Our strategic progress

OUR 2020 DELIVERY

 

GROUP STRATEGIC PROGRESS

 

The Group provides leadership and sets the direction and strategy for each business, together with divisional management. It identifies potential areas for growth and supports the realisation of growth both organically and through acquisition by allocating capital and financing.

The Group targets profit growth, EBITDA margins and ROIC to drive financial returns. The Group's decentralised operating model, extensive geographic footprint, positioning across the ICT value chain and strong vendor and customer relationships combine to create a strategic competitive advantage.

Below are the FY20 strategic objectives as published in the previous year, as well as our progress against these objectives.

2020 STRATEGIC PRIORITY

   

2020 DELIVERY

     
   
     
  • Continuing share repurchases
   
  • US$44.3 million (19.0 million) shares repurchased
  • Share repurchase programme has been completed
   
  • Consolidate Logicalis' position through organic and acquisition activities
   
  • Acquisitions of Cilnet and Orange Networks – expanded Logicalis' presence in Iberian region and cloud technologies
  • Acquisition of Mars Technologies – strengthened and expands its managed services
   
  • Improve revenue growth, EBITDA and cash generation in Logicalis
   
  • Revenue decreased by 2.34% in US$. However, in constant currency*** terms, Logicalis' revenue increased by 4.28%
  • Logicalis' EBITDA increased by 32.7% to US$123.9 million
  • Net cash in Logicalis decreased by US$3.8 million in US$ terms
   
  • Improve revenue growth and profitability in Westcon International
   
  • Revenue growth is 0% in US$
  • However, revenue growth in constant currency*** is 2.7%
  • Gross profit growth of 5.9%, gross margin improved to 10.8% from 10.2%
  • Operating profit increased to US$19.0 million from a US$4.2 million operating loss in FY19
   
  • Improve working capital and operating cash flow in Westcon International
   
  • Net working capital improved by US$92 million or six days
  • Positive cash flow from operations in FY20 (FY19: cash outflow)
   
  • Reduce central costs in Westcon International
   
  • Central costs of US$29 million, 33% lower than FY19 and 12% below targeted levels
  • 0.9% of gross revenue of US$3.4 billion
   
  • Improve quality of earnings and profit margins
   
  • Underlying* earnings per share increased by 50% to 9.9 US cents
  • EBITDA margin improved to 3.7% from 2.0% in FY19
  • Operating profit margin improved to 1.9% from 1.1% in FY19
   
  • Growth in market share
   
  • Increased demand for the Group's technology solutions particularly cloud solutions – cloud revenue grew by 181%
   
  • Continue to look for optimum value realisation opportunities
   
  • Multi-year investment in Westcon International's global Enterprise Resource Planning (“ERP”) system has delivered benefits with significant business automation
  • Logicalis' common services platform has resulted in further efficiencies in the division and an investment plan has been approved to further expand its technology capabilities
  • Continued area of focus for FY21
   
  • Focus on process efficiency
   
  • Significant improvements have been made in Westcon International – continued area of focus for FY21
   
  • Leverage common services and digital distribution platforms
   
  • Approved an investment plan for the common platform to expand its technology capabilities to include Artificial Intelligence (“AI”) and predictive capabilities in Logicalis
   
  • Closing the valuation gap
   
  • Decrease in Datatec's market capitalisation from FY19 as a result of COVID-19 pandemic
   

  • ACHIEVED
  • STILL IN PROGRESS
  • NEGATIVELY IMPACTED BY COVID-19 PANDEMIC


LOGICALIS STRATEGIC PROGRESS

 

Logicalis' strategy is to be the leading ICT services and solutions partner to customers in its key markets around the world.

2020 STRATEGIC PRIORITY

   

2020 DELIVERY

     
   
     
  • Focus on improving the services and annuity revenue mix
   
  • Services mix has improved from 38% to 41%
   
  • Continued bolt-on acquisitions
   
  • Acquisitions of Cilnet and Orange Networks – expanded Logicalis' presence in Iberian region and in cloud technologies
  • Acquisition of Mars Technologies – strengthens and expands its managed services
   
  • Grow sales of IT products and services that drive cloud-based solutions
   
  • Cloud-based services grew by 12%
   
  • Focus on cost reduction activities in legacy areas of the business
   
  • A leader for customer experience was appointed during the year and will be responsible for building efficiencies into the mature areas of the business
   
  • Add to the capabilities of the common services platform to ensure it remains a business enabler
   
  • Plan for the common services platform to expand its technology capabilities approved
   

  • ACHIEVED
  • STILL IN PROGRESS


WESTCON INTERNATIONAL STRATEGIC PROGRESS

 

Westcon International's strategy is to be the leading value-added distributor for networking and cyber security vendors across Europe, the Middle East, Africa and Asia-Pacific.

2020 STRATEGIC PRIORITY

   

2020 DELIVERY

     
   
     
  • Improve working capital and operating cash flow generation
   
  • Net working capital improved by US$92 million or six days
  • Positive cash flow from operations (FY19: cash outflow)
   
  • Reduce central costs to below 1% of gross revenue
   
  • Central costs of US$29 million, 33% lower than FY19 and 12% below targeted levels
  • 0.9% of gross revenue of US$3.4 billion
   
  • Improve internal delivery of shared services
   
  • Stable platforms and operations supporting improved profitability
   
  • Expand security portfolio in emerging technologies
   
  • Security continues to grow and is now 32% of revenue mix
   
  • Deployment of digital disruption technology – Cloud/aaS enabled ERP
   
  • Delivered on a roadmap of improvements to core capabilities
   
  • Focus on revenue growth and overall profitability
   
  • Revenue growth is 0% in US$
  • However, revenue growth in constant currency*** is 2.7%
  • Gross profit growth of 5.9%, gross margin improved to 10.8% from 10.2%
  • Operating profit increased to US$19.0 million from a US$4.2 million operating loss in FY19
   
  • Continued focus on cost management and operational performance
   
  • Overall operating costs decreased by 7%
  • Central costs reduced
  • Further cost reductions targeted
   

  • ACHIEVED
  • STILL IN PROGRESS


* 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 and the taxation effect on all of the aforementioned.
*** Pro forma financial information is included for the Group's revenue for the current reporting period, had it been translated at the average foreign currency exchange rates of the prior reporting period ("constant currency financial information").
The
pro forma IFRS 16 and constant currency financial information contained in this Integrated Report has been reported on by the Group's external auditors. The Group's auditors Deloitte & Touche, have issued two unmodified reasonable assurance reports (in terms of ISAE 3420: Assurance Engagements to Report on the Compilation of Pro Forma Financial Information included in the Prospectus), a copy of which is available for inspection at the Company's registered office.