XP Power

Attractive value play with upside potential

Datatec 3 November 2021 Update
Download PDF

Datatec

Attractive value play with upside potential

H122 results

IT services

3 November 2021

Price

ZAR41.9

Market cap

ZAR8.5bn

ZAR15.42/US$

Net debt (US$m) at 31 August 2021

152.5

Shares in issue

203.2m

Free float

62%

Code

DTCJ

Primary exchange

Johannesburg

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

10.5

66.8

87.9

Rel (local)

3.8

69.4

45.9

52-week high/low

ZAR41.9

ZAR22.5

Business description

Datatec is a South Africa-listed multinational ICT business, serving clients globally, predominantly in the networking and telecoms sectors. The group operates through three main divisions: Westcon International (distribution); Logicalis (IT services); and Analysys Mason (consulting).

Next events

FY22 results

May 2022

AGM

July 2022

Analysts

Richard Williamson

+44 (0)20 3077 5700

Katherine Thompson

+44 (0)20 3077 5730

Datatec is a research client of Edison Investment Research Limited

In H122 Datatec saw strong growth globally, with elevated demand for networking, cyber security and cloud infrastructure. The H122 results show good operational growth across the group, with a notably stronger performance from Westcon after its turnaround. Semiconductor supply-chain issues remain challenging, with the group seeing growing inventory levels and a building backlog of unfulfilled work. However, with technology trends continuing from H122, the outlook for H222 looks promising. Trading on 15.4x FY22 earnings and 3.6x FY22 EV/EBITDA, Datatec looks attractively priced, bolstered by the 512 ZAR cents (c 33 US cents) per share special dividend and with the results of management’s ongoing strategic review as potential upside for 2022.

Year end

Revenue
(US$m)

PBT*
(US$m)

EPS*
(c)

DPS
(c)

P/E
(x)

Yield
(%)

02/20

4,214

79.1

9.9

7.0

27.4

2.6

02/21

4,109

73.1

13.6

6.7

20.0

2.5

02/22e

4,514

84.6

17.6

40.3

15.4

14.8

02/23e

4,757

107.6

25.9

8.6

10.5

3.2

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

H122 results: Strong performance across the group

H122 group revenue rose 15% (against a weak comparator) to US$2.26bn, with EBITDA up 24% to US$75m and underlying EPS surging 113% to 8.3 US cents. By division, Logicalis showed 19% revenue growth to US$823m. Despite EBITDA margin compression (5.7% in H122 vs 6.2% for H121) due to supply chain issues and backlog, Logicalis’s EBITDA still rose 8% to US$46.5m. Westcon’s revenues rose 12% to US$1.39bn, with its operational gearing meaning that EBITDA margins expanded to 2.2% in H122, driving its EBITDA up 62% to US$31m. Analysys Mason saw a 37% increase in revenues to US$43.6m, with EBITDA climbing 25% to US$7.1m. Group net debt rose to US$152.5m (FY21: US$60.9m) as the business absorbs cash as it grows, and with elevated inventory levels.

Estimates revised upwards by c 5%

Following Datatec’s strong H122 performance, we have upgraded our FY22 sales estimates by assuming each division matches its H122 revenues in H222, leading to group revenues of US$4.51bn in FY22, an upward revision of c 5%. This then forms a base for future years, with c 5% top-line growth in FY23 and FY24, leading to revenues of US$4.76bn and US$5.03bn, respectively. We have raised EBITDA by c 4% to US$169m in FY22 and US$193 in FY23. With FY22 operating cashflow restrained by inventory build-up, we estimate closing net debt of US$166m.

Valuation: Defensive growth with upside potential

With IT trends set to continue (Datatec’s focus on networking, cyber security and cloud infrastructure looks set to support growth for some time to come) and trading on 15.4x revised FY22 earnings and 3.6x FY22 EV/EBITDA, Datatec looks attractively priced. The shares also offer the c 33 US cents per share special dividend together with potential upside from management’s value realisation initiatives – quantified in our August note, Strategic review to unlock embedded value – which may lead to a crystallisation of value in 2022.

H122 results: Strong performance across the group

In H122, Datatec saw strong growth globally with elevated demand for networking, cyber security and cloud infrastructure, benefiting much of the industry. However, the global semiconductor shortage led to extended hardware lead times, restricting revenue growth and resulting in a significantly higher closing backlog for both Logicalis and Westcon. Without the effect of these supply issues, growth at both Logicalis and Westcon could have been even higher.

Despite this headwind, the H122 results show good operational growth across the group, with a notably stronger performance from Westcon after its turnaround. H122 group revenue rose 15% (against a relatively weak comparator at the start of the COVID-19 pandemic) to US$2.26bn (H121: US$1.96bn), with EBITDA up 24% to US$75m (H121: US$61m) and underlying EPS rising 113% to 8.3 US cents (H121: 3.9 US cents). Group central costs (including board and head office staff remuneration, consulting and audit fees) rose 23% y-o-y to US$9.1m (H121: US$7.4m), largely as a result of share-based payment charges, including LTIPs. As the business absorbs cash as it grows, as well as reflecting elevated inventory levels, group net debt at 31 August 2021 rose to US$152.5m (FY21: US$60.9m).

Exhibit 1: Interim results summary

US$m

H121

H221

FY21

H122

H222e

FY22e

Revenue

1,963

2,147

4,109

2,257

2,257

4,514

Cost of Sales

(1,638)

(1,780)

(3,419)

(1,883)

(1,866)

(3,749)

Gross Profit

324

366

691

374

391

765

EBITDA

61

58

119

75

94

169

Reported operating profit

28

22

50

39

64

103

Profit before tax (reported)

15

10

25

25

51

76

EPS - Company underlying uEPS (c)

3.9

9.7

13.6

8.3

9.3

17.6

Gross Margin (%)

16.5

17.1

16.8

16.6

17.3

17.0

EBITDA Margin (%)

3.1

2.7

2.9

3.3

4.2

3.7

Closing net debt/(cash)

73

61

61

153

166

166

Source: Company accounts, Edison Investment Research

Special dividend of c 33 US cents per share

Following the sale of Westcon Americas to SYNNEX in September 2017, Datatec made an inter-company loan to Westcon International to fund working capital as the business was restructured. During H122, Westcon International repaid the amounts outstanding (c US$70m) to Datatec. This amount is to be paid to shareholders by way of a cash dividend with a scrip alternative. This special dividend equates to 512 ZAR cents (c 33 US cents) per share, payable to shareholders on the register at the close of business on 26 November 2021.

In addition to the special dividend, Datatec still expects to pay a final dividend for FY22 in line with its policy of ensuring that the dividend is covered 3x by uEPS.

Strategic review, developments not anticipated until 2022

As announced in August 2021, Datatec has engaged Lazard & Co. to assist with a strategic review of the group to address the persistent gap between Datatec's valuation and the perceived value of its underlying assets. As part of the strategic review, the board is considering a number of potential options, including private equity participation; joint ventures; international listings; divisional asset unbundling; and other value-creating structures. We quantified the size of the opportunity in our August note, Strategic review to unlock embedded value, and look forward to an update on progress in 2022.

Divisional review: All segments delivering in H122

Exhibit 2: H122 gross profit by division

Exhibit 3: H122 vs H121 gross margins

Source: Datatec

Source: Datatec

Exhibit 2: H122 gross profit by division

Source: Datatec

Exhibit 3: H122 vs H121 gross margins

Source: Datatec

Logicalis

Logicalis contributes the majority of Datatec’s profitability and has the widest geographical spread. Datatec intends to continue to grow Logicalis globally, both organically and through M&A.

The global semiconductor shortage led to extended hardware lead times in H122, restricting revenue growth and resulting in a significantly higher closing backlog particularly in Latin America and EMEA. Despite this, Logicalis’s revenue increased by 19% to US$823m (H121: US$693m). There was some margin compression, with a gross margin of 24.2% in H122 versus 25.5% in H121 and an EBITDA margin of 5.7% in H122 versus 6.2% for H121, due to the supply chain issues and growth in backlog. Despite this, Logicalis’s gross profit still rose 13% to US$199m (H121: US$177m) and EBITDA rose 8% to US$46.5m (H121: US$43.0m).

Global trading uncertainties are expected to persist in the near future, with emerging market currencies and interest rates expected to remain volatile. Prospects within cloud, IoT, software, security, data management and intelligent networks for Logicalis remain attractive as Logicalis seeks to provide full lifecycle IT infrastructure solutions to its customers.

Westcon International

Westcon, Datatec’s distribution business, accounts for 62% of group revenues. Following its restructuring in 2017/18, Westcon remains focused on improving profitability through revenue growth and margin expansion, coupled with tight cost control. As with Logicalis, Westcon’s backlog also rose significantly in H122 due to semiconductor shortages and supply chain constraints.

In H122, Westcon’s revenue increased by 12% to US$1.4bn (H121: US$1.2bn), particularly reflecting strong demand for networked cloud computing, remote access solutions for virtual office environments, unified collaboration and enhanced network security. Gross margins increased to 11.1% (H121: 10.8%) driving gross profit up 16% to US$155m (H121: US$134m). EBITDA increased by 61% to US$31.0m (H1 FY21: US$19.2m), as margins rose to 2.2% in H122 vs 1.9% in H121 with improving operating leverage.

We expect to see continued progress from Westcon in H222 and in the longer term, with growth supported by the unwinding of the backlog and margins by effective cost management.

Management Consulting

Datatec Financial Services has been moved under Westcon International, so Management Consulting now comprises Analysys Mason, which is focused on the convergence of telecoms and IT, driving digitisation, accelerated by the move to cloud computing. Although Analysys Mason is Datatec’s smallest division, it remains important in the group context. Management is targeting revenues of US$100m within the next three years, with geographical expansion in North America and Asia-Pacific likely options.

Analysys Mason revenue increased by 37% to US$43.6m (H121: US$31.8m), with gross profit increasing by 53% to US$20.1m (H121: US$13.1m). Despite EBITDA margins decreasing to 16% compared to 18% in H121, EBITDA rose 25% to US$7.1m (H121: US$5.7m).

Outlook: More of the same in H222

In H122, Datatec benefited from pent-up demand around the world, with semiconductor shortages and the resulting supply chain issues acting as a brake on growth. These issues led to inventory build-up and significant growth in backlogs across the group. We expect a very similar set of dynamics to apply in H222, implying a continued strong performance across all divisions driven by continuing demand for software and services in networking, security and cloud infrastructure.

We do not envisage a solution to the semiconductor supply chain issues in FY22, but rather anticipate this issue will persist into FY23, with inventory build-up and backlog growth only starting to reverse in FY23.

Estimates: FY22/FY23 revised upwards, FY24 introduced

Exhibit 4: Revised estimates

Year end 28 February

2021

2022e

Y-o-y

2023e

Y-o-y

2024e

Y-o-y

US$m

Reported

Old

New

growth

Change

Old

New

growth

Change

New

growth

Revenue

4,109

4,317

4,514

10%

5%

4,548

4,757

5%

5%

5,029

6%

Gross profit

691

727

765

11%

5%

775

816

7%

5%

871

7%

EBITDA

119

163

169

43%

4%

185

193

14%

4%

215

12%

Normalised operating profit

98

106

112

14%

6%

130

138

23%

6%

162

18%

Profit before tax (norm)

73

79

85

16%

7%

102

108

27%

6%

131

21%

Net income (normalised)

27

33

36

32%

7%

50

53

48%

4%

71

34%

EPS - underlying (c)

13.6

16.5

17.6

30%

7%

24.9

25.9

47%

4%

34.8

34%

Dividend (c)

6.7

5.5

40.3

501%

633%

8.3

8.6

(79)%

4%

11.6

34%

Revenue growth (%)

(2.5)

5.0

9.8

5.4

5.4

5.7

Gross margin (%)

16.8

16.8

17.0

17.0

17.1

17.3

EBITDA margin (%)

2.9

3.8

3.7

4.1

4.0

4.3

Normalised operating margin (%)

2.4

2.4

2.5

2.9

2.9

3.2

Operating cash flow

173

95

84

(51)%

(11)%

100

131

55%

31%

178

36%

Closing net debt/(cash)

61

84

166

173%

98%

113

166

(0)%

47%

125

(25)%

Source: Datatec accounts, Edison Investment Research

We have made some small changes to our FY22 and FY23 estimates following Datatec’s strong H122 performance and take the opportunity to introduce our FY24 estimates.

Revenues: we have upgraded our FY22 sales estimates by assuming each division repeats its H122 revenues in H222, leading to group revenues of US$4.51bn in FY22, an upward revision of c 5%. This forms a base for future years, with c 5% top-line growth in FY23 and FY24, leading to revenues of US$4.76bn and US$5.03bn, respectively. We have raised our EBITDA estimate by c 4% to US$169m in FY22 and US$193m in FY23.

Net debt: we estimate closing net debt at 28 February 2022 of US$166m, having factored in the US$70m special dividend, together with an allowance for inventory build-up.

FY24: we have also introduced our FY24 estimates, with revenue of US$5.03bn, 5.7% growth over FY23. The assumed gross margin remains relatively stable at 17.3%, with the EBITDA margin ticking up to 4.3% as the group continues to deliver operating leverage. This leads to gross profit of US$871m, with EBITDA of US$215m and underlying EPS of 35 US cents.

Exhibit 5: Financial summary

28-February

US$’000

2020

2021

2022e

2023e

2024e

INCOME STATEMENT

IFRS

IFRS

IFRS

IFRS

IFRS

Revenue

 

 

4,214,421

4,109,463

4,514,000

4,757,030

5,028,776

Cost of Sales

(3,472,843)

(3,418,926)

(3,748,700)

(3,941,430)

(4,157,507)

Gross Profit

741,578

690,537

765,300

815,601

871,269

EBITDA

 

 

158,657

118,632

169,200

192,607

215,235

Normalised operating profit

 

 

105,157

97,868

111,742

137,503

162,239

Amortisation of acquired intangibles

(11,297)

(8,635)

(8,586)

(8,046)

(7,279)

Exceptionals

(3,700)

(27,771)

(6)

(6)

0

Share-based payments

(7,623)

(11,493)

0

0

0

Reported operating profit

82,537

49,969

103,150

129,451

154,960

Net Interest

(25,874)

(25,692)

(27,097)

(29,900)

(31,729)

Joint ventures & associates (post tax)

(204)

908

0

0

0

Exceptionals

2,029

55

0

0

0

Profit Before Tax (norm)

 

 

79,079

73,084

84,646

107,603

130,510

Profit Before Tax (reported)

 

 

58,488

25,240

76,053

99,551

123,232

Reported tax

(31,809)

(19,540)

(34,224)

(39,821)

(43,131)

Profit After Tax (norm)

34,615

30,035

46,555

64,562

84,832

Profit After Tax (reported)

26,679

5,700

41,829

59,731

80,101

Minority interests

(13,772)

(3,103)

(10,989)

(11,899)

(14,119)

Discontinued operations

1,332

0

0

0

0

Net income (normalised)

20,843

26,932

35,566

52,663

70,713

Net income (reported)

14,239

2,597

30,840

47,832

65,982

Average number of shares outstanding (m)

210.5

198.6

201.8

203.2

203.2

EPS - normalised (c)

 

 

9.90

13.56

17.62

25.92

34.80

EPS - diluted normalised (c)

 

 

9.74

13.20

17.16

25.25

33.90

EPS - basic reported (c)

 

 

6.77

1.31

15.28

23.54

32.47

EPS - Company underlying uEPS (c)

 

 

9.90

13.56

17.62

25.92

34.80

Dividend (c)

7.00

6.71

40.33

8.64

11.60

Revenue growth (%)

(2.7)

(2.5)

9.8

5.4

5.7

Gross Margin (%)

17.6

16.8

17.0

17.1

17.3

EBITDA Margin (%)

3.8

2.9

3.7

4.0

4.3

Normalised Operating Margin

2.5

2.4

2.5

2.9

3.2

BALANCE SHEET

Fixed Assets

 

 

512,598

554,690

586,356

620,633

657,790

Intangible Assets

291,279

314,486

333,525

349,507

363,128

Tangible Assets

43,300

39,987

39,469

41,600

46,255

Right-of-use assets

83,953

94,837

107,983

124,147

143,027

Investments & other

94,066

105,380

105,380

105,380

105,380

Current Assets

 

 

2,083,928

2,242,568

2,355,163

2,488,265

2,644,149

Stocks

253,271

242,005

292,707

307,755

294,285

Debtors

1,110,510

1,108,105

1,245,944

1,329,991

1,425,243

Cash & cash equivalents

347,189

488,632

411,607

444,426

517,223

Other

372,958

403,826

404,905

406,093

407,399

Current Liabilities

 

 

(1,765,823)

(1,980,013)

(2,174,777)

(2,285,960)

(2,411,522)

Creditors

(1,259,013)

(1,385,208)

(1,523,053)

(1,600,041)

(1,687,368)

Tax and social security

(16,677)

(16,596)

(16,596)

(16,596)

(16,596)

Short term borrowings

(338,945)

(392,877)

(431,552)

(454,786)

(480,766)

Lease liabilities

(34,325)

(36,398)

(39,981)

(42,134)

(44,540)

Other

(116,863)

(148,934)

(163,595)

(172,403)

(182,251)

Long Term Liabilities

 

 

(187,610)

(176,624)

(192,883)

(202,650)

(213,572)

Long term borrowings

(18,638)

(42,371)

(46,542)

(49,048)

(51,850)

Lease liabilities

(95,148)

(77,847)

(85,510)

(90,114)

(95,262)

Other long term liabilities

(73,824)

(56,406)

(60,830)

(63,488)

(66,460)

Net Assets

 

 

643,093

640,621

573,860

620,288

676,845

Minority interests

(70,778)

(57,465)

(68,454)

(80,353)

(94,472)

Shareholders equity

 

 

572,315

583,156

505,406

539,935

582,374

CASH FLOW

Op Cash Flow before WC and tax

169,980

157,896

169,206

192,613

215,235

Working capital

57,231

79,903

(50,696)

(22,107)

5,546

Exceptional & other

(11,642)

(28,293)

(6)

(6)

0

Tax

(36,941)

(36,597)

(34,224)

(39,821)

(43,131)

Operating cash flow

 

 

178,628

172,909

84,280

130,679

177,650

Capex

(28,036)

(35,145)

(36,036)

(36,971)

(37,953)

Acquisitions/disposals

(9,179)

(3,694)

0

0

0

Net interest

(25,874)

(25,692)

(27,097)

(29,900)

(31,729)

Equity financing

(51,683)

(2,808)

0

0

0

Dividends

(15,137)

(4,905)

(81,934)

(17,553)

(23,571)

Other

20,019

1,880

(44,459)

(45,830)

(43,329)

Net Cash Flow

68,738

102,545

(105,246)

425

41,068

Opening net debt/(cash)

 

 

100,753

139,867

60,861

166,106

165,682

FX

(9,270)

(11,312)

0

0

0

Other non-cash movements

(98,582)

(12,227)

0

0

0

Closing net debt/(cash)

 

 

139,867

60,861

166,106

165,682

124,614

Source: Datatec accounts, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by Datatec and prepared and issued by Edison, in consideration of a fee payable by Datatec. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for ‘wholesale clients’ within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are ‘wholesale clients’ for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a ‘personalised service’ and, to the extent that it contains any financial advice, is intended only as a ‘class service’ provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the ‘FPO’) (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the ‘publishers' exclusion’ from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Datatec and prepared and issued by Edison, in consideration of a fee payable by Datatec. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for ‘wholesale clients’ within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are ‘wholesale clients’ for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a ‘personalised service’ and, to the extent that it contains any financial advice, is intended only as a ‘class service’ provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the ‘FPO’) (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the ‘publishers' exclusion’ from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Share this with friends and colleagues

You may be interested in