Our operating environment

The Group delivered a strong operational performance during FY23 benefiting from continuing trends in networking and cyber security. We continue to see consistent demand for our technology solutions and services across the world.

From an operational perspective, the Group delivered a strong performance during FY23 despite continuing to experience global supply chain headwinds which affected Datatec's businesses to varying degrees. Operations in Latin America were impacted the most, but the business experienced a notable recovery in the second half of FY23. Logicalis International achieved strong results while Westcon International delivered another excellent performance.

Demand for networking, cyber security products and solutions using cloud infrastructure remained strong while software and services contributions continued to grow as part of the overall mix. We continue to see good momentum in demand for our technology solutions and services across the world.

With the semiconductor shortage now easing, our operations remain well-positioned to service customers in their respective markets as we continue to actively manage supply chain headwinds.

The Group has been able to mitigate rising interest rates through strong working capital management and by reducing debt levels.

Supply chain disruptions

Datatec continued to experience supply chain issues during FY23. Westcon International's hardware and software backlog remained elevated because of the semiconductor shortage and supply chain constraints. Logicalis International also experienced shipment delays as a result of the global supply chain issues resulted in backlog remaining high throughout the year. As expected, the business was most impacted by supply chain delays as referred to in Datatec's FY22 results. The business recovered well in the second half of FY23 with some easing in supply constraints.

However, with supply chain issues abating and backlogs reducing, our operations remain well-positioned in their markets.

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. Exchange rate fluctuations affect all our divisions. Westcon International was significantly impacted by the sharp strengthening of the US Dollar against the Euro and Pound Sterling, especially during the first half of FY23.

Global macroeconomic uncertainty

Over the short term, macroeconomic conditions are expected to remain uncertain, however, Datatec has proved resilient against several macroeconomic risks that persist.