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Executive directors’ commentary on Group results
| US$ million | FY24 Reported |
FY23 Reported |
% movement |
Note reference |
|
| Revenue | 5 457.9 | 5 143.1 | 6 | 1 | |
|---|---|---|---|---|---|
| Gross profit | 862.2 | 744.5 | 16 | ||
| Gross margin (%) | 15.8 | 14.5 | 2 | ||
| Operating costs | (684.6) | (646.2) | 6 | 3 | |
| EBITDA | 177.6 | 98.3 | 81 | ||
| EBITDA margin (%) | 3.3 | 1.9 | |||
| Adjusted EBITDA | 192.1 | 180.2 | 7 | ||
| Adjusted EBITDA margin (%) | 3.5 | 3.5 | |||
| Depreciation and amortisation | (61.2) | (68.1) | (10) | ||
| PPE, right-of-use assets and intangible assets impairments | – | (11.6) | |||
| Operating profit | 116.4 | 18.5 | 529 | ||
| Operating profit margin (%) | 2.1 | 0.4 | |||
| Net finance costs | (55.0) | (38.1) | 44 | 4 | |
| (Loss)/profit before taxation | 76.5 | (20.0) | (483) | ||
| Taxation | (25.5) | (13.4) | 90 | 5 | |
| Underlying earnings per share | 20.2 | 6.1 | |||
| Headline (loss)/earnings per share | 14.2 | (10.8) | |||
| Earnings per share | 20.4 | (16.1) |
| 1 | Group revenue increased by 6.1% comparedcompared to the US$5.1 billion revenue recorded in FY23. In constant currency, Group revenue increased by 7.0%. |
| 2 | The increase in gross margin is largely due to a return to more stable foreign exchange rates compared to FY23 when the rapid strengthening of the US Dollar against the Euro and Pound Sterling during that period had a significant negative impact on gross margins in Westcon Europe. These negative impacts in Westcon International during FY23 were partially offset by foreign exchange hedging gains. |
| 3 |
Overall operating costs (including foreign exchange gains and losses, restructuring costs, share-based payment charges and acquisition and integration costs) were US$684.6 million (FY23: US$646.2 million). Restructuring costs of US$3.0 million were incurred in FY24 in Logicalis Latin America (FY23: $15.2 million restructuring costs relating to fundamental reorganisations in Logicalis International and Logicalis Latin America). Operating costs included US$21.7 million of foreign exchange losses (FY23: gains of US$15.3 million). Foreign exchange losses consisted of unrealised foreign exchange losses of US$15.9 million (FY23: losses of US$8.8 million) and realised foreign exchange losses of US$5.7 million (FY23: gains of US$24.1 million). The unrealised foreign exchange losses in FY24 arose mainly from sharp currency depreciation in Argentina over the period. The FY23 unrealised foreign exchange gains arose mainly in Westcon Europe on open positions of Forward Exchange Contracts (“FECs”). |
| 4 | The net interest charge increased due to increased cost of borrowings and higher working capital requirements and average utilisation of financing facilities. |
| 5 | A tax charge of US$25.5 million (FY23: US$13.4 million) has arisen on pre-tax profits representing an effective tax rate of 33.4% (FY23: -66.7% on losses of the continuing business). The effective tax rate for the year continues to be adversely impacted by the limited tax credits arising on the losses of certain operations (eg Argentina). However, the effective tax rate has benefited from fair value gains arising on the acquisition of a controlling shareholding Mason Advisory Limited, a previously equity-accounted investment for which no taxation arises. As at 29 February 2024, tax losses carried forward are estimated at US$244.8 million with an estimated future tax benefit of US$61.3 million, of which US$45.1 million has been recognised as a deferred tax asset. |
Product backlog
Product backlog (open and unfulfilled sales orders) continued to reduce steadily to approximately US$706.2 million (FY23: US$1.2 billion).
| US$ million | FY24 | FY23 | ||
| Westcon International | 446.0 | 768.0 | ||
|---|---|---|---|---|
| Logicalis International | 161.4 | 271.0 | ||
| Logicalis Latin America | 98.8 | 140.0 | ||
| Datatec Group | 706.2 | 1 179.0 |
Cash and net debt
The Group generated US$175.6 million of cash from operations during FY24 (FY23: US$173.4 million) and ended the period with net debt of US$123.1 million (FY23: US$106.6 million). Excluding lease liabilities, net debt would have been US$51.3 million (FY23: US$34.2 million).
| US$ million | FY24 | FY23 | ||
| Cash resources | 569.0 | 584.7 | ||
|---|---|---|---|---|
| Bank overdrafts | (178.9) | (196.4) | ||
| Short-term interest-bearing liabilities and short-term leases | (428.5) | (407.9) | ||
| Long-term interest-bearing liabilities and long-term leases | (84.7) | (87.0) | ||
| Net debt | (123.1) | (106.6) |