.7 Outside shareholders h 14.9 23.6 Long term liabilities 63.4 83.3 616.0 761.6 Non-current assets Goodwill 162.6 284.3 Other intangible assets 20.7 55.0 Other non-current assets 58.8 81.8 Current assets 1,149.1 1,463.3 Current liabilities 775.2 1,122.8 616.0 761.6 11
12 Westcon Group
Westcon Group Highlights Revenues increased by $582 million to $2.9 billion. Increases in all geographic regions Organic growth of 12% Gross margins improve to 10.4% EBITDA increases 23%. Significant growth in Europe and Asia Pacific NOXS and Crane acquisitions create leadership position in Security & Convergence Significant improvement in product mix Completed acquisition of Review Video (US), a specialist distributor of networked videoconferencing and collaboration solutions Acquired Cernet (Americas), providing entry into Mexico and Central America markets Entered into a strategic joint venture in Turkey. 13
Westcon Group Financial performance summary ($m) FY2007 FY2008 Growth % Sales 2,271.6 2,853.6 26% Gross margin 216.22 296.7 37% Gross margin % 9.5% 10.4% Operating costs 133.5 194.9 46% Operating cost margin % 5.9% 68% 6.8% EBITDA 82.7 102.0 23% EBITDA% 3.6% 3.6% Operating profit 72.5 86.66 19% As a % of revenue 3.2% 3.0% Net interest 9.3 16.9 82% Pre-tax income 63.2 69.8 10% 14
Westcon Group Revenue % by geography Europe Asia Pac Americas 50 40 45 46 10 9 FY 2007 FY 2008 Growth in European business 15
Westcon Group Revenue % by vendor 9 10 Cisco Nortel Avaya Security Other 8 13 9 13 60 11 55 11 FY 2007 FY 2008 16 Reduced reliance on Cisco; growth in Security
Westcon Group Revenue % by customer Reseller System Integrator Service Provider 17 16 23 60 23 61 FY 2007 FY 2008 Customer groups remain constant 17
Westcon Group Gross Margin % FY2007 FY2008 12 10 10.2 9.8 8.6 10.9 11.0 9.7 9.5 10.4 8 6 4 2 0 Americas Europe Asia Pac Total 18
Westcon Group EBITDA ($ millions) FY2007 FY2008 120 100 80 70 75 83 102 60 40 20 25 39 8 12 0-20 -40-21 -23 Americas Europe Asia Pac Central Costs Total Note: Central costs include infrastructure, systems and other non-operating group costs 19
Westcon Group Consolidated balance sheet working capital US GAAP ($m) FY2007 FY2008 Accounts receivable 385 567 DSO (days) 61 69 Inventory 232 279 Inventory turns 8.9x 9.7x Accounts payable 387 484 DPO (days) 68 66 Current ratio 1.6 1.3 20 Note: Amounts are stated before intercompany elimination and ratios based on trailing twelve month averages
Westcon Group Consolidated balance sheet capitalisation US GAAP ($m) FY2007 FY2008 Cash 129 125 Working capital lines 61 211 Notes payable 40 56 Net debt / cash* 0 192 Equity 325 377 Debt to capitalisation 0.28 0.45 Liabilities to TNW 1.83 2.86 Note: * Includes inter-company loan payable to Datatec which is eliminated in consolidation 21
Westcon Group Net cash/debt trend ($m) $50 $0 -$50 -$100 -$150 -$200 -$250 -$300 -$350 ($139,544,122) ($59,842,704) ($30,701,555) ($76,872,694) ($32,122,321) ($55,141,499) ($204,085,03 0) Net Cash Mar-01 Jul-01 Nov-01 Mar-02 Jul-02 Nov-02 Mar-03 Jul-03 Nov-03 Mar-04 Jul-04 Nov-04 Mar-05 Jul-05 Nov-05 Mar-06 Jul-06 Nov-06 Mar-07 Jul-07 Nov-07 22
Westcon Group Future outlook US weakness continues and outlook remains uncertain Leverage growing international reach and global scale for vendors and customers Opportunities to further consolidate and make organic investments in new markets to parallel the objectives of major vendor partners Biggest organic growth opportunities are in Asia-Pac and Latin America Further margin expansion expected in Europe Expand global Cisco relationship with programmes to exploit new revenue streams Strengthening the executive team with appointment of a Westcon COO 23
24 Logicalis Group
Logicalis Group Highlights Revenues up 22% to $845 million Organic growth of 10% Gross Margin expand to 22.9% EBITDA up 35% to $36.2 million (FY2007 $26.8 million) Robust growth in profitability in the UK operations South America very strong revenue growth of 71% US H1 restructure resulted in strong profit recovery despite softening in the market 25
Logicalis Group Financial performance summary ($m) FY2007 FY2008 Growth % Sales 693.1 845.1 22% Gross margin 155.0 193.8 25% Gross margin % 22.3% 22.9% Operating costs 128.2 157.6 23% Operating cost margin % 18.4% 18.7% EBITDA 26.8 36.2 35% EBITDA% 3.9% 4.3% Operating profit 18.8 26.1 40% As a % of revenue 2.7% 3.1% Note: Excludes Datatec Group inter-company transactions 26
Logicalis Group Revenue % geographic split 2 1 North America South America UK Germany 32 42 49 60 6 FY 2007 FY 2008 Dependence on North America has reduced (49% of revenue) 8 27
Logicalis Group Revenue segmental split Product Professional Services Maintenance & Managed Services 10 11 9 9 81 80 FY 2007 FY 2008 Sales mix remained steady 28
Logicalis Group Revenue product vendor mix % IBM Cisco HP Others 11 3 11 2 EMC 21 43 21 39 22 27 FY 2007 FY 2008 IBM remained largest vendor partner 29
Logicalis Group Gross margin % 40 35 30 31.3 34.9 FY2007 FY2008 25 20 23.1 23.0 21.6 23.1 23.1 22.3 22.9 20.4 15 10 5 0 UK Germany North America South America Total Overall margin up 0.6% 30
Logicalis Group EBITDA ($m) 40 35 36.2 FY2007 FY2008 30 26.8 25 22.1 22.3 20 17.4 15 10 5 95 9.5 2.3 4.4 0-5 -0.6 06-0.8 08-10 UK Germany North America South America -6.7-6.9 Central Costs Total Robust growth in UK profitability 31
Logicalis Group Key financial measures ($m) FY2007 FY2008 Deferred revenue 26.2 19.3 Inventory 23.7 28.0 Inventory days (excluding spares stock) 16 18 Accounts receivable 147.2 133.9 DSO days 50 44 Accounts payable 117.0 116.5 DPO days 73 72 Net cash 8.6 44.3 Significant ifi improvement in working capital 32
Logicalis Group Promon Brazil Update Transaction completed on 2 May 2008 Largest independent network integrator in South America Logicalis owns 70% of enlarged South America operations Promon generated $18 million of EBITDA (based on unaudited 31 December FY07) Logicalis now has operations in Argentina, Brazil, Chile, Paraguay, Peru and Uruguay with annualised revenues of approximately $300 million Platform to provide cross-border solutions and regional expansion Post closing we received our largest ever regional order of $80 million 33
Logicalis Group Future outlook Much better geographic balance and improving operational execution Providing broader solutions to more customers Drive to grow annuity based services Expecting to continue to deliver above average market growth Acquisition opportunities continue to be evaluated 34
35 Analysys Mason
Analysys Mason Highlights Growth in revenues, margins and profits EBITDA margins improved to 10.9% from 10.1% and gross margins reached 40% Further globalisation li of client base with 60% of revenues now coming from non-uk clients Core telecoms consulting revenue have had 12% CAGR over the last three years Strategy consulting business had record performance Research business had strong revenue growth of 24% Established Dubai office for Middle East and North Africa (MENA) region Completed the acquisition of Redbox Consulting in February 2008 36
Analysys Mason Financial performance summary ($ 000) FY2007 FY2008 Growth % Revenue 61.4 63.5 3% Gross margin 22.3 25.4 14% Gross margin % 36.3% 40.0% Operating costs 16.1 18.4 14% Operating cost margin % 26% 29% EBITDA 6.2 6.9 11% EBITDA% 10.1% 10.9% Operating profit 5.8 6.2 10.7% As a % of revenue 9.4% 9.8% 37
Analysys Mason Revenue % geographic split 4 1 5 2 UK Europe Rest of World MENA Asia USA 23 45 26 41 2 26 8 18 FY 2007 FY 2008 38
Analysys Mason Strategy Exploit the transition to a single integrated brand and end-to-end service portfolio Leverage recent acquisition Move to offer knowledge based business transformation and restructuring services New offerings to deliver operations improvement planning and convergence consulting Extend international reach Targeting $100 million in revenues in the next few years Maintain gross margins over 40% and drive operating profit into the teens 39
Analysys Mason Future outlook Tl Telecoms ICT environment Buoyant emerging markets presence but need to protect early-mover advantages Demand for people means supply costs are increasing faster than fee rates Overall growth dynamics for industry remain intact Hot industry themes Next Generation Networks; access, applications and product innovation, fibre deployment M&A and operator launch activity in emerging markets Digital Content/Delivery; service integration, advertising models, carrier IPTV vs aggregator IPTV Mobile Broadband/HSPA Radio Spectrum licensing, LTE/Wi-Max, digital dividend review ICT productivity in the Public Sector & Enterprise 40
41 Other Emerging Market Operations
Oh Other Emerging Market Operations Highlights Improvements in market share, geographic reach and new vendors Significant revenue growth (73%) mainly acquisitive Pan Africa footprint established Investments in organic startups (Comstor/Cisco ME) impacted margins South African IT services group AL Indigo performing profitably 42
Oh Other Emerging Market Operations Financial performance summary ($m) FY2007 FY2008 Growth Sales 141.8 245.7 73% Gross margin 21.8 31.2 43% Gross margin % 15.3% 12.2% Operating costs 16.6 23.4 41% Operating cost margin % 11.7% 92% 9.2% EBITDA 5.2 8.1 56% EBITDA% 3.5% 3.2% Operating profit 4.8 6.4 33% As a % of revenue 3.4% 2.5% Net interest 0.6 2.0 233% Pre-tax income 4.2 4.1 (2%) 43
Oh Other Emerging Market Operations Revenue % by geography South Africa Middle East & North Africa Sub Saharan Africa 0 20 32 52 68 28 FY 2007 FY 2008 44
Oh Other Emerging Market Operations Strategic focus and outlook Consolidate recently acquired assets Drive efficiencies through deployment of group systems and processes Leverage scale, purchasing power and brands (i.e.westcon) Expand footprint: India and emerging Asia 45
46 Datatec Group
Datatec Group Market outlook Expect the US to remain weak this year Europe may experience a slowdown but escape the setbacks of the US Emerging markets and commodities countries expected to provide fastest growth Technology businesses should perform well aided by weaker US dollar Unified communications, security and network upgrades for massive content delivery (social networking, IPTV, mobile Web) will be the biggest growth areas 47
Datatec Group Strategy Continued focus on organic growth and faster growing developing economies Recent acquisitions in Brazil, Turkey, Africa and Middle East enhance overall scale and geographical presence globally, supported by key vendor partners Germany viewed as best Euro zone country to expand in currently Actively looking at strategic opportunities in Latin America, India and Asia where lower cost of entry and higher returns allow for greater organic investment Targeting to double emerging markets exposure in the next two years Acquisitions complement growth not the primary driver 48
Datatec Group Current trading and prospects 1 st quarter trading so far remains resilient and in line with the Group s expectations US remains soft and global markets uncertain Solid backlog and order book in many parts of the Group Expecting to add approximately $1 billion or 25% in revenues in current financial year Targeting g to achieve 4% consolidated group EBITDA margins in the medium term 20% increase in dividend to shareholders to R0,90 cents (US $0,12 cents) 49
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