The Group is an international information and communications technology (“ICT”) business with operations in over 60 countries. The Group’s main lines of business comprise: the distribution of networking, security and unified communications and data centre products (Westcon); ICT infrastructure solutions and services (Logicalis); and strategic and technical consulting (which includes Analysys Mason Limited, Mason Advisory Limited and The Via Group, Inc.). “Corporate” encompasses the costs of the Group’s head office entities including Datatec Financial Services, a new capital/leasing business under development.
Datatec Limited (the “Company”), a South African company with registration number 1994/005004/06, is the parent company of the Group. The Company’s shares are listed on the JSE Limited and on the Alternative Investment Market of the London Stock Exchange with share code DTC and ISIN ZAE000017745.
Commentary on the Group financial results is given in this Integrated Report found here. Full details of the financial position and financial results of the Group are set out in the consolidated annual financial statements found here.
The authorised share capital of the Company as at 28 February 2015 and 28 February 2014 is R4 000 000 made up of 400 000 000 ordinary shares of one cent each.
As at 28 February 2015, the issued share capital amounted to R2 036 146, divided into 203 614 644 ordinary shares of one cent each (FY14: R1 971 427 divided into 197 142 685 ordinary shares).
During the year, shares were issued to settle obligations in terms of the Datatec Share Option Scheme (which has now terminated), in relation to the interim scrip distribution (see below) and as part of the consideration for acquisitions.
Financial details of the movement in share capital have been reflected in the Group statement of changes in equity and in Note 15 in the consolidated annual financial statements together with the number of shares issued during the year.
Brief CVs of directors are included here and further information on the directors, including their interests in the shares of the Company and share-based remuneration schemes, is provided in the Remuneration Report and in Note 23 to these consolidated annual financial statements can be downloaded here.
All directors are subject to election by shareholders at the first opportunity after their appointment. Subsequently, the terms of the Company’s Memorandum of Association requires one-third of all directors to retire annually (ensuring each director retires at least once every three years) when they may offer themselves for re-election by shareholders.
Having undertaken a thorough solvency and liquidity test and review of going concern assertions across the Group, the Directors believe that the Datatec Group has adequate financial resources to continue in operation for the 12 months after the date of this report and accordingly the financial statements have been prepared on a going concern basis.
The directors have determined from the solvency and liquidity test that the Group is solvent and has access to sufficient cash resources for the 12 months after the payment of the final dividend referred to below. Ordinary shareholders’ funds are US$870.9 million (FY14: US$871.6 million). Working capital remains well controlled. Trade receivables and inventory are of sound quality and adequate provisions are held against both. The Group has sufficient liquidity and borrowing capacity to meet its ongoing operating needs, including approved capital expenditure. At 28 February 2015, the Group had cash balances on hand of US$366.1 million (FY14: US$378.7 million), bank overdrafts of US$388.2 million (FY14: US$420.4 million) and borrowing facilities of US$1 170 million (FY14: US$1 069 million) of which US$1 034 million (FY14: US$857 million) was available for draw-down against existing collateral at that date.
The Group has no need to undertake a capital restructuring and key executive management is in place. The Board is not aware of any new material changes that may adversely impact on the Group relative to customers, suppliers, services or markets. The Board is not aware of any material non-compliance with statutory or regulatory requirements and there are no pending legal proceedings other than in the normal course of business.
Financial information relating to the Group’s investments and interests in subsidiaries is contained in Annexure 1 of the consolidated annual financial statements (download here).
The following acquisitions were concluded during the financial year ended 28 February 2015:
On 30 August 2014, Westcon acquired the assets of US-based Verecloud, Inc. (“Verecloud”), the developer of an advanced distribution platform for cloud and services solutions, for US$12.0 million, settled through the issue of Datatec shares. The platform will be incorporated into Westcon’s Cloud Solution Practice and form the foundation which is designed to help resellers drive significant revenue from cloud-enabled services.
On 1 September 2014, Logicalis acquired a 51% shareholding in ITUMA GmbH (“Ituma”), a speciality software developer based in Germany. Ituma is focused on Wi-Fi-enabled services such as in-location navigation, product and service offerings access, product promotions and analytics.
Logicalis increased its shareholding in PromonLogicalis Latin America Limited (“PLLAL”) from 60.0% to 64.4% by electing to take its share of a PLLAL dividend in the form of scrip and acquired a further 0.6% of PLLAL shares from Promon in exchange for the issue of Datatec shares. As a result, Datatec’s shareholding in PLLAL increased from 60.0% to 65.0% during the year.
On 2 January 2015, Logicalis acquired inforsacom Holding GmbH (“Inforsacom”). Inforsacom is a provider of database, storage and infrastructure solutions and services with operations across the major economic centres of Germany. The acquisition will significantly enhance Logicalis’ scale and capabilities in the German IT market.
A statement on the Group’s corporate governance policies and procedures is set out in the governance section of the Integrated Report on here.
Details of the Group’s share-based payment schemes and other management incentive schemes are set out in the remuneration section of the Integrated Report on here.
There are no material subsequent events to report. On 6 May 2015, Logicalis acquired Trovus, a small UK business intelligence consultancy, which provides business insight solutions, professional services and managed services to large enterprise clients.
The Company paid an interim scrip distribution with cash dividend alternative of 88 ZAR cents (approximately 8 US cents) to shareholders on 1 December 2014. The number of scrip distribution shares to which each shareholder became entitled (to the extent that such shareholder had not elected to receive the cash dividend) was determined by reference to the ratio that 88 ZAR cents bore to the volume weighted average price of an ordinary Datatec share traded on the JSE during the 30-day trading period ending on Thursday, 13 November 2014, which was 5 378 ZAR cents, ie 1.63630 scrip distribution shares for every 100 ordinary shares held.
The result of the shareholder election in relation to the cash dividend alternative to the scrip distribution was that 2 018 910 new ordinary shares were issued on 1 December 2014 to shareholders who did not elect to receive the cash dividend in respect of all or part of their shareholding, resulting in a capitalisation of the distributable retained profits of the Company of ZAR108.6 million. The proportion of the Company’s total shares which received the scrip distribution was 61.8%. Shareholders holding 76 189 934 ordinary shares elected to receive the gross cash dividend of 88 ZAR cents per ordinary share resulting in a total gross cash dividend of ZAR67.0 million which was paid out of the distributable retained profits of the Company. The proportion of the Company’s total shares which received the cash dividend was 38.2%.
The Board has declared a final scrip distribution with cash dividend alternative of 108 ZAR cents in relation to the financial year ended 28 February 2015, which will be payable to shareholders on the Register on 17 July 2015. The number of scrip distribution shares to which each shareholder will became entitled (to the extent that such shareholder has not elected to receive the cash dividend) will be determined by reference to the ratio that 108 ZAR cents bore to the volume weighted average price of an ordinary Datatec share traded on the JSE during the 30-day trading period ending on Thursday, 2 July 2015.
For the financial year ended February 2014, the Company paid an interim capital distribution to shareholders of 80 ZAR cents (approximately 8 US cents) per share on 2 December 2013 and a final capital distribution of 93 ZAR cents (approximately 9 US cents) per share on 21 July 2014, making a total capital distribution to shareholders for the financial year ended 28 February 2014 of 173 ZAR cents (approximately 17 US cents).
The Group’s dividend policy of paying an annual dividend, which will provide cover of at least three times relative to underlying earnings, remains unchanged.
The Annual General Meeting will be held at 12:00 on Thursday, 10 September 2015 at the DaVinci Hotel & Suites, Nelson Mandela Square, corner Maude and 5th Street, Sandown, Sandton, 2196, South Africa. A notice of Annual General Meeting is included in this PDF.