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DATATEC GROUP UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2006
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DATATEC GROUP Performance Highlights Continuing strong revenue growth up 16% Big increase in earnings per share to 15.65 US cents EBITDA profits up 32% to $52m Margin expansion at all levels Successful listing on AIM market of London Stock Exchange –Full transferability of shares between the two exchanges –All shares listed on both markets –100% market capitalisation on both markets
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DATATEC GROUP Revenues ($ millions) Revenues grew by 16%
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DATATEC GROUP Revenues by Region North America 52% South America 2% Europe 36% Asia 7% South Africa + ME 3% North America remains dominant
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DATATEC GROUP Gross Profit ($ millions)
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DATATEC GROUP EBITDA ($ millions)
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DATATEC GROUP Total Headline Earnings Per Share (US cents)
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DATATEC GROUP H1 FY2007 Cash Generation ($ millions) First dividend payment Primary uses of cash: – one-off working capital investments – acquisitions Strong closing next cash position Opening Net Cash132 EBITDA52 Dividends(6) Working Capital(63) Acquisitions(24) Other(8) Movement in Net Cash(49) Closing Net Cash83 Net Cash ($ millions)
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DATATEC GROUP Segmental Analysis Westcon AMG MEA Revenue 2% 3% 20% 75% Logicalis Westcon MEA Logicalis AMG Westcon EBITDA 3% 22% 69% MEA Logicalis 6% AMG Gross Profit 4% 54% 6% 36%
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WESTCON GROUP
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Highlights Interim revenues up 10% to $1.26bn with increases in all geographies Gross margin stable at 8.3% Operating expenses trimmed back to 5.2% of revenue from 5.8% EBITDA margins grew to 3.0% from 2.7% Ronco acquisition in H1 has expanded Nortel convergence offerings Big improvement in Europe’s financial contribution
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WESTCON GROUP Financial Performance Summary ($ millions)Aug 2005Aug 2006Growth Sales 1,1271,25011% Gross Profit96 *1037% Gross Margin8.5%8.3% Operating Costs65662% Operating Margin5.8%5.2% EBITDA313823% EBITDA %2.7%3.0% Dep & Amort55 D&A %0.4% Interest Expense, Net34 Interest Expense %0.2%0.3% Pre-Tax Income232822% Pre-Tax %2.1%2.3% * Includes once-off benefits Financial Performance summary includes inter-group adjustments
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WESTCON GROUP Revenue Trend – Six Months $1,013 $1,140 $1,163 $1,259 $700 $800 $900 $1,000 $1,100 $1,200 $1,300 Sep-FebMar-AugSep-FebMar-Aug 20052006 2007 $ millions
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WESTCON GROUP Revenue by Geography - % of Revenue Americas Asia Pac Europe 56% 36% 8% Europe Asia Pac Americas 54% 37% 9% Consistent Geographic results H1 FY 2006H1 FY 2007
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WESTCON GROUP Revenue Product Vendor Mix % Cisco59% 12% 15% 6% 8% Nortel Other Security Avaya Other Security Avaya Nortel Cisco59% 10% 14% 8% 9% H1 FY 2006H1 FY 2007 Cisco remains dominant vendor
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WESTCON GROUP Gross Margin % Including once-off benefits H1 FY 2006 H1 FY 2007 9.4% 7.0% 8.4% 8.5% 7.8% 9.1% 8.3% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% AmericasEuropeAsia PacificTotal
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WESTCON GROUP Operating Expenses $64 $65 $63 $66 $60 $62 $64 $66 $68 Sep-FebMar-AugSep-FebMar-Aug 20052006 2007 $ millions 4.0% 4.2% 4.4% 4.6% 4.8% 5.0% 5.2% 5.4% 5.6% 5.8% 6.0% 6.2% 6.4% 6.6% Operating Expense % Operating expenses relatively constant despite high revenue growth
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WESTCON GROUP EBITDA ($000’s) EBITDA increases across all geographic regions. H1 FY2006 H1 FY2007 26.7 1.7 2.4 30.8 24.7 9.1 4.2 38.0 $0.0 $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 $35.0 $40.0 $45.0 AmericasEuropeAsia PacificTotal Note: Americas results include US non-operating subsidiaries
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WESTCON GROUP Consolidated Balance Sheet – Working Capital – US GAAP ($ millions)Aug 2005Feb 2006Aug 2006 Accounts Receivable$325$321$370 DSO (days)555156 Inventory$183$189$198 Inventory Turns10.7x11.2x Accounts Payable$324$333$360 DPO (days)605859 Current Ratio1.51.6 Note: Ratios based on trailing twelve month results
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WESTCON GROUP Consolidated Balance Sheet – Capitalisation – US GAAP * Includes inter-company loan payable to Datatec which is eliminated in consolidation ($ millions) Aug 2005 Feb 2006 Aug 2006 Cash$135$166$156 Working Capital Lines86 67 79 Notes payable- 40 Net Cash*9 23 1 Equity287 284 306 Debt to Capitalization0.310.330.34 Liabilities to TNW1.691.851.88
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WESTCON GROUP Net Cash / Debt Trend ($ millions)
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WESTCON GROUP Headcount by Region Region Aug 2005 Feb 2006Aug 2006 Americas435451476 Europe426454457 Asia-Pacific133141154 Total9941,0461,087
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WESTCON GROUP Future Outlook Cautious optimism with continued organic growth for the second half Increasing the focus on acquisition driven growth Enhanced logistics in North America should drive efficiency gains Further improvements in margins and profitability expected in Europe
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LOGICALIS GROUP
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Highlights Revenues up 39% to $343m Organic growth of 11% Gross margin maintained at 20% EBITDA profits up 59% to $11.8m Continued growth in profitability in both the UK and US operations One acquisition completed during H1 FY 2007 Offices opened in Chile and Peru Acquisition of IBM partner completed 1 September in US
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LOGICALIS GROUP Financial Performance Summary ($ millions)Aug 2005Aug 2006Growth Revenue247,278342,63239% Gross Profit49,66568,82239% Gross Margin20.1% Operating Expenses42,22356,98035% Opex %17.1%16.6% EBITDA7,44211,84259% As % of Revenue3.0%3.5% Operating Profit5,1828,55065% As % of Revenue2.1%2.5% Increased scale has produced stronger results in FY 2007 Notes: Includes Datatec level inter-company transactions which eliminate on Datatec consolidation
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LOGICALIS GROUP Revenue Geographic Split – as % of Revenue H1 FY 2006 H1 FY 2007 North America South America UK Germany 67% 26% 1% 6% 62% 32% 1% 5% North America South America UK Germany North America generated 62% of revenue
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LOGICALIS GROUP Revenue Segmental Split Proportion of product in sales mix relatively constant Product 81% Professional Services 7% H1 FY 2006H1 FY 2007 Managed Services 5% Product 80% Professional Services 8% Maintenance 8% Managed Services 4% Maintenance 7%
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LOGICALIS GROUP Revenue Product Vendor Mix IBM remains most significant vendor partner Others H1 FY 2006H1 FY 2007 IBM Cisco EMC HP 26% 28% 32% 4% 10% HP Cisco Others EMC IBM 23% 38% 2% 12% 25%
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LOGICALIS GROUP Gross Margin % Overall Gross margin % steady
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LOGICALIS GROUP EBITDA ($ millions) Continued growth in profitability in UK and US Note: EBITDA pre IFRS 2 charges and head office costs
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LOGICALIS GROUP Key Financial Measures ($’000) Aug 2005 Feb 2006 Aug 2006 Deferred Revenue21,58015,93317,773 Inventory10,34914,53617,216 Inventory Days (Excluding Spares Stock) 111412 Accounts Receivable75,86287,468115,555 DSO Days544753 Accounts Payable66,65897,14590,480 DPO Days768275 Net Cash30,91326,605(2,010) Net cash reduction reflects acquisitive growth resulting in increased working capital requirements
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LOGICALIS GROUP Headcount by Region Region Aug 2005 Feb 2006Aug 2006 North America385441487 South America186201230 Europe295343400 Total8669851,117 Increase predominantly due to acquisitions and growth in scale
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LOGICALIS GROUP Recent Important Wins USFinance IP comms solution, services and $1.9m managed services USLocal GovtDatacenter build out $0.4m USTechnology Three year network managed $0.1m Services ($ per year) UKManufacturing Server upgrade and storage solution $3.5m following SAP implementation UKUniversity Consultancy, project definition and $875k supply of initial network upgrade UKFinance Cross sell of a computing/ $350k application integration project UKConstruction Five year managed services of $4.9m WAN/LAN/IPT and Data centre South America Telecoms Regional deal for Cisco MPLS $3.0m plus two year maintenance South America Finance Outsourcing contract $1.2m to manage telecom infrastructure
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LOGICALIS GROUP Future Outlook Optimistic about second half trading conditions Cisco Advanced Technologies still growing strongly Continuing to focus on growing the services mix Continue to evaluate acquisition opportunities Scale should drive further operating efficiencies Ian Cook – CEO, Logicalis European Operations – to succeed Jens Montanana in his capacity as Logicalis Group CEO from 1 March 2007 Jens to continue duties as Chairman of this division
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ANALYSYS MASON GROUP
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Overview The group offers a full spectrum of business advisory, management consultancy, research and implementation services Trusted “independent” consultancy operating throughout the world with a direct presence in the UK, Ireland, France, Spain, Italy, USA and Singapore Analysys Mason’s input has become an indispensable part of any major telecoms initiative The group now employs approximately 330 professional consultants and support staff Analysys Research Telecoms research, publications and benchmarking Analysys Consulting Strategy consulting and economic modelling in the telecoms sector Technical, business and management consulting in telecoms and high-tech Contact centre, CRM and change management consulting
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ANALYSYS MASON GROUP Highlights Non-UK international revenues now contribute 48% of total Modest revenue growth of 2% despite completion last year of large wireless network rollout Improvements in gross and net profits Debt free balance sheet with $9m of cash
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ANALYSYS MASON GROUP Financial Performance Summary ($ millions) Aug 2005 Aug 2006 Variance % Revenue30,07230,703+2% Gross Profit10,33111,201+8% Gross Margin34.4%36.5% EBITDA3,2633,227-1% As % of Revenue10.9%10.5% PBT2,6852,709+1% As % of Revenue8.9%8.8%
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ANALYSYS MASON GROUP Revenue Geographic Split – as % of Revenue H1 FY 2006H1 FY 2007 UK USA Rest of World Europe USA Rest of World Europe UK 67% 1% 14% 18%
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ANALYSYS MASON GROUP Revenue Segmental Split H1 FY 2007H1 FY 2006 Analysys Research 9% Analysys Consulting 38% Catalyst 12% Mason 41% Analysys Consulting 49% Analysys Research 8% Mason 35% Catalyst 8%
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ANALYSYS MASON GROUP Gross Margin % 41.6 40.1 17.3 34.4 44.7 31.4 10.7 36.5 0 5 10 15 20 25 30 35 40 45 50 55 60 MasonAnalysys Consulting Analysys Research CatalystTotal % 28.7 30.6 H1 FY2006 H1 FY2007
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ANALYSYS MASON GROUP EBITDA – ($000’s) Mason ACL ARL Catalyst Total -500 $000 0 500 1,000 1,500 2,000 2,500 3,000 3,500 1,239 1,110 1,694 2,465 370 157 162 -86 3,263 3,227 H1 FY2006 H1 FY2007
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ANALYSYS MASON GROUP Headcount by Division RegionAug 2005Feb 2006Aug 2006 Mason847478 Analysys Consulting768083 Analysys Research263536 Catalyst21 20 AMG Support Services (FTE’s)47 48 Full Time Headcount254257265 Associates625970 Total316 335
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ANALYSYS MASON GROUP Recent Important Wins Analysys Consulting and ResearchMason and Catalyst Middle East operator – Fixed and mobile LRIC modelling - $900k UK Department of Health – Ambulance radio programme $3.4m Turkish operator – Cost modelling project - $700kUK Mobile Operator – Mobile network projects $3.2m Leading investment bank – Due diligence of cable TV & 3G business plans - $240k Transport for London – IT and telecommunications projects $770k Italian operator – Development of mobile cost model - $375k Norway Ministry of Justice – Tetra network procurement $450k North African operator – Pricing and tariff advice - $290k Sri Lanka – Core network roadmap strategy - $290k Joint Morocco operator – 3G license bid support - $500K UK Development Agency – Procurement advice re: FibreSpeed - $405k Asian Development Authority – Mobile interconnect framework review - $570K
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ANALYSYS MASON GROUP Future Outlook Building critical mass in key geographies and content areas, e.g.: –US, Asia –Convergence, digital media research Telecoms industry is still forecast to grow steadily, market drivers include: –Market liberalisation / privatisation –Fixed/mobile convergence and quadruple play –Development of IPTV and VOIP services Telecoms consultancy is also forecast to maintain growth levels, key drivers being: –Geographic diversification –Operations and outsourcing –Business and strategic planning –NGN, Broadband and VOIP services
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DATATEC GROUP
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Market Conditions Outlook for the global IT industry remains favourable US market continues to be robust Europe inches forward Rest of the world including emerging markets showing strong growth
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DATATEC GROUP Prospects Expecting continued revenue growth and profit margin expansion Improving contribution from Europe Considering a number of strategic acquisitions Plans to increase geographic footprint and extend services offerings
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QUESTIONS
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