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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Datatec | LSE:DTC | London | Ordinary Share | ZAE000017745 | ORD ZAR0.01(DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 310.00 | 285.00 | 335.00 | 0.00 | 00:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Dec 2019 to Dec 2024
TIDMDTC
RNS Number : 2440W
Datatec Limited
13 November 2017
13 November 2017
Datatec Limited
Results for the six months ended 31 August 2017
Datatec Limited ("Datatec", the "Company" or the "Group", JSE and LSE: DTC), the international information and communications technology (ICT) group, is today publishing its unaudited interim results for the six months ended 31 August 2017 ("the Period" or "H1 FY18").
Highlights
-- Value unlocked through two significant disposals:
o Sale of Westcon Americas and 10% of Westcon International to SYNNEX Corporation for up to US$830 million
o Sale of Logicalis SMC, Dutch business unit for US$42 million
-- Plan to return US$350 million of cash to shareholders -- Any deferred consideration received from SYNNEX will be returned to shareholders -- Westcon International to be streamlined -- Positive outlook for Logicalis in second half
-- Continuing operations: revenue US$1.84 billion (H1 FY17: US$1.98 billion); EBITDA US$7.7 million (H1 FY17: US$24.4 million
Hot Features
Premium
-- Underlying* earnings per share 1.4 US cents (H1 FY17: 12.5 US cents)
Datatec Limited (www.datatec.com)
+44 (0) 1753
Jens Montanana - Chief Executive Officer 797 118
+27 (0) 11
Ivan Dittrich - Chief Financial Officer 233 3301
Wilna de Villiers - Investor Relations +27 (0) 11
Manager 233 1013
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Jefferies International Limited - Nominated adviser
and broker
+44 (0) 20
Nick Adams/Simon Hardy 7029 8000
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finnCap - Broker
+44 (0) 20
Stuart Andrews 7220 0500
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Instinctif Partners
+27 (0) 11
Frederic Cornet/Keagile Makgoba (SA) 447 3030
+44 (0) 20
Adrian Duffield/Chantal Woolcock (UK) 7457 2077
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Jens Montanana, Chief Executive of Datatec, commented:
"Although the first half headline results were disappointing, we have generated exceptional value through the successful sale of our Westcon Americas business and recently the smaller disposal of the non-core Logicalis SMC business.
"In the near term, we plan to return US$350 million of cash to shareholders in a structured way to give them maximum flexibility and in due course return to shareholders any deferred cash consideration from the sale of Westcon Americas.
"The outlook for Logicalis, which contributed most of our profits, is increasingly positive with a number of important developments set to support an overall improvement in H2. We are moving rapidly to create the appropriate structure in Westcon International to support the direction of the business."
GROUP ACTIVITIES
Datatec is an international ICT solutions and services group operating in more than 50 countries across North America, Latin America, Europe, Africa, Middle East and Asia-Pacific. The Group's service offering spans the technology, distribution, integration and consulting sectors of the ICT market.
Following the sale of the Westcon Americas businesses to SYNNEX in September 2017, Datatec operates two main divisions:
-- Technology distribution - Westcon International: distribution of security, collaboration, networking and data centre products and solutions; and
-- Integration and managed services - Logicalis: ICT infrastructure solutions and services.
The specialist activities of Consulting and Datatec Financial Services are included with the corporate head office functions in the "Corporate, Consulting and Financial Services" segment of the Group.
STRATEGIC OVERVIEW
Datatec's strategy remains to deliver long-term, sustainable and above average returns to shareholders through portfolio management and the development of its principal subsidiaries providing technology solutions and services to targeted customers in identified markets around the world.
The Group completed two major disposals after the half-year, realising material returns to shareholders.
Effective 1 September 2017, the Group sold Westcon-Comstor's businesses in North America and Latin America ("Westcon Americas") and a 10% interest in the remaining part of Westcon-Comstor ("Westcon International") to SYNNEX Corporation for US$630 million in cash, with the potential for an earn-out of up to US$200 million in cash.
In October 2017, Logicalis also realised significant value from the sale of its non-core SMC consulting business to DXC Technology Company (NYSE: DXC) for US$42 million.
Following the disposal of Westcon Americas (the largest profit contributor of Westcon-Comstor) the remaining business, Westcon International, will be directly managed by the Datatec management team. This business, which has faced difficult trading for the last few years, will be reshaped through a combination of cost-reduction measures and business efficiency initiatives.
Westcon International currently retains the circa US$63 million annual central costs of Westcon-Comstor and has a transitional services agreement with SYNNEX, which will run until August 2018. Subsequently, Westcon International will be able to implement fully its plans to reduce the central costs and right-size the business.
Logicalis has now become the strongest part of the Group in terms of profitability and cash generation and continues to provide the widest geographical exposure with its substantial Latin American and USA businesses. The Group intends to continue to develop and grow the Logicalis business.
As announced on 24 October 2017, the AIM listing of Datatec shares will be cancelled on 8 December 2017. The AIM listing has not had the desired effect of diversifying Datatec's investor base and trading of the shares on AIM has dwindled to negligible volumes.
The Group's trading in H1 FY18 continued to be adversely impacted by the roll out of the SAP ERP system and business process outsourcing ("BPO") across Westcon-Comstor's operations in Europe, Middle East and Africa ("EMEA").
Westcon Americas and the Logicalis SMC business are classified as a "disposal group" in accordance with IFRS 5. The Group's results for H1 FY18 are reported in the form of the "continuing operations", excluding the disposal group.
Continuing operations had revenues of US$1.84 billion in H1 FY18 and US$1.98 billion in the six-month financial period ended 31 August 2016 ("the Comparable Period" or "H1 FY17"). Continuing EBITDA was US$7.7 million in H1 FY18 (H1 FY17: US$24.4 million).
Group total revenue, on the "combined" basis including revenue of the disposal group, for H1 FY18 was US$2.99 billion compared to US$3.04 billion in H1 FY17. Group combined EBITDA was US$39.3 million (H1 FY17: US$68.9 million).
Underlying* earnings per share ("UEPS") was 1.4 US cents compared to 12.5 US cents for H1 FY17.
Given the Group's dividend policy and as underlying* earnings in H1 FY18 would only support a negligible dividend, the Board is not declaring an interim dividend.
CURRENT TRADING AND OUTLOOK
While the Group's trading in H1 FY18 has been disappointing, the Board expects a much better performance from Logicalis in H2 FY18.
Logicalis is expected to benefit from the contribution of Packet Systems Indonesia ("PSI") which was acquired in September 2017 and a major multi-year contract win in Latin America, which will underpin the performance of Logicalis in that geography.
Datatec is continuing to focus on improving the financial performance of Westcon International and streamlining its operations.
PROPOSED DISTRIBUTION TO SHAREHOLDERS following the disposal of westcon americas
The Company has consulted with its principal bankers relative to adjusting its debt levels and agreed that $350 million of the designated free cash of $500 million may be distributed to shareholders. The balance of $150 million will be utilised to reduce the Group's residual interest bearing debt to mutually acceptable levels. For clarity, no part of the amount retained is earmarked for acquisitions and all will be applied to debt reduction and working capital funding.
The Board intends to distribute a special dividend of $350 million (approximately R5 billion) to shareholders as a cash dividend with a scrip distribution alternative.
To the extent that the full $350 million is not paid due to shareholders electing the scrip distribution alternative, the Board will use the full undistributed cash amount to do a general buyback of shares through the market under the authority granted at the Annual General Meeting on 14 September 2017.
The formal dividend declaration is expected to be done before the end of November 2017.
Shareholders will be advised in due course when the result of the special dividend election is known.
In addition, a further special dividend will be declared and/or a share buyback effected from all of the SYNNEX earn-out consideration received by the Group. This is expected to be known and advised to shareholders in April 2018.
GROUP RESULTS
Revenue
Group combined revenues for the period were US$2.99 billion (H1 FY17: US$3.04 billion). Continuing revenues of US$1.84 billion in H1 FY18 (H1 FY17: US$1.98 billion) are included in the combined results as shown in the table below.
Disposal Disposal
Combined Continuing group Combined Continuing group
US$ millions H1 FY18 H1 FY18 H1 FY18 H1 FY17 H1 FY17 H1 FY17
Revenue
Westcon-Comstor 2 278.6 1 148.0 1 130.6 2 256.1 1 216.4 1 039.7
Logicalis 693.7 677.6 16.1 757.2 736.1 21.1
Consulting and
Financial Services 19.2 19.2 - 23.6 23.6 -
--------------------- -------- ---------- -------- -------- ---------- --------
2 991.5 1 844.8 1 146.7 3 036.9 1 976.1 1 060.8
--------------------- -------- ---------- -------- -------- ---------- --------
Revenue by geography
North America 1 027.3 184.3 843.0 1 056.4 237.3 819.1
Latin America 496.3 208.7 287.6 415.9 195.3 220.6
Europe 964.2 948.1 16.1 1 018.6 997.5 21.1
Asia-Pacific 325.2 325.2 - 345.3 345.3 -
MEA 178.5 178.5 - 200.7 200.7 -
--------------------- -------- ---------- -------- -------- ---------- --------
2 991.5 1 844.8 1 146.7 3 036.9 1 976.1 1 060.8
--------------------- -------- ---------- -------- -------- ---------- --------
Gross profit by
geography
North America 106.5 50.2 56.3 125.5 63.1 62.4
Latin America 87.9 48.8 39.1 80.1 44.3 35.8
Europe 130.5 127.2 3.3 139.0 135.4 3.6
Asia-Pacific 55.3 55.3 - 52.7 52.7 -
MEA 17.9 17.9 - 22.5 22.5 -
--------------------- -------- ---------- -------- -------- ---------- --------
398.1 299.4 98.7 419.8 318.0 101.8
--------------------- -------- ---------- -------- -------- ---------- --------
Group EBITDA
Westcon-Comstor 19.0 (12.0) 31.0 42.9 (1.2) 44.1
Logicalis 28.8 28.2 0.6 33.0 32.6 0.4
Consulting and
Financial Services (8.5) (8.5) - (7.0) (7.0) -
--------------------- -------- ---------- -------- -------- ---------- --------
39.3 7.7 31.6 68.9 24.4 44.5
--------------------- -------- ---------- -------- -------- ---------- --------
Group combined gross margins in H1 FY18 were 13.3% (H1 FY17: 13.8%) and continuing gross margins in H1 FY18 were 16.2% (H1 FY17: 16.1%). Combined gross profit was US$398.1 million (H1 FY17: US$419.8 million) including US$299.4 million (H1 FY17: US$318.0 million) gross profit from continuing operations.
Overall combined operating costs were US$358.8 million (H1 FY17: US$350.9 million), including US$291.7 million (H1 FY17: US$293.6 million) from continuing operations. Included in the combined operating costs are total restructuring costs of US$6.7 million (H1 FY17: US$7.2 million).
Combined EBITDA was US$39.3 million (H1 FY17: US$68.9 million) and combined EBITDA margin was 1.3% (H1 FY17: 2.3%). Continuing EBITDA was US$7.7 million (H1 FY17: US$24.4 million) and continuing EBITDA margin was 0.4% (H1 FY17: 1.2%).
Combined operating profit was US$10.0 million (H1 FY17: US$40.7 million) including a loss of US$19.0 million (H1 FY17: US$0.7 million) from continuing operations.
The combined net interest charge increased to US$17.0 million (H1 FY17: US$10.3 million).
Combined loss before tax was US$6.6 million (H1 FY17: US$34.3 million profit). Loss before tax from continuing operations was US$28.5 million (H1 FY17: US$2.1 million).
A tax charge of US$0.9 million has arisen on a loss from continuing operations of US$28.5 million. This is largely due to the fact that the tax credit associated with certain management and IT costs of the continuing business have been treated as a benefit arising for the disposal group. This is also reflected in the comparative numbers. The underlying tax rate continues to be adversely affected by losses arising in Westcon-Comstor's Asia-Pacific and Africa regions for which limited deferred tax assets have been recognised.
Underlying* earnings per share were 1.4 US cents (H1 FY17: 12.5 US cents). Headline loss per share was 5.8 US cents (H1 FY17: 9.1 US cents headline earnings per share).
Cash
The Group generated US$29.3 million of cash from combined operations during H1 FY18 (H1 FY17: US$24.2 million) and ended the period with a combined net debt of US$428.6 million (H1 FY17: US$251.7 million and FY17: US$396.5 million). The increase in net debt is a result of reduced cash earnings and funding of increased working capital. Of the net debt at 31 August 2017, US$273.4 million related to continuing operations and US$155.2 million related to the disposal group.
On 1 September 2017, the Group received US$630 million for the sale of Westcon Americas to SYNNEX.
Acquisitions
Effective 1 June 2017, Analysys Mason acquired 100% of the share capital of Nexia Management Consulting AS, a telecoms management consultancy company registered in Norway.
Effective 4 July 2017, Logicalis Group acquired 51% of the share capital in NubeliU, a South America-based company specialising in cloud computing projects based on OpenStack.
As a result of these acquisitions, goodwill and other intangibles assets increased by US$6.7 million and US$1.8 million respectively. None of the goodwill recognised is expected to be deductible for income tax purposes. The revenue and EBITDA included from these acquisitions in H1 FY18 were US$1.0 million and US$0.1 million respectively. Had the acquisition dates been 1 March 2017, revenue and EBITDA attributable to these acquisitions would have been approximately US$2.4 million and US$0.2 million for H1 FY18 respectively.
Acquisition-related costs of the above acquisitions of US$0.3 million are included under operating costs in the condensed consolidated statement of comprehensive income.
An assessment of the fair value of the assets acquired across both the acquisitions made by the Group is shown in the table below.
Shareholder distributions and dividend policy
The Group's policy is to maintain a fixed three times cover relative to underlying* earnings when declaring dividends. The level of underlying earnings in H1 FY18 would only support a negligible dividend under this policy so no interim dividend for FY18 is declared.
As set out above, the Board has determined a structured programme of dividends and share repurchases in order to return the majority of cash received from the SYNNEX transaction to shareholders.
Foreign exchange translation
Gains of US$8.5 million (H1 FY17: US$47.5 million) arising on translation to presentation currency are included in total comprehensive loss of US$0.3 million (H1 FY17: income US$62.8 million).
DIVISIONAL REVIEWS
Westcon-Comstor
Westcon-Comstor accounted for 76% of the Group's combined revenues (H1 FY17: 74%) and 62% of the Group's continuing revenues (H1 FY17: 62%). Westcon-Comstor accounted for 59% of its combined EBITDA (H1 FY17: 56%).
Westcon-Comstor is a value-added technology distributor of category-leading solutions in security, collaboration, networking and data centre. Westcon-Comstor is transforming the technology supply chain through its global capabilities in cloud, services and global deployment. It has teams in 50-plus countries, combining expert technical and market knowledge with industry-leading partner enablement programmes. Collaborating with its partners in a unique engagement model, Westcon-Comstor strives to provide an exceptional partner experience by delivering results together. The company goes to market under the Westcon and Comstor brands. Westcon-Comstor's portfolio of market-leading vendors includes: Cisco, Avaya, Polycom, Juniper, Check Point, F5, Palo Alto and Symantec.
With effect from 1 September 2017, Westcon Americas was sold to SYNNEX and the EMEA and Asia-Pacific businesses of Westcon-Comstor (Westcon International) continue under Datatec ownership with a 10% interest held by SYNNEX.
Disposal Disposal
Continuing group Continuing group
(Westcon (Westcon (Westcon (Westcon
Combined International) Americas) Combined International) Americas) Combined Continuing
US$ millions H1 FY18 H1 FY18 H1 FY18 H1 FY17 H1 FY17 H1 FY17 % change % change
-------------- -------- --------------- ---------- -------- --------------- ---------- --------- ----------
Revenue
North America 843.0 - 843.0 819.1 - 819.1 2.9 -
Latin America 287.6 - 287.6 220.6 - 220.6 30.4 -
Europe 730.5 730.5 - 760.5 760.5 - (3.9) (3.9)
Asia-Pacific 241.0 241.0 - 257.6 257.6 - (6.5) (6.5)
MEA 176.5 176.5 - 198.3 198.3 - (11.0) (11.0)
-------------- -------- --------------- ---------- -------- --------------- ---------- --------- ----------
2 278.6 1 148.0 1 130.6 2 256.1 1 216.4 1 039.7 1.0 (5.6)
-------------- -------- --------------- ---------- -------- --------------- ---------- --------- ----------
Gross profit
North America 56.3 - 56.3 62.4 - 62.4 (9.8) -
Latin America 39.1 - 39.1 35.8 - 35.8 9.2 -
Europe 72.6 72.6 - 87.1 87.1 - (16.7) (16.7)
Asia-Pacific 31.2 31.2 - 29.6 29.6 - 5.4 5.4
MEA 17.1 17.1 - 21.6 21.6 - (20.8) (20.8)
-------------- -------- --------------- ---------- -------- --------------- ---------- --------- ----------
216.3 120.9 95.4 236.5 138.3 98.2 (8.6) (12.6)
-------------- -------- --------------- ---------- -------- --------------- ---------- --------- ----------
Westcon-Comstor's combined revenues increased by 1% to US$2.3 billion (H1 FY17: US$2.3 billion) with higher revenue in North America and Latin America offset by lower revenues in Europe, MEA and Asia-Pacific.
There was a decline in the financial performance of the EMEA region. Continued business transformation challenges in EMEA led to a drop in revenues of US$51.8 million in H1 FY18 compared to H1 FY17. The drop in revenue resulted in a reduction in gross profit of US$19.0 million in EMEA, representing the bulk of the drop in gross profit in Westcon-Comstor. Trading conditions in MEA were weak, particularly in South Africa.
Asia-Pacific revenues were US$16.6 million lower due to reduced sales in China; however, gross profit was US$1.6 million better than H1 FY17.
Westcon-Comstor combined revenue by technology category:
H1 FY18 H1 FY17
------------------------ -------- ---------------
Security 38% 38%
Networking 25% 26%
Unified communications 22% 22%
Data centre and
other 15% 14%
------------------------ -------- ---------------
100% 100%
------------------------ -------- ---------------
Westcon-Comstor's combined gross margins were 9.5% (H1 FY17: 10.5%) due to unfavourable geographic mix with lower margins in Latin America and MEA.
Combined operating expenses increased to US$197.3 million (H1 FY17: US$193.6 million). The 2% increase is primarily due to higher foreign exchange expense in Latin America and Asia-Pacific.
Restructuring expenses of US$4.3 million (H1 FY17: US$7.0 million) were incurred, mainly in North America, Asia-Pacific and Global Support related to BPO transformation. In addition US$1.4 million of expenditure was incurred in relation to the recently completed transaction with SYNNEX.
Combined EBITDA was US$19.0 million (H1 FY17: US$42.9 million). Westcon-Comstor's continuing operations (Westcon International) incurred an EBITDA loss of US$12.0 million (H1 FY17: US$1.2 million) and the disposal group (Westcon Americas) recorded EBITDA of US$31.0 million (H1 FY17: US$44.1 million).
Net working capital days decreased to 32 days compared to FY17 (39 days) primarily due to significant improvement in inventory turns in EMEA and Asia-Pacific. The improvement in net working capital days, partially offset by lower cash earnings, US$15.8 million of capital expenditures and the further purchase of US$2 million Angola government bonds resulted in a decrease of US$32.1 million in net debt to US$371.3 million.
Of this net debt, US$207.5 million is in the continuing Westcon International business and US$163.8 million is in the disposal group (Westcon Americas). Of the US$12.4 million incurred in capitalised development expenditure during H1 FY18, the majority is attributable to the SAP ERP system transition, cloud development and digital transformation.
From H2 FY18 Westcon International is being managed by the Datatec management team and the Group will be collapsing the Datatec and Westcon International head office functions to further streamline its operations. Westcon International is well positioned to benefit from its partnership with SYNNEX, continued growth in security and mobile networks, investments in its cloud practice as well as improving conditions in emerging markets.
Logicalis
Logicalis accounted for 23% of the Group's combined revenues (H1 FY17: 25%) and 37% of the Group's continuing revenues (H1 FY17: 37%).
Logicalis is a global IT solutions and managed services provider with expertise in data centre and cloud services, security and network infrastructure, workspace communications and collaboration, data and information strategies, and IT operation modernisation.
Combined revenues were US$693.7 million (H1 FY17: US$757.2 million), including US$0.3 million of revenue from acquisitions made during the period. Revenues from continuing operations (excluding Logicalis' disposal group, SMC) were US$677.6 million (H1 FY17 US$736.1 million). Services revenues were up 7.4% with strong growth in both professional services and annuity revenue. Revenue contribution by geography is shown below:
H1 FY18 H1 FY17
--------------- -------- --------
North America 26% 31%
Latin America 30% 26%
Europe 32% 32%
Asia-Pacific 12% 11%
--------------- -------- --------
100% 100%
--------------- -------- --------
Revenue increases in Latin America were offset by decreases in Europe, North America and Asia-Pacific.
In Europe, the UK results have improved as the restructuring of the UK operation continued and it benefited from a large supplier credit. Latin America showed improvement notably in Argentina. North America was adversely impacted by weak trading conditions and product sales in the first half.
Revenues from product were down 16.5%, with decreases in Cisco, HPE and IBM.
Logicalis' combined gross margins were 25.2% (H1 FY17: 23.2%), benefiting from the improved services mix. Gross margins from continuing operations were 25.3% (H1 FY17: 23.3%).
Combined gross profit was down 0.4% to US$174.7 million (H1 FY17: US$175.4 million). Gross profit from continuing operations was US$171.4 million (H1 FY17: US$171.8 million).
Logicalis' combined gross profit contribution by geography is shown below:
H1 FY18 H1 FY17
--------------- -------- --------
North America 28% 36%
Latin America 28% 25%
Europe 31% 27%
Asia-Pacific 13% 12%
--------------- -------- --------
100% 100%
--------------- -------- --------
Combined EBITDA was US$28.8 million (H1 FY17: US$33.0 million), with a corresponding EBITDA margin of 4.2% (H1 FY17: 4.4%). Combined operating profit was US$16.5 million (H1 FY17: US$20.3 million). Operating profit from continuing operations was US$16.0 million (H1 FY17: US$20.0 million).
Logicalis incurred US$2.4 million expenditure in H1 FY18 restructuring its UK and US operations. Combined EBITDA before restructuring charges was US$31.2 million with a combined EBITDA margin of 4.5% and operating profit before these restructuring charges was US$18.9 million.
At 31 August 2017, Logicalis has a net overdraft of US$1.9 million (H1 FY17: US$11.3 million net cash). The reduction in net cash was caused primarily by significant prepaid expenses in Latin America. The sale of the SMC business in October 2017 brought US$42 million of cash into the business in H2 FY18.
Logicalis continues to have a contingent liability in respect of a possible tax liability at its PromonLogicalis subsidiary in Brazil.
In July 2017, Logicalis acquired 51% of the share capital in NubeliU, a South American company specialising in cloud computing projects based on OpenStack. The 51% interest in NubeliU was acquired for a cash consideration of US$3.8 million. NubeliU's expertise in OpenStack will accelerate the global expansion of Logicalis' cloud computing and SDx (Software Defined everything) practices, strengthening its position as a cloud integrator and ensuring its ability to meet its customers' requirements on their journey to digital transformation.
In September 2017, Logicalis won a significant long-term project with a large service provider covering multiple territories within Latin America which will contribute significantly to the business in H2 FY18 and beyond.
Digital innovation is accelerating; business technology is undergoing a major shift. Logicalis is transitioning itself into a Digital Enabler for its customers, driven by the explosion of data, the rise of mobile and the cloud and many opportunities exist to tap into themes such as security to augment its strong networking heritage.
Logicalis is also investing in areas such as business intelligence and data analytics to grow its data centre infrastructure offerings for customers. Cloud continues to be a key feature in the business and IT strategies of customers and Logicalis is well positioned to support customers regardless of their cloud strategy.
Logicalis remains confident about the prospects for the industry and its positioning and expects a solid H2 FY18.
Corporate, Consulting and Financial Services
This segment accounted for 1% of Group's combined and continuing revenues (H1 FY17: 1%).
The Consulting unit comprised: Analysys Mason, a provider of strategic, trusted advisory, modelling and market intelligence services to the telecoms, media and technology industries; and Mason Advisory, an independent and impartial IT consultancy providing related strategic, technical and operational advice to the public and private sectors. Datatec's shareholding in Mason Advisory reduced to 42.5% at the end of H1 FY17 and accordingly it has been equity-accounted from that date.
Consulting revenues were US$18.5 million (H1 FY17: US$22.3 million) and EBITDA was US$0.9 million (H1 FY17: US$1.1 million). The H1 FY17 Consulting revenues and EBITDA include Mason Advisory but in H1 FY18 the Group's share of Mason Advisory's profit is included in "share of equity-accounted investment earnings". Both Analysys Mason and Mason Advisory achieved improved results for H1 FY18 compared to H1 FY17.
In June 2017, Analysys Mason acquired Nexia Management Consulting AS, a telecoms management consultancy based in Norway which will enhance Analysys Mason's existing track record in the Nordics, where telecoms, media and technology ("TMT") markets are among the most advanced in the world.
Datatec Financial Services is in a development phase of its business providing financing/leasing solutions for ICT customers. The business recorded revenues of US$0.7 million in H1 FY18 (H1 FY17: US$1.2 million) and an EBITDA loss of US$0.8 million (H1 FY17: US$0.3 million).
Corporate includes the net operating costs of the Datatec head office entities which were US$8.6 million (H1 FY17: US$6.0 million). These costs include the remuneration of the Board and head office staff, consulting and audit fees. In H1 FY18, foreign exchange gains were negligible (H1 FY17: US$1.7 million foreign exchange loss). The net operating costs included SYNNEX transaction related expenses of US$2.0 million in H1 FY18.
SUBSEQUENT EVENTS
On 1 September 2017, the sale of Datatec's Westcon Americas and 10% of the remaining part of Westcon-Comstor (Westcon International) to SYNNEX Corporation completed.
On 13 October 2017, Logicalis sold its SMC operation in the Netherlands for US$42 million in cash. Logicalis had 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.
The profit on sale and associated adjustments from the two disposals noted above will be accounted for in the second half of FY18.
On 4 September 2017, Logicalis completed the acquisition, with its Indonesian partner Metrodata, of a majority stake in Packet Systems Indonesia ("PSI"), a leading ICT systems integrator and service company. PSI will be integrated with Logicalis Metrodata Indonesia ("LMI"), the existing Indonesian operation of Logicalis.
REPORTING
This interim financial report was prepared in accordance with the framework concepts and the recognition and measurement criteria of IFRS and its interpretations adopted by the International Accounting Standards Boards ("IASB") in issue and effective for the group at 1 March 2017 and the SAICA Financial Reporting Guides, as issued by the Accounting Practices Committees and Financial Reporting pronouncements as issued by the Financial Reporting Standards Council. This interim report was prepared using the information as required by IAS 34 - Interim Financial Reporting, and complies with the Listings Requirements of the JSE Limited, the AIM Rules for Companies, and the requirements of the Companies Act, No 71 of 2008, of South Africa. This report was compiled under the supervision of Ivan Dittrich CA(SA) (Chief Financial Officer).
The accounting policies and methods of computation applied in the preparation of these interim financial statements are in terms of IFRS and are consistent with those accounting policies applied in the preparation of the previous consolidated annual financial statements. The adoption of certain amendments to existing standards did not have an impact on the accounting policies of the Group.
DISCLAIMER
This announcement may contain statements regarding the future financial performance of the Group which may be considered to be forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty, and although the Group has taken reasonable care to ensure the accuracy of the information presented, no assurance can be given that such expectations will prove to have been correct.
The Group has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements and there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. It is important to note, that:
(i) unless otherwise indicated, forward-looking statements indicate the Group's expectations and have not been reviewed or reported on by the Group's external auditors;
(ii) actual results may differ materially from the Group's expectations if known and unknown risks or uncertainties affect its business, or if estimates or assumptions prove inaccurate;
(iii) the Group cannot guarantee that any forward-looking statement will materialise and, accordingly, readers are cautioned not to place undue reliance on these forward-looking statements; and
(iv) the Group disclaims any intention and assumes no obligation to update or revise any forward-looking statement even if new information becomes available, as a result of future events or for any other reason, other than as required by the JSE Limited Listings Requirements and/or the AIM Rules.
On behalf of the Board
SJ Davidson
Chairman
JP Montanana
Chief Executive Officer
IP Dittrich
Chief Financial Officer
13 November 2017
DIRECTORS
SJ Davidsondeg-- (Chairman), JP Montanana-- (CEO), IP Dittrich (CFO), O Ighodarodeg++, JF McCartneydeg , MJN Njekedeg, CS Seabrookedeg, NJ Templedeg--
degNon-executive --British American ++Nigerian
* Excluding impairments of goodwill and intangible assets, profit or loss on sale of investments and assets, amortisation of acquired intangible assets, unrealised foreign exchange movements, acquisition-related adjustments, fair value movements on acquisition-related financial instruments, restructuring costs relating to fundamental reorganisations, SYNNEX deal-related expenses and the taxation effect on all of the aforementioned.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
for the six months to 31 August 2017
Unaudited
Re-presented+ Audited
Unaudited Six months Re-presented+
Six months to 31 Year ended
to 31 August August 28 February
US$'000 2017 2016 2017
------------------------------------------ ------------- -------------- --------------
1 976 3 861
Revenue 1 844 823 119 991
------------- -------------- --------------
1 975 3 859
Continued operations 1 843 819 214 775
Revenue from acquisitions 1 004 905 2 216
------------- -------------- --------------
(1 658 (3 239
Cost of sales (1 545 460) 125) 701)
------------------------------------------ ------------- -------------- --------------
Gross profit 299 363 317 994 622 290
Operating costs (284 602) (284 397) (579 177)
Restructuring costs (4 885) (7 236) (13 072)
Share-based payments (2 174) (1 925) (1 000)
------------------------------------------ ------------- -------------- --------------
Operating profit before interest,
tax, depreciation and amortisation
("EBITDA") 7 702 24 436 29 041
Depreciation (13 648) (13 356) (27 440)
Amortisation of capitalised development
expenditure (7 209) (5 914) (13 461)
Amortisation of acquired intangible
assets and software (5 828) (5 887) (11 429)
------------------------------------------ ------------- -------------- --------------
Operating loss (18 983) (721) (23 289)
Interest income 1 705 1 554 2 912
Finance costs (11 625) (6 883) (16 729)
Share of equity-accounted investment
earnings/(losses) 231 250 (793)
Acquisition-related fair value
adjustments 66 3 563 5 565
------------- -------------- --------------
Fair value movements on put option
liabilities ** - 658
Fair value adjustment on deferred
and/or contingent purchase consideration 66 3 563 4 907
------------- -------------- --------------
Other income 115 142 230
Profit on disposal of associate/loss
of control of subsidiary - - 319
------------------------------------------ ------------- -------------- --------------
Loss before taxation (28 491) (2 095) (31 785)
Taxation (860) 697 (21 242)
------------------------------------------ ------------- -------------- --------------
Loss for the period from continuing
operations (29 351) (1 398) (53 027)
Profit for the period from discontinued
operations 18 162 24 069 63 776
------------------------------------------ ------------- -------------- --------------
(Loss)/profit for the period (11 189) 22 671 10 749
------------------------------------------ ------------- -------------- --------------
**Less than US$1 000.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
for the six months to 31 August 2017
Unaudited
Unaudited Re-presented(+) Audited
Six months Six months Re-presented(+)
to 31 to 31 Year ended
August August 28 February
US$'000 2017 2016 2017
-------------------------------------- ----------- ---------------- ----------------
Other comprehensive (loss)/income
Items that may be reclassified
subsequently to profit and loss
Exchange differences arising on
translation to presentation currency 8 498 47 527 56 947
Translation of equity loans net
of tax effect 149 (7 661) (9 994)
Transfers and other items 2 244 287 622
-------------------------------------- ----------- ---------------- ----------------
Total comprehensive (loss)/income
for the period (298) 62 824 58 324
-------------------------------------- ----------- ---------------- ----------------
(Loss)/profit attributable to:
Owners of the parent (12 363) 19 145 3 038
Non-controlling interests 1 174 3 526 7 711
-------------------------------------- ----------- ---------------- ----------------
(11 189) 22 671 10 749
-------------------------------------- ----------- ---------------- ----------------
Total comprehensive (loss)/income
attributable to:
Owners of the parent (296) 53 946 44 732
Non-controlling interests (2) 8 878 13 592
-------------------------------------- ----------- ---------------- ----------------
(298) 62 824 58 324
-------------------------------------- ----------- ---------------- ----------------
(+) The prior years have been re-presented to show
comparative results from continuing and discontinued
operations in accordance with IFRS 5.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 August 2017
Unaudited Unaudited
Six months Six months Audited
to 31 to 31 Year ended
August August 28 February
US$'000 2017 2016 2017
---------------------------------------- ----------- ----------- ------------
ASSETS
Non-current assets 671 821 784 039 786 361
Property, plant and equipment 59 425 77 048 73 742
Goodwill 403 530 463 324 461 651
Capitalised development expenditure 84 596 76 612 80 843
Acquired intangible assets and
software 41 060 54 181 48 620
Investments 27 266 23 842 24 887
Deferred tax assets 40 624 55 602 67 644
Finance lease receivables 6 819 6 780 8 885
Other receivables 8 501 26 650 20 089
2 966 2 641
Current assets 452 694 2 698 539
----------- ----------- ------------
Inventories 256 431 420 923 438 503
1 049 1 592
Trade receivables 965 494 1 548 003
Current tax assets 7 401 19 935 17 849
Prepaid expenses and other receivables 320 906 286 884 340 696
Finance lease receivables 2 679 5 581 7 854
Cash resources 233 504 315 877 345 634
1 095
Assets classified as held for sale 566 - -
----------- ----------- ------------
3 638 3 425
Total assets 273 733 3 484 900
---------------------------------------- ----------- ----------- ------------
EQUITY AND LIABILITIES
Equity attributable to equity holders
of the parent 855 412 870 366 854 986
----------- ----------- ------------
Share capital and premium 152 396 134 215 151 947
Non-distributable reserves 66 105 77 013 63 299
Foreign currency translation reserve (132 030) (148 277) (141 816)
Share-based payment reserve 3 440 2 480 2 681
Distributable reserves 765 501 804 935 778 875
----------- ----------- ------------
Non-controlling interests 52 097 47 932 51 889
---------------------------------------- ----------- ----------- ------------
Total equity 907 509 918 298 906 875
---------------------------------------- ----------- ----------- ------------
Non-current liabilities 119 430 116 479 127 056
----------- ----------- ------------
Long-term liabilities 56 136 27 116 31 902
Liability for share-based payments 3 075 5 326 2 080
Amounts owing to vendors 190 2 798 580
Deferred tax liabilities 40 429 71 970 78 959
Provisions 8 413 8 756 8 376
Other liabilities 11 187 513 5 159
----------- ----------- ------------
2 611 2 390
Current liabilities 334 956 2 450 969
----------- ----------- ------------
1 218 1 831
Trade and other payables 685 899 1 720 391
Short-term interest-bearing liabilities 58 944 59 079 64 787
Provisions 5 265 6 488 8 634
Amounts owing to vendors 1 343 4 353 512
Current tax liabilities 2 378 7 736 11 159
Bank overdrafts 391 813 481 401 645 486
Liabilities directly associated
with assets classified as held
for sale 932 906 - -
----------- ----------- ------------
3 638 3 425
Total equity and liabilities 273 733 3 484 900
---------------------------------------- ----------- ----------- ------------
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months to 31 August 2017
Unaudited Unaudited
Six months Six months Audited
to 31 to 31 Year ended
August August 28 February
US$'000 2017 2016 2017
------------------------------------------ ----------- --------------- ---------------
Operating profit before working
capital changes 42 255 69 989 134 535
Working capital changes (11 754) (41 131) (184 576)
----------- --------------- ---------------
Decrease/(increase) in inventories 3 465 581 (11 995)
Increase in receivables (125 052) (78 285) (83 753)
Increase/(decrease) in payables 109 833 36 573 (88 828)
----------- --------------- ---------------
Other working capital changes (1 217) (4 673) 12 720
------------------------------------------ ----------- --------------- ---------------
Cash generated from/(utilised in)
operations 29 284 24 185 (37 321)
Net finance costs paid (13 125) (9 638) (25 264)
Taxation paid (14 861) (21 262) (43 299)
------------------------------------------ ----------- --------------- ---------------
Net cash inflow/(outflow) from
operating activities 1 298 (6 715) (105 884)
------------------------------------------ ----------- --------------- ---------------
Cash outflow for acquisitions (5 262) (1 854) (1 854)
Increase in investments (2 118) - (9 201)
Additions to property, plant and
equipment (13 149) (39 426) (30 796)
Proceeds on disposal of investments - - 533
Increase in capitalised development
expenditure (12 433) - (29 091)
Additions to software - - (1 566)
Proceeds on disposal of property,
plant and equipment 89 - 2 302
------------------------------------------ ----------- --------------- ---------------
Net cash outflow from investing
activities (32 873) (41 280) (69 673)
------------------------------------------ ----------- --------------- ---------------
Dividends paid to shareholders - (14 680) (20 949)
Amounts paid to vendors (210) - (3 429)
Inflow of long-term liabilities 27 321 18 694 20 851
------------------------------------------ ----------- --------------- ---------------
Net cash inflow/(outflow) from
financing activities 27 111 4 014 (3 527)
------------------------------------------ ----------- --------------- ---------------
Net decrease in cash and cash equivalents (4 464) (43 981) (179 084)
Cash and cash equivalents at the
beginning of the year (299 852) (132 685) (132 685)
Translation differences on cash
and cash equivalents (259) 11 142 11 917
------------------------------------------ ----------- --------------- ---------------
Cash and cash equivalents at the
end of the period(#) - combined (304 575) (165 524) (299 852)
------------------------------------------ ----------- --------------- ---------------
Cash flows from discontinued operations Re-presented(+) Re-presented(+)
Net cash (outflow)/inflow from
operating activities (49 747) 5 076 (18 654)
Net cash outflow from investing
activities (2 700) (2 824) (1 472)
Net cash inflow/(outflow) from
financing activities 8 240 (10 535) (35)
------------------------------------------ ----------- --------------- ---------------
Net decrease in cash and cash equivalents (44 207) (8 283) (20 161)
------------------------------------------ ----------- --------------- ---------------
Opening cash (101 122)
Translation differences (937)
Net decrease in cash and cash equivalents (44 207)
------------------------------------------ ----------- --------------- ---------------
Cash and cash equivalents at the
end of the period(#) - discontinued
operations (146 266)
------------------------------------------ ----------- --------------- ---------------
Cash and cash equivalents at the
end of the period(#) - continuing
operations (158 309)
------------------------------------------ ----------- --------------- ---------------
(#) Comprises cash resources, net of bank overdrafts.
(+) The prior years have been re-presented to show
comparative results from discontinued operations in
accordance with IFRS 5.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN TOTAL
EQUITY
for the six months to 31 August 2017
Unaudited Unaudited
Six months Six months Audited
to 31 to 31 Year ended
August August 28 February
US$'000 2017 2016 2017
-------------------------------------- ----------- ----------- ------------
Balance at the beginning of the
period 906 875 869 420 869 420
-------------------------------------- ----------- ----------- ------------
Transactions with equity holders
of the parent
Comprehensive (loss)/income (296) 53 946 44 732
Dividends - (14 680) (20 949)
Share-based payments 722 734 837
Transactions with non-controlling
interests
Comprehensive (loss)/income (2) 8 878 13 592
Acquisitions of additional interests
from non-controlling interests 210 - -
Disposals of additional interests
from non-controlling interests - - (757)
-------------------------------------- ----------- ----------- ------------
Balance at the end of the period 907 509 918 298 906 875
-------------------------------------- ----------- ----------- ------------
DETERMINATION OF HEADLINE AND UNDERLYING EARNINGS
for the six months to 31 August 2017
Unaudited Unaudited
Six months Six months Audited
to 31 to 31 Year ended
August August 28 February
US$'000 2017 2016 2017
------------------------------------------------- ----------- ----------- ------------
(Loss)/profit attributable to the
equity holders of the parent (12 363) 19 145 3 038
Headline earnings adjustments 79 (32) 1 262
----------- ----------- ------------
Property impairment - - 1 600
Profit on disposal of investment/associate/loss
of control or subsidiary - (14) (319)
Loss/(profit) on disposal of property,
plant and equipment 131 (28) (36)
Tax effect (52) 10 17
----------- ----------- ------------
Non-controlling interests - - (7)
------------------------------------------------- ----------- ----------- ------------
Headline (losses)/earnings (12 284) 19 113 4 293
----------- ----------- ------------
Continuing operations - Re-presented(+) (30 446) (4 928) (59 426)
Discontinued operations - Re-presented(+) 18 162 24 041 63 719
----------- ----------- ------------
DETERMINATION OF UNDERLYING EARNINGS
Underlying earnings adjustments 20 299 8 689 24 677
----------- ----------- ------------
Unrealised foreign exchange losses/(gains) 4 311 (1 092) 1 854
Acquisition-related fair value
adjustments (66) (3 563) (5 565)
SYNNEX deal-related costs 3 442 - -
Restructuring costs 6 713 7 236 16 559
Amortisation of acquired intangible
assets 5 899 6 108 11 829
----------- ----------- ------------
Tax effect (4 650) (1 525) (5 488)
Non-controlling interests (332) (155) (340)
------------------------------------------------- ----------- ----------- ------------
Underlying earnings 3 033 26 122 23 142
----------- ----------- ------------
Continuing operations - Re-presented(+) (18 355) 2 589 (43 896)
Discontinued operations - Re-presented(+) 21 388 23 533 67 038
----------- ----------- ------------
(+) The prior years have been re-presented to show
comparative results from continuing and discontinued
operations in accordance with IFRS 5.
SALIENT FINANCIAL FEATURES
for the six months to 31 August 2017
Unaudited
Unaudited Re-presented(+) Audited
Six months Six months Re-presented(+)
to 31 to 31 Year ended
August August 28 February
US$'000 2017 2016 2017
----------------------------------------- ----------- ---------------- ----------------
Number of shares issued (millions)
Issued 212 211 212
Weighted average 212 210 211
Diluted weighted average 214 211 212
----------------------------------------- ----------- ---------------- ----------------
(Losses)/earnings per share ("EPS")
(US cents)
Basic (5.8) 9.1 1.4
----------- ---------------- ----------------
Continuing operations (14.4) (2.4) (28.9)
Discontinued operations 8.6 11.5 30.3
----------- ---------------- ----------------
Diluted basic (5.8) 9.1 1.4
----------- ---------------- ----------------
Continuing operations (14.3) (2.3) (28.7)
Discontinued operations 8.5 11.4 30.1
----------- ---------------- ----------------
Headline (losses)/earnings (12 284) 19 113 4 293
----------- ---------------- ----------------
Continuing operations (30 446) (4 928) (59 426)
Discontinued operations 18 162 24 041 63 719
----------- ---------------- ----------------
Headline (losses)/earnings per
share (US cents)
Headline (5.8) 9.1 2.0
----------- ---------------- ----------------
Continuing operations (14.4) (2.4) (28.3)
Discontinued operations 8.6 11.5 30.3
----------- ---------------- ----------------
Diluted headline (5.8) 9.1 2.0
----------- ---------------- ----------------
Continuing operations (14.3) (2.3) (28.1)
Discontinued operations 8.5 11.4 30.1
----------- ---------------- ----------------
Underlying earnings 3 033 26 122 23 142
----------- ---------------- ----------------
Continuing operations (18 355) 2 589 (43 896)
Discontinued operations 21 388 23 533 67 038
----------- ---------------- ----------------
Underlying earnings per share (US
cents)
Underlying 1.4 12.5 11.0
----------- ---------------- ----------------
Continuing operations (8.7) 1.3 (20.8)
Discontinued operations 10.1 11.2 31.8
----------- ---------------- ----------------
Diluted underlying 1.4 12.4 10.9
----------- ---------------- ----------------
Continuing operations (8.6) 1.2 (20.7)
Discontinued operations 10.0 11.2 31.6
----------- ---------------- ----------------
Net asset value per share (US cents) 404.3 412.2 403.5
----------------------------------------- ----------- ---------------- ----------------
KEY RATIOS
Gross margin (%) - continuing operations 16.2 16.1 16.1
EBITDA (%) - continuing operations 0.4 1.2 0.8
Effective tax rate (%) - continuing
operations (3.0) 33.3 (66.8)
Exchange rates
Average Rand/US$ exchange rate 13.2 14.7 14.2
Closing Rand/US$ exchange rate 13.0 14.5 13.0
----------------------------------------- ----------- ---------------- ----------------
(+) The prior years have been re-presented to show
comparative results from continuing and discontinued
operations in accordance with IFRS 5.
CONDENSED SEGMENTAL ANALYSIS
for the six months to 31 August 2017
Corporate, Consulting
Westcon-Comstor Logicalis and Financial Services Total
Unaudited Unaudited Audited Unaudited Unaudited Audited Unaudited Unaudited Audited Unaudited Unaudited Audited
Six Re-presented+ Re-presented+ Six Re-presented+ Re-presented+ Six Re-presented+ Re-presented+ Six Re-presented+ Re-presented+
months Six months Year months Six months Year months Six months Year months Six months Year
to 31 to 31 ended to 31 to 31 ended to 31 to 31 ended to 31 to 31 ended
August August 28 February August August 28 February August August 28 February August August 28 February
2017 2016 2017 2017 2016 2017 2017 2016 2017 2017 2016 2017
------------------ --------- ------------- -------------- --------- ------------- ------------- --------- ------------- ------------- --------- ------------- -------------
1 147 1 216 2 352 1 468 1 844 1 976 3 861
Revenue 968 414 752 677 650 736 123 238 19 205 23 582 41 001 823 119 991
EBITDA (11 999) (1 163) (33 667) 28 186 32 605 76 350 (8 485) (7 006) (13 642) 7 702 24 436 29 041
Reconciliation
of operating
(loss)/profit
to (loss)/profit
for the
period
Operating
(loss)/profit (25 986) (13 467) (61 102) 15 968 20 028 52 017 (8 965) (7 282) (14 204) (18 983) (721) (23 289)
Interest
income 679 542 1 313 839 836 1 273 187 176 326 1 705 1 554 2 912
Finance
costs (6 160) (4 322) (9 996) (5 463) (2 534) (6 690) (2) (27) (43) (11 625) (6 883) (16 729)
Share of
equity-accounted
investment
earnings/(losses) 146 250 (933) - - - 85 - 140 231 250 (793)
Fair value
movements
on put option
liabilities ** - 658 - - - - - - ** - 658
Fair value
adjustments
on deferred
and/or contingent
purchase
consideration - - - 66 3 563 4 907 - - - 66 3 563 4 907
Other income - - - - - - 115 142 230 115 142 230
Profit on
disposal
of associate/loss
of control
of subsidiary - - - - - - - - 319 - - 319
------------------ --------- ------------- -------------- --------- ------------- ------------- --------- ------------- ------------- --------- ------------- -------------
(Loss)/profit
before taxation (31 321) (16 997) (70 060) 11 410 21 893 51 507 (8 580) (6 991) (13 232) (28 491) (2 095) (31 785)
Taxation 1 681 7 680 (2 697) (3 361) (6 763) (16 326) 820 (220) (2 219) (860) 697 (21 242)
------------------ --------- ------------- -------------- --------- ------------- ------------- --------- ------------- ------------- --------- ------------- -------------
(Loss)/profit
for the
period from
continuing
operations (29 640) (9 317) (72 757) 8 049 15 130 35 181 (7 760) (7 211) (15 451) (29 351) (1 398) (53 027)
Profit for
the period
from discontinued
operations 17 930 24 051 62 275 232 18 1 501 - - - 18 162 24 069 63 776
------------------ --------- ------------- -------------- --------- ------------- ------------- --------- ------------- ------------- --------- ------------- -------------
(Loss)/profit
for the
period (11 710) 14 734 (10 482) 8 281 15 148 36 682 (7 760) (7 211) (15 451) (11 189) 22 671 10 749
------------------ --------- ------------- -------------- --------- ------------- ------------- --------- ------------- ------------- --------- ------------- -------------
2 465 2 374 2 405 1 121 3 638 3 425 3 484
Total assets 006 333 604 801 955 747 986 291 51 466 95 653 93 005 273 733 900
------------------ --------- ------------- -------------- --------- ------------- ------------- --------- ------------- ------------- --------- ------------- -------------
(1 909 (1 798 (1 861 (812 (664 (685 (2 730 (2 507 (2 578
Total liabilities 526) 264) 416) 352) 799) 867) (8 886) (44 372) (30 742) 764) 435) 025)
------------------ --------- ------------- -------------- --------- ------------- ------------- --------- ------------- ------------- --------- ------------- -------------
+The prior years have been re-presented to show comparative results from continuing
and discontinued operations in accordance with IFRS 5.
Sales and purchases between Group companies are concluded at arm's length in
the ordinary course of business. The inter-group sales of goods and provision
of services for the year ended 31 August 2017 amounted to US$19.9 million (H1
FY17: US$25.5 million).
DISCONTINUED OPERATIONS
for the six months to 31 August 2017
Westcon Westcon
Americas SMC Americas SMC Datatec SMC
disposal disposal Datatec disposal disposal consolidation Discontinued Westcon disposal
group group consolidation group group adjustments operations Americas group Datatec
Six Six adjustments Discontinued Six Six Six Six disposal Year consolidation Discontinued
months months Six months operations months months months months group ended adjustments operations
to 31 to 31 to 31 Six months to 31 to 31 to to 31 Year ended 28 Year ended Year ended
August August August to 31 August August August 31 August August 28 February February 28 February 28 February
2017 2017 2017 2017 2016 2016 2016 2016 2017 2017 2017 2017
----------------- -------- -------- ------------- -------------- -------- -------- ------------- -------------- ----------- -------- ------------- --------------
1 151 1 071 (31 1 060
Revenue 849 16 088 (21 251) 1 146 686 305 21 065 579) 791 2 234 659 42 061 (55 328) 2 221 392
-------- -------- ------------- -------------- -------- -------- ------------- -------------- ----------- -------- ------------- --------------
Continued 1 130 1 039 1 060
operations 598 16 088 - 1 146 686 726 21 065 - 791 2 179 331 42 061 - 2 221 392
Inter-segmental (31
revenue 21 251 - (21 251) - 31 579 - 579) - 55 328 - (55 328) -
-------- -------- ------------- -------------- -------- -------- ------------- -------------- ----------- -------- ------------- --------------
(1 056 (12 (973 (17 (958 (32
Cost of sales 453) 732) 21 251 (1 047 934) 126) 434) 31 579 981) (2 033 077) 801) 55 328 (2 010 550)
----------------- -------- -------- ------------- -------------- -------- -------- ------------- -------------- ----------- -------- ------------- --------------
101
Gross profit 95 396 3 356 - 98 752 98 179 3 631 - 810 201 582 9 260 - 210 842
(62 (53 (57
Operating costs 172) (2 771) - (64 943) 990) (3 215) - 205) (109 462) (6 601) - (116 063)
Impairment if
property - - - - - - - - (1 600) - - (1 600)
Restructuring
costs (1 828) - - (1 828) - - - (3 488) - - (3 488)
Share-based
payments (401) - - (401) (144) - - (144) 139 - - 139
----------------- -------- -------- ------------- -------------- -------- -------- ------------- -------------- ----------- -------- ------------- --------------
Operating profit
before interest,
tax,
depreciation
and amortisation
("EBITDA") 30 995 585 - 31 580 44 045 416 - 44 461 87 171 2 659 - 89 830
Management fees (18 (14
- Westcon 109) - 18 109 - 430) - 14 430 - (40 027) - 40 027 -
Datatec Group
management fees (4 441) - 4 441 - (3 853) - 3 853 - (7 208) - 7 208 -
----------------- -------- -------- ------------- -------------- -------- -------- ------------- -------------- ----------- -------- ------------- --------------
EBITDA after
management fees 8 445 585 22 550 31 580 25 762 416 18 283 44 461 39 936 2 659 47 235 89 830
Depreciation (1 555) (55) - (1 610) (2 153) (54) - (2 207) (3 887) (103) - (3 990)
Amortisation
of capitalised
development
expenditure (338) - - (338) - - - - (351) - - (351)
Amortisation
of acquired
intangible
assets
and software (667) - - (667) (782) (75) - (857) (1 507) (151) - (1 658)
----------------- -------- -------- ------------- -------------- -------- -------- ------------- -------------- ----------- -------- ------------- --------------
Operating profit 5 885 530 22 550 28 965 22 827 287 18 283 41 397 34 191 2 405 47 235 83 831
Net finance
costs (6 889) (234) - (7 123) (4 723) (251) - (4 974) (9 964) (422) - (10 386)
----------------- -------- -------- ------------- -------------- -------- -------- ------------- -------------- ----------- -------- ------------- --------------
(Loss)/profit
before taxation (1 004) 296 22 550 21 842 18 104 36 18 283 36 423 24 227 1 983 47 235 73 445
(12 (12
Taxation (3 616) (64) - (3 680) 336) (18) - 354) (9 187) (482) - (9 669)
----------------- -------- -------- ------------- -------------- -------- -------- ------------- -------------- ----------- -------- ------------- --------------
(Loss)/profit
for the period
from
discontinued
operations (4 620) 232 22 550 18 162 5 768 18 18 283 24 069 15 040 1 501 47 235 63 776
----------------- -------- -------- ------------- -------------- -------- -------- ------------- -------------- ----------- -------- ------------- --------------
The Westcon-Comstor management fees charged are added back as these costs will
remain within the Datatec Group as per the Share Purchase agreement. Datatec
management fees are eliminated at Datatec Group.
CAPITAL EXPENDITURE AND COMMITMENTS
as at 31 August 2017
Unaudited Unaudited
Six months Six months Audited
to 31 to 31 Year ended
August August 28 February
US$'000 2017 2016 2017
------------------------------------------- ----------- ----------- ------------
Capital expenditure incurred in
the current period (including capitalised
development expenditure) 25 584 32 808 61 453
----------- ----------- ------------
Continuing operations 22 961 32 808 61 453
Discontinued operations 2 623 - -
----------- ----------- ------------
Capital commitments at the end
of the period - continuing operations 29 359 22 586 36 155
Lease commitments at the end of
the period - continuing operations 126 033 149 543 133 202
----------- ----------- ------------
Payable within one year - continuing
operations 31 429 35 711 33 894
Payable after one year - continuing
operations 94 604 113 832 99 308
----------- ----------- ------------
ACQUISITIONS MADE DURING THE PERIOD
as at 31 August 2017
The following table sets out the assessment of the
fair value of assets and liabilities acquired in the
acquisition made by the Group during the period. The
fair value assessments of assets and liabilities acquired
and the amounts recognised as goodwill and intangible
assets have only been determined provisionally due
to the timing of the acquisitions and future amendments
may impact classification in these categories.
Unaudited
Six months
to 31
August
US$'000 2017
--------------------------------------------- --------------
Assets acquired
Non-current assets 98
Current assets 1 394
Non-current liabilities (273)
Current liabilities (817)
--------------------------------------------- --------------
Net assets acquired 402
Intangible assets 1 777
Goodwill 6 760
Non-controlling interest (210)
--------------------------------------------- --------------
Fair value of acquisition 8 729
--------------------------------------------- --------------
Purchase consideration
Cash 5 814
Deferred purchase consideration 844
Subsidiary shares issued 2 051
--------------------------------------------- --------------
Total consideration 8 709
--------------------------------------------- --------------
Cash outflow for acquisitions
Cash and cash equivalents acquired (552)
Cash consideration paid 5 814
--------------------------------------------- --------------
Net cash outflow for acquisitions 5 262
--------------------------------------------- --------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR UUAURBWAAAAA
(END) Dow Jones Newswires
November 13, 2017 02:00 ET (07:00 GMT)
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