Our operating environment
The underlying trends in our industry remain positive and our businesses are well positioned to benefit from continuing demand for software and services in networking, cyber security and cloud infrastructure. This is further evidenced by increased order intake and backlog.
From an operational perspective, the Group achieved a strong performance in FY22 as it continued to benefit from increased networking, cloud usage and cyber security trends. Datatec's positioning enabled all divisions to deliver robust revenue and profit growth.
Datatec's strong financial position provides a firm foundation
to support growth and new initiatives as most economies start
to recover and supply chain constraints ease over time. The
Board is focused on driving shareholder value and implementing
opportunities arising from the Strategic Review,
a comprehensive evaluation of strategic options and initiatives
to unlock and maximise shareholder value going forward. The
Strategic Review seeks to address the persistent gap between
Datatec's valuation and the inherent value of its underlying
assets while also ensuring that the Group is positioned to
take full advantage of the positive market dynamics for its
technology solutions and services.
Overall, the Group's businesses have successfully repositioned away from many forms of traditional hardware to software, subscriptions and services with growing annuity revenue. The Group continues to focus on supporting the digitisation trends and the requirements for increased cyber security.
Supply chain disruptions
Supply chain issues, and a global semiconductor shortage created extended lead times on certain hardware product deliveries in FY22, which impeded revenue and resulted in significantly higher closing backlog (sales orders waiting to be fulfilled) in both Logicalis and Westcon International.
This is expected to impact Logicalis in Latin America, especially during the first half of the current financial year as macroeconomic challenges are compounded by these severe supply chain constraints.
While an improvement in the situation was expected, further supply chain disruptions resulting from Covid-19-related lockdowns in China, the Russian invasion of Ukraine and spiralling energy costs is expected to have an adverse impact on the current financial year.
Logicalis product backlog on a net revenue basis
Westcon international product backlog on net revenue basis
Global macroeconomic uncertainty
Recent months have shown the potential for economic risk on the downside with global macroeconomic volatility. We are faced with a great deal of uncertainty and this has the potential to negatively affect our results.
The war in Ukraine, Covid-19 lockdowns in China and global inflationary pressures will continue to disrupt global supply chains for the foreseeable future.
Fluctuating exchange rates
Exchange rate volatility has a big impact on Datatec, especially in emerging markets. We are exposed to the effects of negative fluctuations in the Brazilian Real and South African Rand in particular. This affects both Logicalis and Westcon International.
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