datatec group · technology distribution integration & managed services consulting &...

Technology Distribution Integration & Managed Services Consulting & Research

DATATEC GROUP UNAUDITED INTERIM RESULTS FOR THE

SIX MONTHS ENDED 31 AUGUST 2017

© Datatec 2017 2

DATATEC GROUP AGENDA

Results summary, overview & strategic update Jens Montanana, Datatec Group CEO

Financial results Ivan Dittrich, Datatec Group CFO

Operational review Jens Montanana, Datatec Group CEO

Current trading & prospects Jens Montanana, Datatec Group CEO

© Datatec 2017


RESULTS SUMMARY, OVERVIEW &

STRATEGIC UPDATE

© Datatec 2017 4 OVERVIEW

WESTCON-

COMSTOR

LOGICALIS

GROUP DATATEC

GROUP OUTLOOK

STRATEGIC

UPDATE

DATATEC GROUP FINANCIAL RESULTS SUMMARY

Revenue

H1 FY18 Combined $2.99bn

H1 FY17 Combined $3.04bn

H1 FY18 Reported $1.84bn

H1 FY17 Reported $1.98bn

Underlying EPS

H1 FY18 Combined $39m

H1 FY17 Combined $69m

H1 FY18 Reported $8m

H1 FY17 Reported $24m

Gross margin

H1 FY18 Combined 13.3%

H1 FY17 Combined 13.8%

H1 FY18 Reported 16.2%

H1 FY17 Reported 16.1%

EBITDA

H1 FY18 1.4 US¢

H1 FY17 12.5 US¢


WESTCON-

COMSTOR

LOGICALIS

GROUP DATATEC

GROUP OUTLOOK

STRATEGIC

UPDATE

DATATEC GROUP OVERVIEW

Challenging first half

Plan to return at least $350 million to shareholders as we are

committed to returning any of the earn-out monies

Westcon International to be streamlined

Value unlocked through Westcon Americas & Logicalis SMC

disposals

© Datatec 2017

LOGICALIS

GROUP

WESTCON-

COMSTOR

DATATEC

GROUP 6 OUTLOOK OVERVIEW

STRATEGIC

UPDATE

DATATEC GROUP STRATEGIC UPDATE

Sale of Westcon Americas to Synnex

Sale of Logicalis SMC

Cancellation of AIM listing

Combining Datatec & Westcon International Group functions

© Datatec 2017


FINANCIAL RESULTS


DATATEC

GROUP

WESTCON-

COMSTOR OUTLOOK

LOGICALIS

GROUP STRATEGIC

UPDATE

DATATEC GROUP FINANCIAL PERFORMANCE

US$m

H1 FY18

Reported

Westcon

Americas

Logicalis

SMC

H1 FY18

Combined H1 FY17 Growth %

Revenue 1,844.8 1,130.6 16.1 2,991.5 3,036.9 (1%)

Gross profit 299.4 95.4 3.3 398.1 419.8 (5%)

Gross margin % 16.2% 8.4% 20.5% 13.3% 13.8%

Operating costs (291.7) (64.4) (2.7) (358.8) (350.9) 2%

Operating cost margin % 15.8% 5.7% 16.8% 12.0% 11.6%

EBITDA 7.7 31.0 0.6 39.3 68.9 (43%)

EBITDA% 0.4% 2.7% 3.7% 1.3% 2.3%

Depreciation & amortisation (26.7) (2.5) (0.1) (29.3) (28.2) 4%

Operating (loss)/profit (19.0) 28.5* 0.5 10.0 40.7 (75%)

Operating (loss)/profit % (1.0%) 2.5% 3.1% 0.3% 1.3%

IFRS 5 disposal groups and

disclosure

Financial performance impacted by

weaker Westcon-Comstor

performance

Depreciation & amortisation high due

to high historic capex

* Includes Datatec consolidation adjustments


DATATEC

GROUP

WESTCON-

COMSTOR OUTLOOK

LOGICALIS

GROUP STRATEGIC

UPDATE

DATATEC GROUP FINANCIAL PERFORMANCE – CONTINUED

US$m H1 FY18

Reported

H1 FY18

Combined H1 FY17 Growth %

Operating (loss)/profit (19.0) 10.0 40.7 (75%)

Net finance costs (9.9) (17.0) (10.3) 65%

Loss before tax (28.5) (6.6) 34.3 (119%)

Underlying EPS (US cents) 1.4 1.4 12.5 (89%)

HEPS (US cents) (5.8) (5.8) 9.1 (164%)

Increased finance costs due to higher

average debt, mainly in

Westcon-Comstor

Underlying EPS excludes

restructuring costs & Synnex

transaction costs

No interim dividend declared


DATATEC

GROUP

WESTCON-

COMSTOR OUTLOOK

LOGICALIS

GROUP STRATEGIC

UPDATE

DATATEC GROUP ADJUSTED EBITDA BRIDGE

39 53

79

7 4 3

Combined EBITDA Restructuring costs Unrealised FX Synnex deal-relatedexpenses

Adjusted** EBITDA H1 FY17 adjusted**EBITDA

7

** Adjusted for uEPS adjustments

US$m


DATATEC

GROUP

WESTCON-

COMSTOR OUTLOOK

LOGICALIS

GROUP STRATEGIC

UPDATE

DATATEC GROUP CONTRIBUTION PER DIVISION (COMBINED RESULTS INCLUDING DISPOSAL GROUP)

* Contribution to EBITDA is calculated before Corporate costs

76%

23%

1%

H1 FY18

74%

25%

1%

H1 FY17

REVENUE GROSS PROFIT

Westcon-Comstor Logicalis Consulting & Financial Services

54%

44%

2%

H1 FY18

56%

42%

2%

H1 FY17

EBITDA*

39%

59%

2%

H1 FY18

56%

43%

1%

H1 FY17

Larger EBITDA

contribution from

Logicalis


DATATEC

GROUP

WESTCON-

COMSTOR OUTLOOK

LOGICALIS

GROUP STRATEGIC

UPDATE

DATATEC GROUP REVENUE & GROSS PROFIT % CONTRIBUTION BY GEOGRAPHY

(COMBINED RESULTS INCLUDING DISPOSAL GROUP)

34%

17%

32%

11%

6%

H1 FY18

35%

14% 33%

11% 7%

H1 FY17


27%

22%

33%

14%

4%

H1 FY18

30%

19% 33%

13%

5%

H1 FY17

North America Latin America Europe Asia-Pacific MEA

Geographic mix affected

margins

Increased contribution from

Latin America


DATATEC

GROUP

WESTCON-

COMSTOR OUTLOOK

LOGICALIS

GROUP STRATEGIC

UPDATE

DATATEC GROUP BALANCE SHEET SUMMARY

US$m H1 FY18 FY 2017 H1 FY17

Assets 3,638.3 3,484.9 3,425.7

Non-current assets

Goodwill 403.5 461.7 463.3

Acquired intangible assets & software 41.1 48.6 54.2

Other non-current assets 227.2 276.1 266.5

Current assets 1,870.9 2,698.5 2,641.7

Assets held for sale 1,095.6 - -

Equity & Liabilities 3,638.3 3,484.9 3,425.7

Shareholders’ funds 855.4 855.0 870.4

Non-controlling interests 52.1 51.9 47.9

Long-term liabilities 119.3 126.5 113.7

Amounts due to vendors 1.5 1.1 7.1

Current liabilities 1,677.1 2,450.4 2,386.6

Liabilities directly associated with assets held for sale 932.9 - -

Net debt – Combined operations (428.6) (396.5) (251.7)

Net debt – Continuing operations (273.4) (281.5) (149.7)

Gross assets & liabilities of disposal

group disclosed separately

$4.04 NAV per share

1.1 current ratio

Increased net debt as a result of

Westcon-Comstor


DATATEC

GROUP

WESTCON-

COMSTOR OUTLOOK

LOGICALIS

GROUP STRATEGIC

UPDATE

DATATEC GROUP CASH FLOW (COMBINED RESULTS INCLUDING DISPOSAL GROUP)

US$m H1 FY18 H1 FY17

EBITDA 39.3 68.9

Working capital changes (11.8) (41.1)

Other working capital changes (1.2) (4.7)

Other movements 3.0 1.1

Cash generated from operations 29.3 24.2

Net finance costs paid (13.1) (9.6)

Taxation paid (14.9) (21.3)

Net cash inflow/(outflow) from operating activities 1.3 (6.7)

Net cash outflow for acquisitions (5.3) (1.9)

Net cash outflow from other investing activities (27.6) (39.4)

Dividends to shareholders - (14.7)

Net cash inflow from financing activities 27.1 18.7

Decrease in cash & cash equivalents (4.5) (44.0)

Cash & cash equivalents at beginning of year (299.9) (132.7)

Translation difference on cash & cash equivalents (0.2) 11.2

Cash & cash equivalents at end of period – Combined (304.6) (165.5)

Improved cash generated from

operations

Reduced capex spend

Large cash outflows from receivables

due to increased prepaid exposures

in Logicalis


DATATEC

GROUP

WESTCON-

COMSTOR OUTLOOK

LOGICALIS

GROUP STRATEGIC

UPDATE

DATATEC GROUP CASH FLOW FROM OPERATING ACTIVITIES (COMBINED RESULTS INCLUDING DISPOSAL GROUP)

US$m

(32.9)

12.3

39

(125) 3

110

(1) 3 (13) (15) 1

EBITDA Increase inreceivables

Decrease ininventories

Increase inpayables

Other workingcapital

changes

Othermovements

Net financecosts

Taxation paid Net cashinflow fromoperatingactivities


WESTCON-

COMSTOR

LOGICALIS

GROUP DATATEC

GROUP OUTLOOK

STRATEGIC

UPDATE

DATATEC GROUP USE OF SYNNEX PROCEEDS

$630 million cash received on closing

Pay transaction-related costs, fund working capital & reduce debt

Up to $200 million cash earn-out (to be returned to shareholders)

Return $350 million cash to shareholders

• Special dividend with scrip alternative

• General share buy-back

© Datatec 2017


OPERATIONAL REVIEW

© Datatec 2017


WESTCON-COMSTOR


DATATEC

GROUP

WESTCON-

COMSTOR OUTLOOK LOGICALIS

GROUP STRATEGIC

UPDATE

WESTCON-COMSTOR FINANCIAL PERFORMANCE – COMBINED OPERATIONS

US$m H1 FY18 H1 FY17 Growth %

Revenue 2,278.6 2,256.1 1%

Gross profit 216.3 236.5 (9%)

Gross margin % 9.5% 10.5%

Operating costs (197.3) (193.6) 2%

Operating cost margin % 8.7% 8.6%

EBITDA 19.0 42.9 (56%)

EBITDA% 0.8% 1.9%

Operating profit 2.4 27.6 (91%)

Operating profit % 0.1% 1.2%

Revenue growth in North America

and Latin America

Competitive pricing pressure drives

down gross margin % across all

regions except Asia-Pacific

EBITDA declines across all operating

regions; lower central costs


DATATEC

GROUP

WESTCON-


GROUP STRATEGIC

UPDATE

WESTCON-COMSTOR

37%

13%

32%

10%

8%

H1 FY18

36%

10% 34%

11%

9%

H1 FY17


26%

18% 34%

14%

8%

H1 FY18

26%

15% 37%

13%

9%

H1 FY17

North America

Latin America

Europe

Asia-Pacific

MEA

REVENUE & GROSS PROFIT % CONTRIBUTION BY GEOGRAPHY – COMBINED OPERATIONS


DATATEC

GROUP

WESTCON-


GROUP STRATEGIC

UPDATE

WESTCON-COMSTOR

REVENUE % BY BUSINESS UNIT, CUSTOMER & TECHNOLOGY CATEGORY

– COMBINED OPERATIONS

41%

59%

H1 FY18

42%

58%

H1 FY17

BUSINESS UNIT CUSTOMER

Comstor Westcon

66%

20%

14%

H1 FY18

70%

20%

10%

H1 FY17

TECHNOLOGY

38%

22%

25%

15%

H1 FY18

38%

22%

26%

14%

H1 FY17

Reseller System

integrator

Service

provider

Security Unified communications

Networking Data centre & other


DATATEC

GROUP

WESTCON-


GROUP STRATEGIC

UPDATE

WESTCON-COMSTOR HISTORICAL QUARTERLY SALES – COMBINED OPERATIONS

US$m

Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2

FY 2016

1 254

1 068 1 086

1 257 1 188 1 193 1 190

1 141 1 169 1 135

FY 2017 H1 FY18


DATATEC

GROUP

WESTCON-


GROUP STRATEGIC

UPDATE

WESTCON-COMSTOR GROSS PROFIT & EBITDA BY GEOGRAPHY – COMBINED OPERATIONS

3.3%

GROSS PROFIT EBITDA

US$m US$m

62 36

87

30 22

237

56 39

73

31 17

216

-

50

100

150

200

250

300

350

400

450

500

550

NorthAmerica

Latin America Europe Asia-Pacific MEA Total

H1 FY17 H1 FY18

34

10

23

6 3

(33)

43

24

7 15 3 1

(31)

19

(80)

(60)

(40)

(20)

-

20

40

60

80

100

120

NorthAmerica

LatinAmerica

Europe Asia-Pacific MEA Centralcosts

Total

H1 FY17 H1 FY18


DATATEC

GROUP

WESTCON-


GROUP STRATEGIC

UPDATE

US$m H1 FY18 FY 2017 H1 FY17

Accounts receivable 1,300.7 1,245.2 1,281.4

DSO (days) 70 71 69

Inventory 358.0 400.0 359.2

Inventory turns 11.4x 9.4x 11.6x

Accounts payable (1,107.7) (1,060.9) (1,161.4)

DPO (days) 70 72 73

Net working capital 551.0 584.3 479.2

NWC (days) 32 39 27

Current ratio 1.1 1.1 1.1

Net debt (371.3) (403.4) (248.6)

Net debt – continuing operations (207.5) (288.4) (146.6)

Net debt – discontinued operations

(163.8) (115.0) (102.0)

WESTCON-COMSTOR WORKING CAPITAL – COMBINED OPERATIONS

DSO steady; continued challenges in

emerging markets

Significant improvement in inventory

turns vs. FY17

$163.8m net debt for disposal group


DATATEC

GROUP

WESTCON-


GROUP STRATEGIC

UPDATE

WESTCON-COMSTOR WESTCON AMERICAS AT A GLANCE – SOLID RETURN ON DISPOSAL

US$m H1 FY18 FY17 FY16 FY15

Revenue 1,130.6 2,179.3 2,266.4 2,223.5

Gross profit 95.4 201.6 211.9 224.3

Gross margin % 8.4% 9.3% 9.3% 10.1%

Operating costs (64.4) (114.4) (111.1) (120.1)

Operating cost margin % 5.7% 5.2% 4.9% 5.4%

EBITDA 31.0 87.2* 100.8 104.1

EBITDA% 2.7% 4.0% 4.4% 4.7%

$600m cash on closing

Up to $200m earn-out

* Includes $1.6 million Spanish property impairment (which was part of disposal group)


DATATEC

GROUP

WESTCON-

COMSTOR STRATEGIC

UPDATE OUTLOOK

LOGICALIS

GROUP

WESTCON-COMSTOR OUTLOOK

Continuing to stabilise platform post completion of SAP transition

Collapse Datatec & Westcon head office functions

Focus on improving working capital & cash generation

Reduce costs

Return to revenue growth & better profitability

© Datatec 2017


LOGICALIS GROUP


DATATEC

GROUP

WESTCON-

COMSTOR

STRATEGIC

UPDATE LOGICALIS

GROUP OUTLOOK

LOGICALIS GROUP FINANCIAL PERFORMANCE – COMBINED OPERATIONS

US$m H1 FY18 H1 FY17 Growth %

Revenue 693.7 757.2 (8%)

Gross profit 174.7 175.4 0%

Gross margin % 25.2% 23.2%

Operating costs (145.9) (142.4) 2%

Operating cost margin % 21.0% 18.8%

EBITDA 28.8 33.0 (13%)

EBITDA% 4.2% 4.4%

Operating profit 16.5 20.3 (19%)

Operating profit % 2.4% 2.7%

Total revenue down 8% mainly in US

Services revenue up 7%

Gross margin increased to 25.2%

EBITDA down 13%

Restructuring costs incurred of $2.4m

and included within operating costs


DATATEC

GROUP

WESTCON-

COMSTOR

STRATEGIC

UPDATE LOGICALIS

GROUP OUTLOOK

LOGICALIS GROUP

26%

30%

32%

12%

H1 FY18

31%

26%

32%

11%

H1 FY17


28%

28%

31%

13%

H1 FY18

36%

25%

27%

12%

H1 FY17

North America

Latin America

Europe

Asia-Pacific

REVENUE & GROSS PROFIT % CONTRIBUTION BY GEOGRAPHY – COMBINED OPERATIONS


DATATEC

GROUP

WESTCON-

COMSTOR

STRATEGIC

UPDATE LOGICALIS

GROUP OUTLOOK

LOGICALIS GROUP REVENUE BY SEGMENT & PRODUCT REVENUE BY VENDOR – COMBINED OPERATIONS

SEGMENT

61% 14%

25%

H1 FY18

66%

12%

22%

H1 FY17

Product

Professional services

Maintenance &

managed services

VENDOR

53%

10%

6%

31%

H1 FY18

50%

11% 6%

33%

H1 FY17

Cisco

IBM

HPE

Other


DATATEC

GROUP

WESTCON-

COMSTOR

STRATEGIC

UPDATE LOGICALIS

GROUP OUTLOOK

LOGICALIS GROUP

GROSS PROFIT EBITDA

US$m US$m

62

44 47

22

175

50 48 54

23

175

-

20

40

60

80

100

120

140

160

180

200

North America Latin America Europe Asia-Pacific Total

H1 FY17 H1 FY18

16 15

1

4

-

(3)

33

5

15

7 6

(1) (3)

29

(5)

-

5

10

15

20

25

30

35

NorthAmerica

LatinAmerica

Europe Asia-Pacific MEA Centralcosts

Total

H1 FY17 H1 FY18

GROSS PROFIT & EBITDA BY GEOGRAPHY – COMBINED OPERATIONS


DATATEC

GROUP

WESTCON-

COMSTOR

STRATEGIC

UPDATE LOGICALIS

GROUP OUTLOOK

LOGICALIS GROUP WORKING CAPITAL – COMBINED OPERATIONS

US$m H1 FY18 FY 2017 H1 FY17

Deferred revenue 78.8 77.3 78.8

Inventory 72.3 38.5 61.6

Inventory days (excluding spares stock) 25 14 23

Accounts receivable 308.3 296.7 302.8

DSO (days) 53 50 50

Accounts payable (296.3) (259.7) (259.1)

DPO (days) 118 88 90

Net working capital 84.3 75.5 105.3

Net (debt)/cash * (1.9) 18.1 11.3

* Excluding lease liabilities, Datatec loans and other borrowings

Cash down $20m largely driven by

increased inventory in EMEA &

increased prepaid expenses


DATATEC

GROUP

WESTCON-

COMSTOR

STRATEGIC

UPDATE LOGICALIS

GROUP OUTLOOK

LOGICALIS GROUP SMC AT A GLANCE

US$m H1 FY18 FY17 FY16 FY15

Revenue 16.1 42.1 30.9 38.7

Gross profit 3.3 9.3 8.9 10.2

Gross margin % 20.5% 22.1% 28.8% 26.4%

Operating costs (2.7) (6.6) (6.2) (7.2)

Operating cost margin % 16.8% 15.7% 20.1% 18.6%

EBITDA 0.6 2.7 2.7 3.0

EBITDA% 3.7% 6.4% 8.7% 7.8%

Proceeds received on sale: $42m

Purchase price: $4.7m


DATATEC

GROUP

WESTCON-

COMSTOR

STRATEGIC

UPDATE LOGICALIS

GROUP OUTLOOK

LOGICALIS GROUP OUTLOOK

General market for IT product and services is expected to remain stable

albeit with continued shift from pure product to cloud based solutions

M&A activity will add net incremental benefit in FY18

Recent large contract win in LATAM should result in improved

near-term performance despite continuing economic uncertainty

in Brazil

FX rate volatility expected to continue


DATATEC

GROUP WESTCON-

COMSTOR

STRATEGIC

UPDATE

LOGICALIS

GROUP OUTLOOK

DATATEC GROUP CURRENT TRADING & PROSPECTS

Logicalis well positioned to improve services mix

Stronger Logicalis H2 expected

Westcon International to be streamlined

Continual adjustment to cloud-based infrastructure solutions

© Datatec 2017 38

DATATEC GROUP DEFINITIONS

UNDERLYING EARNINGS

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.

© Datatec 2017 39

DATATEC GROUP

This presentation may contain statements regarding the future financial performance of the Group which may be considered to be forward-looking statements. By their nature,

forward-looking statements involve risk and uncertainty, and although the Group has taken reasonable care to ensure the accuracy of the information presented, no assurance

can be given that such expectations will prove to have been correct.

The Group has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements,

there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. It is important to note, that:

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;

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;

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

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.

DISCLAIMER

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