Integration & Managed Services Technology Distribution Management Consulting
DATATEC GROUPAUDITED RESULTS For the year ended 29 February 2020
Summary:– Overview– COVID-19 & Current trading FY21– Strategic update
Financial Results Operational Review Prospects & Outlook
Summary, Overview & Strategic Update
© Datatec 2020
Results – year ended February 2020
© Datatec 2020
4
OVERVIEW Strategic update Datatec Group Logicalis Group Westcon International Management Consulting Outlook
Datatec GroupFINANCIAL RESULTS SUMMARY
4
Revenue
$4.3bnFY 2020
$4.3bnFY 2019
EBITDA
$158.7mFY 2020
$86.8mFY 2019
Gross profit
$741.6mFY 2020
$687.7mFY 2019
Underlying EPS
9.9 US¢FY 2020
6.6 US¢FY 2019
Results – year ended February 2020
OVERVIEW© Datatec 2020 Strategic update Datatec Group Logicalis Group Westcon International Management Consulting Outlook
Datatec GroupOVERVIEW
5
Solid operational execution in all divisions
Record year for Analysys Mason
Strong Logicalis performance, especially in Latin America
Significantly improved cash generation
Major progress in Westcon International, with benefits of multi-year investment in advanced systems
© Datatec 2020
Results – year ended February 2020
© Datatec 2020
6
OVERVIEW Strategic update Datatec Group Logicalis Group Westcon International Management Consulting Outlook
Datatec GroupCOVID-19 & CURRENT TRADING - FY21
6
Strong demand for our solutions and services
Focus on cash & liquidity
Emerging Markets currency weakness
Continuing good revenue and order intake
COVID-19 uncertainty everywhere
Results – year ended February 2020
STRATEGIC UPDATEOverview Datatec Group Logicalis Group Westcon International Management
Consulting Outlook© Datatec 2020
Datatec GroupSTRATEGIC UPDATE
7
$15.4m special dividend
$44.3m share repurchases
Strategic acquisitions in Logicalis & Analysys
Mason
Brazil IPO
Financial Results
© Datatec 2020
Results – year ended February 2020
DATATEC GROUP© Datatec 2020 Strategic updateOverview Logicalis Group Westcon International Management
Consulting Outlook
Datatec Group 9
FINANCIAL PERFORMANCE
US$m FY 2020 FY 2019 % Movement
Revenue 4,304.8 4,332.4 (1%)
Gross profit 741.6 687.7 8%
Gross margin % 17.2% 15.9%
Operating costs (582.9) (600.9) (3%)
Operating cost margin % 13.5% 13.9%
EBITDA 158.7 86.8 83%
EBITDA margin % 3.7% 2.0%
Depreciation & amortisation (76.1) (38.4) 98%
Operating profit 82.6 48.4 71%
Operating profit margin % 1.9% 1.1%
Significantly improved p&l at all levels
4% revenue growth in constant currency
Strong operating leverage
Increased depreciation due to adoption of IFRS16
© Datatec 2020
Results – year ended February 2020
DATATEC GROUP© Datatec 2020 Strategic updateOverview Logicalis Group Westcon International Management
Consulting Outlook
Datatec Group 10
FINANCIAL PERFORMANCE – CONTINUED
US$m FY 2020 FY 2019 % Movement
Operating profit 82.6 48.4 71%
Net finance costs (25.9) (22.6) 15%
Profit before tax 58.5 24.2 142%
Underlying EPS (US cents) 9.9 6.6 50%
HEPS (US cents) 5.9 0.7 743%
Net finance costs benefitted from Logicalis Brazil tax ruling in H1
50% growth in underlying earnings per share
© Datatec 2020
Results – year ended February 2020
DATATEC GROUP© Datatec 2020 Strategic updateOverview Logicalis Group Westcon International Management
Consulting Outlook
FY 2020 pro forma shows like for like comparison to FY 2019
EBITDA, depreciation & finance costs impacted by IFRS 16
Underlying EPS similar after adopting IFRS 16
11
US$m FY 2020 (reported)
FY 2020 (pro-forma*)
FY 2019 (reported) % Movement
Revenue 4,304.8 4,304.8 4,332.4 (1%)
Gross profit 741.6 736.4 687.7 7%
Gross margin % 17.2% 17.1% 15.9%
Operating costs (582.9) (612.9) (600.9) 2%
Operating cost margin % 13.5% 14.2% 13.9%
EBITDA 158.7 123.5 86.8 42%
EBITDA margin % 3.7% 2.9% 2.0%
Depreciation & amortisation (76.1) (45.5) (38.4) 18%
Operating profit 82.6 78.0 48.4 61%
Operating profit margin % 1.9% 1.8% 1.1%
Net finance costs (25.9) (21.3) (22.6) (6%)
Profit before tax 58.5 58.5 24.2 142%
Underlying EPS (US cents) 9.9 9.9 6.6 50%
Datatec GroupPRO FORMA FINANCIAL PERFORMANCE (EXCLUDING ADOPTION OF IFRS 16)
* Excluding the impact of adopting IFRS 16 on the FY20 results
© Datatec 2020
Results – year ended February 2020
DATATEC GROUP© Datatec 2020 Strategic updateOverview Logicalis Group Westcon International Management
Consulting Outlook
Increased revenue contribution from MEA
Larger GP contribution from Latin America
15%
22%
38%
18%
7%10%
14%
46%
20%
10%
16%
19%
40%
19%6%9%
15%
48%
20%
8%
Datatec Group 12
REVENUE & GROSS PROFIT % CONTRIBUTION BY GEOGRAPHY
Revenue contribution by geography Gross profit contribution by geography
North AmericaLatin AmericaEuropeAsia-PacificMEA
FY 2019
FY 2020 FY 2020
FY 2019
© Datatec 2020
Results – year ended February 2020
DATATEC GROUP© Datatec 2020 Strategic updateOverview Logicalis Group Westcon International Management
Consulting Outlook
Datatec Group 13
BALANCE SHEET SUMMARY
US$m FY 2020 FY 2019
Assets 2,596.5 2,722.3Non-current assets
Goodwill 241.4 234.6
Acquired intangible assets & software 30.0 37.6
Other non-current assets 241.2 165.6
Current assets 2,083.9 2,284.5
Equity & Liabilities 2,596.5 2,722.3Shareholders’ funds 572.3 648.9
Non-controlling interests 70.8 63.3
Long-term liabilities 185.5 99.5
Amounts due to vendors 5.5 2.3
Current liabilities 1,762.4 1,908.3
Net debt (139.9) (100.8)
Strong operating cash generation as a result of working capital
improvements
Reduction in shareholders funds due to currency translation and share
repurchases
© Datatec 2020
Results – year ended February 2020
DATATEC GROUP© Datatec 2020 Strategic updateOverview Logicalis Group Westcon International Management
Consulting Outlook
Right of use assets take on balance of
$95 million
Net debt increased by $85 million at
29 February 2020 as a result
Reduction in Westcon International and Logicalis net debt
14
US$m FY 2020 (reported)
FY 2020 (pro-forma*)
FY 2019 (reported)
Assets 2,596.5 2,517.6 2,722.3Non-current assets
Goodwill 241.4 241.4 234.6
Acquired intangible assets & software 30.0 30.0 37.6
Property, plant & equipment & right-of-use assets 127.3 47.5 60.3
Other non-current assets 113.9 113.9 105.3
Current assets 2,083.9 2,084.8 2,284.5
Equity & Liabilities 2,596.5 2,517.6 2,722.3Shareholders’ funds 572.3 572.3 648.9
Non-controlling interests 70.8 70.8 63.3
Long-term liabilities 71.7 71.7 68.0
Interest-bearing liabilities & leases 223.3 138.5 141.1
Amounts due to vendors 5.5 5.5 2.3
Other current liabilities 1,652.9 1,658.8 1,798.7
Net debt (139.9) (55.1) (100.8)
Datatec GroupPRO FORMA BALANCE SHEET SUMMARY (EXCLUDING ADOPTION OF IFRS 16)
* Excluding the impact of adopting IFRS 16 on the FY20 results
© Datatec 2020
Results – year ended February 2020
DATATEC GROUP© Datatec 2020 Strategic updateOverview Logicalis Group Westcon International Management
Consulting Outlook
Datatec Group 15
CASH FLOW
US$m FY 2020 FY 2019
EBITDA 158.7 86.8Working capital changes 57.0 (21.2)Other working capital changes 0.2 1.3Other movements (0.3) 2.1
Cash generated from operations 215.6 69.0Net finance costs paid (31.0) (22.4)Taxation paid (37.0) (38.6)
Net cash inflow from operating activities 147.6 8.0Net cash outflow for acquisitions (9.3) (25.4)Net cash outflow from other investing activities (21.7) (33.8)Dividend paid to shareholders (12.2) -Share repurchases (44.3) (43.9)Net cash inflow from disposal of discontinued operations 14.0 -Net cash outflow from other financing activities (34.2) (10.7)
Increase/(decrease) in cash & cash equivalents 39.9 (105.8)Cash & cash equivalents at beginning of year 40.4 161.3Translation difference on cash & cash equivalents 3.1 (15.1)
Cash & cash equivalents at end of period 83.4 40.4
Very strong working capital management
Significant improvement in operating cash flows
$57m cash returned to shareholders through share repurchases and dividends
Operational Review
Logicalis Group
© Datatec 2020
Results – year ended February 2020
LOGICALIS GROUP© Datatec 2020 Strategic update Datatec GroupOverview Westcon International Management
Consulting Outlook
Logicalis GroupFINANCIAL PERFORMANCE
US$m FY 2020 FY 2019 % Movement
Revenue 1,700.4 1,741.1 (2%)
Gross profit 441.2 410.1 8%
Gross margin % 25.9% 23.6%
Operating costs (317.3) (316.7) 0%
Operating cost margin % 18.7% 18.2%
EBITDA 123.9 93.4 33%
EBITDA margin % 7.3% 5.4%
Operating profit 72.3 65.9 10%
Operating profit margin % 4.3% 3.8%
18
Constant currency revenues up 4%
Gross margin improvement driven by business mix and $14m Brazil tax
credit
Operating costs increase largely due to acquisitions
Significantly improved EBITDA and operating margins
© Datatec 2020
Results – year ended February 2020
LOGICALIS GROUP© Datatec 2020 Strategic update Datatec GroupOverview Westcon International Management
Consulting Outlook
Logicalis GroupPRO FORMA FINANCIAL PERFORMANCE (EXCLUDING ADOPTION OF IFRS 16)
US$m FY 2020 (reported)
FY 2020(pro-forma*)
FY 2019 (reported) % Movement
Revenue 1,700.4 1,700.4 1,741.1 (2%)
Gross profit 441.2 438.3 410.1 7%
Gross margin % 25.9% 25.8% 23.6%
Operating costs (317.3) (334.4) (316.7) 6%
Operating cost margin % 18.7% 19.7% 18.2%
EBITDA 123.9 103.9 93.4 11%
EBITDA margin % 7.3% 6.1% 5.4%
Depreciation & amortisation (51.6) (34.6) (27.5) 26%
Operating profit 72.3 69.3 65.9 5%
Operating profit margin % 4.3% 4.1% 3.8%
Net finance costs (14.1) (11.7) (16.8) (30%)
Profit before tax 58.7 58.1 49.6 17%
* Excluding the impact of adopting IFRS 16 on the FY20 results
FY20 EBITDA includes $20 million positive impact from
IFRS 16
Negligible impact on PBT
19
© Datatec 2020
Results – year ended February 2020
LOGICALIS GROUP© Datatec 2020 Strategic update Datatec GroupOverview Westcon International Management
Consulting Outlook
25%
37%
25%
13%
25%
36%
24%
15%
23%
37%
26%
14% 27%
32%
26%
15%
FY 2019
Logicalis GroupREVENUE & GROSS PROFIT % CONTRIBUTION BY GEOGRAPHY
Revenue contribution by geography Gross profit contribution by geography
North AmericaLatin AmericaEMEAAsia-Pacific
20
FY 2020 FY 2020
FY 2019
© Datatec 2020
Results – year ended February 2020
LOGICALIS GROUP© Datatec 2020 Strategic update Datatec GroupOverview Westcon International Management
Consulting Outlook
52%
10%
3%
6%
4%
2%
23%
59%
17%
24%
62%16%
22%
57%
9%3%
5%3%3%
20%
Product revenue by vendor
Logicalis GroupREVENUE BY SEGMENT & PRODUCT REVENUE BY VENDOR
Revenue by segment
ProductProfessional servicesMaintenance & managed services
21
CiscoIBMHPEDell, EMC, VMwareNetAppOracleOther
FY 2019
FY 2020
FY 2019
FY 2020
© Datatec 2020
Results – year ended February 2020
LOGICALIS GROUP© Datatec 2020 Strategic update Datatec GroupOverview Westcon International Management
Consulting Outlook
Logicalis GroupGROSS PROFIT & EBITDA BY GEOGRAPHY
Gross profit EBITDAFY 2019FY 2020
112133
10560
410
109
165
10859
441
North America Latin America EMEA Asia-Pacific Total
22
56
820
(13)
93
25
66
22 22
(11)
124
NorthAmerica
LatinAmerica
EMEA Asia-Pacific Centralcosts
Total
US$m
22
US$m
© Datatec 2020
Results – year ended February 2020
LOGICALIS GROUP© Datatec 2020 Strategic update Datatec GroupOverview Westcon International Management
Consulting Outlook
Logicalis GroupWORKING CAPITAL
US$m FY 2020 FY 2019
Deferred revenue (100.7) (98.3)
Inventory 78.7 92.3
Inventory days (excluding spares stock) 17 25
Accounts receivable 403.2 478.3
DSO (days) 49 65
Other receivables, prepayments & contract assets 275.8 268.7
Accounts payable (256.2) (336.7)
DPO (days) 70 83
Net working capital 225.7 233.9
Net debt (156.7) (109.2)
23
Inventory and AP reductions due to phasing on large multi-year Latam deal
DSO improvement linked to reduced AR in Brazil
Increased net debt mainly due to IFRS16
Results – year ended February 2020
LOGICALIS GROUPStrategic update Datatec GroupOverview Westcon International Management
Consulting Outlook© Datatec 2020
Logicalis GroupCOVID-19 & CURRENT TRADING
24
Action plans created to respond to various scenarios including cost
reduction initiatives
Increased investment in critical remote working technologies
Order intake for Q1 FY21 similar to Q1 FY20, but revenues slightly lower
Strong cash collections so far in FY21 Health & wellbeing of employees a core focus, most employees successfully working remotely
Results – year ended February 2020
LOGICALIS GROUP© Datatec 2020 Strategic update Datatec GroupOverview Westcon International Management
Consulting Outlook
Logicalis GroupOUTLOOK
25
Focus on costs, balance sheet and liquidity
Acceleration in customer digital transformation and our skills
investment for new technologies
Continued development of capabilities within cloud services
Economic uncertainty and currency volatility expected to
continue
Westcon International
© Datatec 2020
Results – year ended February 2020
WESTCON INTERNATIONAL© Datatec 2020 Strategic update Datatec GroupOverview Logicalis Group Management
Consulting Outlook
Westcon International 27
FINANCIAL PERFORMANCE
US$m FY 2020 FY 2019 % Movement
Revenue 2,544.6 2,544.8 0%
Gross profit 275.7 260.4 6%
Gross margin % 10.8% 10.2%
Operating costs (235.7) (254.8) (7%)
Operating cost margin % 9.3% 10.0%
EBITDA 40.0 5.6 614%
EBITDA margin % 1.6% 0.2%
Operating profit/(loss) 19.0 (4.2) 552%
Operating profit/(loss) margin % 0.7% (0.2%)
Flat revenues with significant gross margin expansion
Strong operating leverage
FY19 EBITDA included non-recurring $15m transitional services benefit
Significantly improved operating profit
© Datatec 2020
Results – year ended February 2020
WESTCON INTERNATIONAL© Datatec 2020 Strategic update Datatec GroupOverview Logicalis Group Management
Consulting Outlook
Westcon International 28
US$m FY 2020 (reported)
FY 2020(pro-forma*)
FY 2019 (reported) % Movement
Revenue 2,544.6 2,544.6 2,544.8 0%
Gross profit 275.7 273.3 260.4 5%
Gross margin % 10.8% 10.7% 10.2%
Operating costs (235.7) (246.3) (254.8) (3%)
Operating cost margin % 9.3% 9.7% 10.0%
EBITDA 40.0 27.0 5.6 382%
EBITDA margin % 1.6% 1.1% 0.2%
Depreciation & amortisation (21.0) (9.4) (9.8) (4%)
Operating profit/(loss) 19.0 17.6 (4.2) 519%
Operating profit/(loss) margin % 0.7% 0.7% (0.2%)
Net finance costs (13.6) (11.8) (12.2) (3%)
Profit/(loss) before tax 6.3 6.7 (18.9)
PRO FORMA FINANCIAL PERFORMANCE (EXCLUDING ADOPTION OF IFRS 16)
* Excluding the impact of adopting IFRS 16 on the FY20 results
FY20 EBITDA includes $13m positive impact from IFRS16
Depreciation and finance costs increased
Negligible IFRS16 impact on PBT
© Datatec 2020
Results – year ended February 2020
WESTCON INTERNATIONAL© Datatec 2020 Strategic update Datatec GroupOverview Logicalis Group Management
Consulting Outlook
59%
26%
15%
60%
24%
16%
64%23%
13%
61%26%
13%
Revenue contribution by geography
Westcon InternationalREVENUE & GROSS PROFIT % CONTRIBUTION BY GEOGRAPHY
Gross profit contribution by geography
EuropeAsia-PacificMEA
29
FY 2019
FY 2020 FY 2020
FY 2019
© Datatec 2020
Results – year ended February 2020
WESTCON INTERNATIONAL© Datatec 2020 Strategic update Datatec GroupOverview Logicalis Group Management
Consulting Outlook
32%
24%
27%
17%
54%
28%
18%
49%
51%
53%27%
20%31%
24%
28%
17%
49%51%
Revenue by business unit
Westcon InternationalREVENUE % BY BUSINESS UNIT, CUSTOMER & TECHNOLOGY CATEGORY
Product revenue by customer
ComstorWestcon
ResellerSystem integratorService provider
Product revenue by technology category
30
FY 2019
FY 2020 FY 2020
FY 2019
FY 2020
FY 2019
SecurityUnified communicationsNetworkingData centre & other
© Datatec 2020
Results – year ended February 2020
WESTCON INTERNATIONAL© Datatec 2020 Strategic update Datatec GroupOverview Logicalis Group Management
Consulting Outlook
557 578 612 591 629 636
573 650 640
596 688 657
US$mFY 2018^ FY 2020
Westcon International 31
HISTORICAL QUARTERLY SALES
FY 2019
Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2
^ Continuing operations
Qtr 3 Qtr 4
© Datatec 2020
Results – year ended February 2020
WESTCON INTERNATIONAL© Datatec 2020 Strategic update Datatec GroupOverview Logicalis Group Management
Consulting Outlook
Gross profit
Westcon InternationalGROSS PROFIT & EBITDA BY GEOGRAPHY
EBITDAFY 2019FY 2020
160
66
34
260
164
71
41
276
Europe Asia-Pacific MEA Total
1811 5
(28)
6
42
189
(29)
40
Europe Asia-Pacific MEA Central Costs* Total
US$m
* $15 million transitional services costs for FY 2019 accrued against profit on disposal of discontinued operations in FY 2018
32
US$m
© Datatec 2020
Results – year ended February 2020
WESTCON INTERNATIONAL© Datatec 2020
Management ConsultingStrategic update Datatec GroupOverview Logicalis Group Outlook
US$m Continuing Central Costs
FY17 Actual 63
FY18 Actual* 61
FY19 Actual** 43
FY20 Published Target 33
Westcon International 33
CENTRAL COSTS
* $15m (transitional services costs) reallocated to profit from discontinued operations in FY18, reducing the reported amount to $46m. Includes restructuring costs.** $15m (transitional services costs) accrued against profit from discontinued operations in FY18, reducing the reported amount to $28m. Includes restructuring costs.
FY 2020 Actual 29
Central costs continue to decline
FY20 central costs below target levels
© Datatec 2020
Results – year ended February 2020
WESTCON INTERNATIONAL© Datatec 2020 Strategic update Datatec GroupOverview Logicalis Group Management
Consulting Outlook
US$m FY 2020 FY 2019
Accounts receivable 695.1 768.9
DSO (days) 67 71
Inventory 174.6 240.0
Inventory turns 11.0x 10.0x
Accounts payable (670.2) (717.3)
DPO (days) 78 79
Net working capital 199.5 291.6
NWC (days) 22 28
Current ratio 1.2 1.1
Net debt (48.7) (109.5)
Westcon InternationalWORKING CAPITAL
34
Improved DSO and inventory turns, 6 day improvement in NWC days
Significantly improved operating cash flows
FY20 net debt includes $31.3m of debt associated to IFRS16 adoption
Management Consulting
Results – year ended February 2020
WESTCON INTERNATIONAL© Datatec 2020 Strategic update Datatec GroupOverview Logicalis Group Outlook
Westcon InternationalCOVID-19 & CURRENT TRADING
35
Advanced systems and business automation facilitated seamless shift to
remote working
Demand for: cloud computing, remote access solutions, virtualisation, security,
unified communications
Revenues and order intake for Q1 FY21 similar to Q1 FY20
Cash collections to date in line with past performance
Limited delays and disruption in supply chains
Results – year ended February 2020
WESTCON INTERNATIONALStrategic update Datatec GroupOverview Logicalis Group Management
Consulting Outlook© Datatec 2020
Westcon InternationalOUTLOOK
36
Focus on balance sheet and working capital management
Increased demand for remote access computing expected
Economic uncertainty and continued currency volatility
Continued optimisation through our digital platform investments
Analysys Mason Consulting
© Datatec 2020
Results – year ended February 2020
MANAGEMENT CONSULTING© Datatec 2020 Strategic update Datatec Group Logicalis Group Westcon InternationalOverview Outlook
Analysys Mason 38
OVERVIEW
Headquartered in London, 250 professionals worldwide
Presence across Europe, USA, Middle East and Asia
TMT strategy consulting and advisory with research arm
Main market drivers:Significant build up in 5G momentumNew ultra broadband optical networksConflation of cloud and telecoms
© Datatec 2020
Results – year ended February 2020
MANAGEMENT CONSULTING© Datatec 2020 Strategic update Datatec Group Logicalis Group Westcon InternationalOverview Outlook
Analysys Mason 39
FINANCIAL PERFORMANCE
US$m FY 2020 FY 2019 % Movement
Revenue 58.7 45.7 28%
Gross profit 23.8 16.4 45%
Gross margin % 40.5% 35.9%
Operating costs (14.4) (13.6) 6%
Operating cost margin % 24.5% 29.8%
EBITDA 9.4 2.8 236%
EBITDA % 16.0% 6.1%
Operating profit 6.1 1.7 259%
Operating profit % 10.4% 3.7%
Record financial performance
Significantly improved profit margins
Prospects & Outlook
Results – year ended February 2020
OUTLOOK© Datatec 2020 Management ConsultingStrategic update Datatec Group Logicalis Group Westcon InternationalOverview
Datatec GroupPROSPECTS & OUTLOOK
41
Global economic uncertainty with currency volatility to persist
Elevated demand for the Group’s technology solutions
Cash, balance sheet and operating cost focus
Balancing near term COVID-19 impact with anticipated recovery