2018 INTEGRATED REPORT
- Features of the year
- Our strategy
- Executive directors' report
Features of the year
Features of the year
Value unlocked
We have delivered on our strategy and commitment to deliver long-term, sustainable and above-average returns to shareholders with two significant disposals.
- Sold Westcon Americas and 10% of Westcon International to SYNNEX Corporation for US$630 million.
- US$630 million in cash on completion (1 September 2017).
- Additional potential cash earn-out, subject to Westcon Americas meeting gross profit performance targets (resolution process in progress).
- Sold Logicalis SMC, a Dutch professional services business unit for US$42 million.
- Logicalis acquired SMC on 4 March 2013 as one of the four European operations purchased from 2e2 for US$31 million. The purchase price attributed to SMC was US$5 million.
- This represents an eight fold return on investment which represented a valuation of one times trailing revenues and 15 times trailing EBITDA.
Results summary
-
Stronger balance sheet with higher tangible NAV of
US$452 million
(FY17: US$264 million)
-
Solid Logicalis results
and positive outlook
-
Continuing operations
REVENUE
US$3.92 billion
(FY17: US$3.86 billion)
-
EBITDA
US$26.7 million
(FY17: US$29.0 million)
-
Earnings per share
20.5 US cents
(FY17: 1.4 US cents)
-
Underlying* loss per share
5.6 US cents
(FY17 underlying* earnings per share: 11.0 US cents)
| * | Excluding impairments of goodwill and intangible assets, profit or loss on sale of investments and assets, amortisation for acquired intangible assets, unrealised foreign exchange movements, acquisition-related financial instruments, restructuring costs relating to fundamental reorganisation, SYNNEX deal-related expenses and the taxation effect on all of the aforementioned. |
Our strategy
Our strategy
Datatec's strategy is to deliver long-term, sustainable and above-average returns to shareholders through portfolio management and the development of its principal operating divisions – providing technology solutions and services to targeted customers in identified markets.
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 either organically or through acquisition by allocating capital and financing.
The Group targets revenue growth, EBITDA margins and return on invested capital (“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.
Strategic roadmap
The Group is committed to improving performance across the business and has identified the following strategic priorities:
STRATEGIC PRIORITIES
1
1 DATATEC GROUP
DATATEC GROUP
- Continued share buy-backs aligned to prudent cash management
- 12-month return to profitability in Westcon International
- Improve accounts receivables and net working capital in Westcon International
- Consolidate Logicalis' position through organic and inorganic actions
- Continue to look for optimum value realisation opportunities
2
2 INTEGRATION AND MANAGED SERVICES
LOGICALIS
- Continue to focus on improving the services and annuity revenue mix
- Focus on cost reduction activities in legacy areas of the business
- Continue the roll out of the common services platform to new countries as an enabler for further efficiencies
- Seek further acquisitions to boost market share in existing territories and to leverage Logicalis' capabilities in emerging technologies
3
3 TECHNOLOGY DISTRIBUTION
WESTCON INTERNATIONAL
- Focus on revenue growth, margin improvement and profitability
- Working capital normalisation and improving cash flow
- Africa transformation, transition from loss to profit
- Leverage technology automation around SAP and customer-supplier tools
- Reverse BPO to improve customer service and transaction execution
- Shared services centres in SA and Philippines for EMEA and Asia-Pacific
- Continued focus on Comstor-Cisco differentiation
- Expand security portfolio in emerging technologies
- Deployment of digital distribution technology – Cloud/aaS enabled ERP
- Reduce ongoing central costs to below 1% of revenue
4
4 CONSULTING AND FINANCIAL SERVICES
ANALYSYS MASON
- Improve scale
- Grow research practice
- Customer diversified
DATATEC FINANCIAL SERVICES
- Drive penetration and revenue growth
- Expand geographical coverage
- Increase product efficiencies
Executive directors' report
Executive directors' report
Logicalis delivered good growth during the year, supported by a much improved performance across our Latin America, Europe and Asia-Pacific businesses in the second half as well as the strategic acquisitions completed during the year. We expect Logicalis to deliver a strong financial performance in FY19.
This has been a landmark
year for Datatec during which
we generated exceptional
value for shareholders
through the successful sale
of Westcon Americas and
the disposal of Logicalis
SMC. We remain focused
on closing the valuation
gap through strategic
initiatives and other
corporate actions.
