DATATEC GROUP AUDITED RESULTS
Transcript of DATATEC GROUP AUDITED RESULTS
ICT Solutions & Services Technology Distribution Management Consulting
DATATEC GROUPAUDITED RESULTS For the year ended 28 February 2021
Agenda Summary
– Overview– Current Trading FY21– Key Features
Financial Results Operational Review Prospects & Outlook
© Datatec 2021
4Results – year ended February 2021
OVERVIEW Datatec Group Logicalis Group Westcon International Management Consulting Outlook
Datatec GroupFINANCIAL RESULTS SUMMARY
4
$4.1bFY 2021
$4.2bFY 2020^
Revenue
$690.5mFY 2021
$741.6mFY 2020
Gross profit
$141.0mFY 2021
$158.7mFY 2020
Adjusted EBITDA*
9.9 US¢FY 2020
13.6 US¢FY 2021
Underlying EPS
^ FY20 revenue restated* Excludes restructuring costs
0 ZAR¢FY 2020
100 ZAR¢FY 2021
Ordinary dividend per share
Results – year ended February 2021
© Datatec 2021 OVERVIEW Datatec Group Logicalis Group Westcon International Management Consulting Outlook
Datatec GroupOVERVIEW
5
Solidoperational execution in challenging environment Strong
demand for the technology products
and services we provide
Much improved liquidity
following refinancing of key
facilities
Cost control measures implemented
through restructuring
Significantly improved operating
cash generation
Software & services (including annuity)
continues to grow
Results – year ended February 2021
© Datatec 2021 OVERVIEW Datatec Group Logicalis Group Westcon International Management Consulting Outlook
Datatec GroupCURRENT TRADING
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Business mix and global presence well
diversified for a recovery
Trends of FY21 continuing into FY22
but pandemic outcome uncertain
Acceleration in digitisation has
structurally changed nature of business
Strong balance sheet to support growth and
new initiatives
Increased demand for software & services in networking, security
and cloud infrastructure
© Datatec 2021
Results – year ended February 2021
OVERVIEW Datatec Group Logicalis Group Westcon International Management Consulting Outlook
Datatec GroupKEY FEATURES
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Global footprint6 continents and over 50 countries
Long-standing trusted vendor-
partner relationships
Strong recurring customer
base20,000 telecoms,
enterprise and public sector customers
Core competence in
networking and cloud infrastructure
International brand
recognition across all divisions
Advancedinternal systems
and digital capabilities
© Datatec 2021
Results – year ended February 2021
DATATEC GROUP Logicalis Group Westcon International Management
Consulting OutlookOverview
Datatec Group 9
FINANCIAL PERFORMANCE
US$m FY 2021 FY 2020 Restated^ % Movement
Revenue 4,109.5 4,214.4 (2%)Gross profit 690.5 741.6 (7%)Operating costs (571.9) (582.9) (2%)EBITDA 118.6 158.7 (25%)EBITDA margin % 2.9% 3.8%Adjusted EBITDA* 141.0 158.7 (11%)Adjusted EBITDA margin % 3.4% 3.8%Depreciation & amortisation (68.6) (76.1) (10%)Operating profit 50.0 82.6 (39%)Operating profit margin % 1.2% 2.0%Net finance costs (25.7) (25.9) (1%)Profit before tax 25.2 58.5 (57%)Underlying EPS (US cents) 13.6 9.9HEPS (US cents) 1.8 5.9
Margin enhancing prior year revenue and cost of sales restatement with no
change to gross profit
Operating costs includes $22m of one-off restructuring costs
Prior year EBITDA benefited from $14m Brazil tax credit
Prior year net finance costs benefited from $7m interest on the Brazil tax
credit
^ FY20 revenue restated* Excludes restructuring costs
© Datatec 2021
Results – year ended February 2021
DATATEC GROUP Logicalis Group Westcon International Management
Consulting OutlookOverview
Datatec Group 10
FINANCIAL PERFORMANCE - SEGMENTAL
US$m
ICT Solutions and Services Technology Distribution Management Consulting
FY 2021 FY 2020 Restated^ FY 2021 FY 2020
Restated^ FY 2021 FY 2020
Revenue 1,449.5 1,681.5 2,585.7 2,473.1 73.2 58.7
Gross profit 367.5 441.2 291.0 275.7 31.0 23.8
Operating costs (285.6) (317.3) (246.2) (235.7) (20.8) (14.4)
EBITDA 81.9 123.9 44.8 40.0 10.2 9.4
EBITDA margin % 5.7% 7.4% 1.7% 1.6% 13.9% 16.0%
Adjusted EBITDA* 96.1 123.9 52.5 40.0 10.2 9.4
Adjusted EBITDA margin % 6.6% 7.4% 2.0% 1.6% 13.9% 16.0%
Operating profit 40.3 72.3 22.2 19.0 5.9 6.1
Operating profit margin % 2.8% 4.3% 0.9% 0.8% 8.1% 10.4%
^ FY20 revenue restated
© Datatec 2021
Results – year ended February 2021
DATATEC GROUP Logicalis Group Westcon International Management
Consulting OutlookOverview
14%
15%
44%
20%
7%8%
11%
51%
21%
9%
15%
22%
38%
18%7%10%
14%
46%
20%
10%
Datatec Group 11
REVENUE & GROSS PROFIT % CONTRIBUTION BY GEOGRAPHY
Revenue contribution by geography Gross profit contribution by geography
North AmericaLatin AmericaEuropeAsia-PacificMEA
FY 2020^
FY 2021 FY 2021
FY 2020
Europe drives major part of revenues and contribution
Latin America has been the most challenged region
^ FY20 revenue restated
© Datatec 2021
Results – year ended February 2021
DATATEC GROUP Logicalis Group Westcon International Management
Consulting OutlookOverview
53%
47%
60%
40%
Datatec Group 12
REVENUE ANALYSIS: HARDWARE VS SOFTWARE & SERVICES
Revenue by segment
HardwareSoftware & services (incl. annuity)
FY 2020^
FY 2021 Software and services have grown significantly
Working capital should structurally improve
^ FY20 revenue restated
Business is becoming less asset intensive
Hardware is expected to fall below 50% of revenue mix
© Datatec 2021
Results – year ended February 2021
DATATEC GROUP Logicalis Group Westcon International Management
Consulting OutlookOverview
Datatec Group 13
BALANCE SHEET SUMMARY
US$m FY 2021 FY 2020
Assets 2,797.3 2,596.5Non-current assets
Goodwill 255.5 241.4Acquired intangible assets & software 33.9 30.0Other non-current assets 265.3 241.2
Current assets 2,242.6 2,083.9Equity & Liabilities 2,797.3 2,596.5Shareholders’ funds 583.2 572.3Non-controlling interests 57.5 70.8Long-term liabilities 172.2 185.5Amounts due to vendors 2.6 5.5Current liabilities 1,981.8 1,762.4Net debt (60.9) (139.9)Net cash/(debt) excluding lease liabilities 53.4 (10.4)
Working capital improvements driving better cash position
Significant reduction in net debt
New financing facilities in Westcon during H2 enhancing liquidity
© Datatec 2021
Results – year ended February 2021
DATATEC GROUP Logicalis Group Westcon International Management
Consulting OutlookOverview
14Datatec GroupBALANCE SHEET SUMMARY - SEGMENTAL
US$m
ICT Solutions and Services Technology Distribution Management Consulting
FY 2021 FY 2020 FY 2021 FY 2020 FY 2021 FY 2020
Assets 1,296.8 1,303.1 1,336.1 1,155.6 82.7 61.3Non-current assets
Goodwill 230.8 222.6 - - 24.7 18.8Acquired intangible assets & software 27.1 24.3 2.2 3.9 4.6 1.8Other non-current assets 143.6 134.6 106.4 90.7 11.9 12.6
Current assets 895.3 921.6 1,227.5 1,061.0 41.5 28.1Liabilities 935.5 926.9 1,170.4 985.9 35.7 28.9Long-term liabilities 111.4 103.2 47.8 71.7 10.5 8.8Amounts due to vendors 2.6 4.3 - - - 1.2Current liabilities 821.5 819.4 1,122.6 914.2 25.2 18.9Net (debt)/cash (123.4) (156.7) (19.0) (48.7) 8.8 (2.3)Net cash/(debt) excluding lease liabilities (60.7) (67.7) 24.2 (17.4) 16.5 6.1
© Datatec 2021
Results – year ended February 2021
DATATEC GROUP Logicalis Group Westcon International Management
Consulting OutlookOverview
Datatec Group 15
CASH FLOW
US$m FY 2021 FY 2020 Restated#
EBITDA 118.6 158.7Working capital changes 78.2 57.0Other working capital changes 1.7 0.2Other movements 35.8 (0.3)
Cash generated from operations 234.3 215.6Net finance costs paid (25.7) (31.0)Taxation paid (36.6) (37.0)
Net cash inflow from operating activities 172.0 147.6Net cash outflow for acquisitions (5.5) (9.3)Net cash outflow from other investing activities (28.7) (21.7)Dividend paid to shareholders - (12.2)Share repurchases - (44.3)Net cash inflow from disposal of discontinued operations - 14.0Net cash inflow/(outflow) from other financing activities 15.0 (66.3)
Increase in cash & cash equivalents 152.8 7.8Cash & cash equivalents at beginning of year 332.3 333.7Translation difference on cash & cash equivalents (6.3) (9.2)
Cash & cash equivalents at end of year 478.8 332.3
Improved operating cash flows
Prior year overdrafts restated from cash and cash equivalents to financing
activities
Improved cash position
# FY20 cash flow restated
Results – year ended February 2021
LOGICALIS GROUP© Datatec 2021 Westcon International Management
Consulting OutlookOverview Datatec Group
Logicalis GroupHIGHLIGHTS
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Resilient financial performance, despite 14% drop in revenues
(8% constant currency)
Reduced operating costs even with substantial restructuring costs
Reduction in net debt & improvedliquidity
Increasing annuity services in line with strategy
Hybrid office working for manyinternal functions
LOGICALIS GROUP© Datatec 2021
Results – year ended February 2021
LOGICALIS GROUP Westcon International Management
Consulting OutlookOverview Datatec Group
Logicalis GroupREVENUE & GROSS PROFIT BY GEOGRAPHY
FY 2020FY 2021
19
Gross profit
109
165
10859
441
96 102 109
60
367
North America Latin America EMEA Asia-Pacific Total
US$mRevenue^
409
613
409 251
1,682
337 451 430
232
1,450
North America Latin America EMEA Asia-Pacific Total
US$m
^ FY20 revenue restated
LOGICALIS GROUP© Datatec 2021
Results – year ended February 2021
LOGICALIS GROUP Westcon International Management
Consulting OutlookOverview Datatec Group
Logicalis GroupEBITDA BY GEOGRAPHY
EBITDA
20
US$m
25
66
22 22
(11)
124
20 35
13 23
(9)
82
23 37
20 24
(8)
96
North America Latin America EMEA Asia-Pacific Central costs Total
FY 2020FY 2021FY 2021 Adjusted*
* Excludes restructuring costs
Adjusted EBITDA resilient in most regions except LATAM
FY20 included $14m tax credit in Brazil
Central costs reduced
LOGICALIS GROUP© Datatec 2021
Results – year ended February 2021
LOGICALIS GROUP Westcon International Management
Consulting OutlookOverview Datatec Group
40%
9%4%4%4%2%
37%
45%
13%
14%
28%
53%
9%13%
25%
50%
9%3%6%
4%2%
26%
Product revenue by vendor
Logicalis GroupREVENUE BY SEGMENT & PRODUCT REVENUE BY VENDOR
Revenue by segment
HardwareSoftwareProfessional servicesAnnuity services
21
CiscoIBMHPEDell, EMC, VMwareNetAppOracleOther
FY 2020^
FY 2021
FY 2020^
FY 2021
^ FY20 revenue restated
LOGICALIS GROUP© Datatec 2021
Results – year ended February 2021
LOGICALIS GROUP Westcon International Management
Consulting OutlookOverview Datatec Group
Logicalis GroupWORKING CAPITAL
22
49
17
70
52
11
82
DSO Inventory days DPO
Days
FY 2020FY 2021
403
79
256
344
58
277
Trade accountsreceivable
Inventory Trade accountspayable
US$m
DSO remained steady
DPO increase due to extended credit terms agreed with suppliers
Net working capital fell significantly by $104m
Results – year ended February 2021
LOGICALIS GROUP© Datatec 2021 Westcon International Management
Consulting OutlookOverview Datatec Group
Logicalis GroupOUTLOOK
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Acceleration in the use of digitaltechnologies to transform businesses
Cloud adoption is happening faster as remote computing escalates
Growth expected in major economies driven by Covid-19 stimulus
Continued volatility in emerging market exchange rates
Results – year ended February 2021
© Datatec 2021 WESTCON
INTERNATIONAL Management Consulting OutlookOverview Datatec Group Logicalis Group
Westcon InternationalHIGHLIGHTS
25
Strong financial performance with revenue growth of 5% (4% constant currency)
Cost reduction benefits with remote working include lower travel and office-related
Structural shift to greater software mix and increasing recurring business
xxxSignificant growth in security with growing
portfolio of category leading vendors Improved liquidity due to strong cash collections,
reduced working capital and major refinancing
WESTCON INTERNATIONAL© Datatec 2021
Results – year ended February 2021
Management Consulting OutlookOverview Datatec Group Logicalis Group
Revenue^
Westcon InternationalREVENUE & GROSS PROFIT BY GEOGRAPHY
FY 2020FY 2021
1,503
577393
2,473
1,608
609369
2,586
Europe Asia-Pacific MEA Total
US$m
26
Gross profit
164
71
41
276
178
7142
291
Europe Asia-Pacific MEA Total
US$m
^ FY20 revenue restated
WESTCON INTERNATIONAL© Datatec 2021
Results – year ended February 2021
Management Consulting OutlookOverview Datatec Group Logicalis Group
Westcon InternationalEBITDA BY GEOGRAPHY
27
EBITDAUS$m
42
18 9
(29)
40 41 22
11
(29)
45 48
22 11
(28)
53
Europe Asia-Pacific MEA Central costs Total
FY 2020FY 2021FY 2021 Adjusted*
* Excludes restructuring costs
EBITDA increases 12% in FY 2021
Excluding restructuring expense EBITDA increases 31% with
improved results across all regions
Continued reduction in central costs
WESTCON INTERNATIONAL© Datatec 2021
Results – year ended February 2021
Management Consulting OutlookOverview Datatec Group Logicalis Group
43%
57%
52%
29%
19%
54%28%
18%
49%51%
Revenue by business unit
Westcon InternationalREVENUE % BY BUSINESS UNIT, CUSTOMER & TECHNOLOGY CATEGORY
Product revenue by customer
ComstorWestcon
ResellerSystem integratorService provider
28
FY 2020^
FY 2021 FY 2021
FY 2020^
^ FY20 revenue restated
WESTCON INTERNATIONAL© Datatec 2021
Results – year ended February 2021
Management Consulting OutlookOverview Datatec Group Logicalis Group
40%
22%
24%
14%
32%
24%
27%
17%
Westcon InternationalREVENUE % BY BUSINESS UNIT, CUSTOMER & TECHNOLOGY CATEGORY
Product revenue by technology category
SecurityUnified communicationsNetworkingData centre & other
29
FY 2021
FY 2020^
^ FY20 revenue restated
59%
3%
36%
2%
66%2%
29%
3%
Product revenue by segment
FY 2021
FY 2020^
HardwareResold maintenanceSoftwareServices
WESTCON INTERNATIONAL© Datatec 2021
Results – year ended February 2021
Management Consulting OutlookOverview Datatec Group Logicalis Group
Westcon InternationalWORKING CAPITAL
30
67
11.0
78
65
12.7
76
DSO Inventory turns DPO
Days
FY 2020FY 2021
695
175
670 751
184
714
Trade accountsreceivable
Inventory Trade accountspayable
US$m
NWC days decrease a favourable 4 days to 18 due to improved DSO and Inventory
turns
Improved working capital metrics drives $29.7m or 61%
decrease in net debt
Results – year ended February 2021
WESTCON INTERNATIONAL© Datatec 2021
Management Consulting OutlookOverview Datatec Group Logicalis Group
Westcon InternationalOUTLOOK
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Expect benefits of better cash management and lower finance costs to continue
Operational efficiencies and scale in more markets are driving improved P&L
Return-to-the-office and hybrid-working dynamics expected to fuel demand
Growth in Security and Software Defined Networks is increasing Software & Services
Results – year ended February 2021
MANAGEMENTCONSULTING© Datatec 2021 OutlookOverview Datatec Group Logicalis Group Westcon International
Analysys MasonHIGHLIGHTS
33
25% revenue growth and increased profitability
Strong performance from Europe Reduction in net debt and improved liquidity
Operational efficiencies and greater scale driving better P&L
Successful shift to remote working for most employees during pandemic
MANAGEMENT CONSULTING© Datatec 2021
Results – year ended February 2021
OutlookOverview Datatec Group Logicalis Group Westcon International
Analysys MasonFINANCIAL PERFORMANCE
34
FY 2020FY 2021
59
24
9
73
31
10
Revenue Gross profit EBITDA
US$m
Strong revenue growth from acquisitions and organic
Improved gross margins, higher productivity and
reduction in travel
EBITDA growth impacted by IFRS 2 charges
Results – year ended February 2021
MANAGEMENTCONSULTING© Datatec 2021 OutlookOverview Datatec Group Logicalis Group Westcon International
Analysys MasonOUTLOOK
35
Public and private networks undergoing a sustained period of heightened demand
Accelerating demand for Optical network and 5G expertise
Health and wellbeing of employees is a priority focus
Development of multi-geography key accounts to increase scale of business
Results – year ended February 2021
OUTLOOK© Datatec 2021 Logicalis Group Westcon International Management ConsultingOverview Datatec Group
Datatec GroupPROSPECTS & OUTLOOK
37
Strong demand for the Group’s technology
solutions and services
Semiconductor shortage could impact supply chain
Most economies expected to rebound
Enhanced liquidity, stronger balance sheet and lower interest costs