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Robust underlying performance across the board

Datatec 27 May 2021 Update
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Datatec

Robust underlying performance across the board

FY21 results

IT services

27 May 2021

Price

ZAR29.37

Market cap

ZAR5.9bn

ZAR13.70/US$

Net debt (US$m) at 28 February 2021

60.9

Shares in issue

200.45m

Free float

63%

Code

DTCJ

Primary exchange

Johannesburg

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

5.0

14.1

39.3

Rel (local)

7.3

14.1

6.6

52-week high/low

ZAR31.48

ZAR20.01

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

AGM

July 2021

Interim results

October 2021

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

Datatec delivered a strong operational performance across all divisions in FY21, despite the challenges of COVID-19 and emerging market weakness. The group reported revenues of US$4.1bn down 2.5% y-o-y (a 0.7% fall in constant currency terms), with adjusted EBITDA of US$141m (3.4% margin), down 11% y-o-y. Nevertheless, with strong operating cash flow, net debt fell from US$139.9m to US$60.9m. Underlying EPS was up 37% to 13.6USc per share and the group announced a c 7USc dividend per share, offering a 3.4% yield. Management expects many of the FY21 technology trends to persist in FY22. Software & services will represent the majority of group sales, with the group focused on the growth areas of networking, security and cloud infrastructure. As the global economy recovers, the shares offer good value as a dividend yielding, defensive growth stock.

Year end

Revenue
(US$m)

PBT*
(US$m)

EPS*
(c)

DPS
(c)

P/E
(x)

Yield
(%)

02/20

4,214

79.1

9.9

7.00

20.2

3.3

02/21

4,109

73.1

13.6

7.30

15.8

3.4

02/22e

4,317

79.1

16.6

5.54

12.9

2.6

02/23e

4,548

101.6

25.2

8.40

8.5

3.9

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

FY21 results: A solid platform for growth

Excluding restructuring costs, adjusted EBITDA fell 11% y-o-y to US$141.0m (FY20: US$158.7m), a margin of 3.4% (FY20: 3.8%). The FY20 results were flattered by a multi-year Brazilian tax credit and accrued interest (c US$21.5m), with the FY21 results including one-off restructuring costs (c US$22.4m) for the COVID-19 pandemic as well as c US$7.9m of foreign exchange losses. All three divisions (Westcon, Logicalis and Analysys Mason) were profitable in FY21, benefiting particularly from regional strength in Europe, offering a solid platform for growth in what remains an uncertain global economic environment.

Global, diversified group with a strong balance sheet

Datatec has undergone a structural change in its business with the acceleration in digitisation brought on by the COVID-19 pandemic, driving increasing demand for software and services. Datatec had FY21 net debt of US$60.9m and has a strong balance sheet to support growth. Although Westcon’s growth will absorb cash, the increasing penetration of software and sales means the group is structurally more capital-efficient overall in the medium term. With a diversified mix of businesses and a broad global presence, Datatec is well-placed for a recovery in FY22.

Valuation: Defensive growth with a 3.4% yield

All three of Datatec’s divisions can now point to a track record of solid profitability. Despite this, the group currently trades on 3.0x FY22e EV/EBITDA and 12.9x FY22e P/E, this low valuation reflecting the group’s historical challenges rather than its improved operational performance or its future growth prospects. This view is supported by a simple sum-of-the-parts analysis as well as by comparison with peer multiples. Datatec’s focus on software & services in networking, security and cloud infrastructure looks set to support growth for some time to come.

FY21 results: A resilient performance

Datatec delivered a strong operational performance across all divisions in FY21, despite the onset of the COVID-19 pandemic coinciding with the start of its financial year. The group delivered revenues of US$4.1bn, down 2.5% (a 0.7% fall in constant currency terms), with EBITDA of US$119m (2.9% margin), down 25% y-o-y. Excluding restructuring costs, adjusted EBITDA fell 11% yoy to US$141.0m (FY20: US$158.7m), with the FY20 comparator benefiting from a US$14m tax credit. The FY21 adjusted EBITDA margin was 3.4% (FY20: 3.8%). Nevertheless, through improved working capital management delivering strong operational cash flow, net debt fell from US$139.9m to US$60.9m. Underlying EPS (uEPS) was up 37% to US$0.136 per share (principally reflecting the reversing out of the restructuring costs of US$22.4m and the US$8.6m amortisation of acquired intangibles) and the group announced a ZAR1 dividend (c 7USc), offering a 3.4% yield.

The FY20 results were flattered by a multi-year Brazilian tax credit, together with accrued interest (c US$21.5m), with the FY21 results including COVID-19-related one-off restructuring costs (c US$22.4m) as well as foreign exchange losses of US$7.9m (FY20: US$1.7m) from emerging markets including Brazil, Argentina, Chile, Mexico, Indonesia and South Africa. FY20 revenues were restated, leading to a US$90.4m fall in FY20 revenues as the group recorded an increased proportion of revenues net rather than gross, with no impact on the P&L at gross profit or below.

Due to losses arising in Westcon’s Asian and South African operations (with no deferred tax assets) and in the UK, where deferred tax assets are only partially recognised at a low rate of tax credit, the FY21 effective tax rate was 77.4%, with tax of US$19.5m payable on PBT of US$25.2m. With an estimated tax loss carry forward of US$240.5m (a future tax benefit of c US$52.6m), management expects a significantly lower effective tax rate from FY22, as profits build at Westcon.

All told, the FY21 results highlight a resilient performance from Datatec. All three divisions (Westcon, Logicalis and Analysys Mason) were materially profitable, benefiting particularly from regional strength in Europe, in what remains an uncertain global environment.

Increasing penetration of software & services, SaaS revenues

With new auditors in place, FY20 revenues were restated to better reflect whether Datatec acted as agent (revenues to be reported net) or principal (revenues to be reported gross) in delivering different services, reflecting the increasing penetration of software & services and SaaS revenues (FY21: 47% of group revenues, versus 40% in FY20) across the group. FY21 annuity revenues represented c 10% of group revenues, rising to c 20% when contractual recurring revenues are included. The proportion of software-related revenues are expected to continue to increase in coming years, representing the majority of revenues in the medium term.

Exhibit 1: Software & sales/SaaS continues to rise as a proportion of overall revenues

Source: Datatec

Underlying the restatement, there has been an element of judgment in determining whether or not Datatec acts as an agent or principal in the way it delivers certain services. Management concluded that where the software service is delivered entirely remotely by the vendor, or where there is no material ‘on-premise’ component, management will consider Datatec to be acting as agent and accordingly recognise revenue on a net basis. This change in recognition led to a US$90.4m fall in FY20 revenues (US$4.30bn previously, US$4.21bn restated), fully offset by a matching reduction in cost of sales, meaning that there is no change to the P&L for gross profit or below. However, as a result of the dip in revenues, FY20 gross profit margin rose by 0.4% to 17.6% (restated) compared to 16.8% in FY21.

Divisional review: Strong performance across the group

As recognised by the revenue restatement, there has been a meaningful structural change in the business, with the acceleration in digitisation brought on by the COVID-19 pandemic driving increasing demand for software and services, and reducing the proportion of revenues from hardware reselling. Management’s vision is for Datatec to be a global leader in higher-margin, speciality ICT solutions, with the group seeing particular demand for software & services in networking, security and cloud infrastructure.

Exhibit 2: FY21 revenue by division

Exhibit 3: FY21 EBITDA by division

Source: Datatec

Source: Datatec

Exhibit 2: FY21 revenue by division

Source: Datatec

Exhibit 3: FY21 EBITDA by division

Source: Datatec

Logicalis benefited from the accelerated migration to cloud-based infrastructure, with software, annuity and professional services (together 55% of Logicalis’s FY21 revenues), overtaking hardware revenues (45% of FY21 revenues). Revenue fell by 14% to US$1.4bn (FY20: US$1.7bn), an 8% fall in constant currency terms. Logicalis recorded EBITDA of US$81.9m (FY20: US$123.9m), while adjusted EBITDA was US$96.1m, a margin of 6.6% (FY20: 7.4%).

Westcon revenues rose by 5% to US$2.6bn (FY20: US$2.5bn), with constant currency revenue growth of 3.5%. EBITDA was US$44.8m, with a margin of 1.7% (FY20: US$40.0m, 1.6%). FY21 saw Westcon start to benefit from its multi-year investment in the modernisation of its service platform, systems and organisation. This helped the division deliver an increasing proportion of services from next-generation vendors, including Palo Alto Networks, Check Point, F5, Extreme Networks, Avaya, Broadcom and Juniper. Westcon is continuing to build its portfolio of category-leading security vendors, to enable it to offer full market coverage in this high-growth area.

Analysys Mason had a record year in FY21, with revenue of US$73.2m (FY20: US$58.7m), while EBITDA increased to US$10.2m (FY20: US$9.4m), with EBITDA margins falling to 13.9% from 16.0% in FY20. Although Analysys Mason is the smallest division, it remains important to the group. Management’s target is to grow revenues to US$100m over the next three years, with geographical expansion in North America and Asia-Pacific likely options.

Geography: A strong Europe, while Latin America lags

Europe was the strongest region for the group in FY21, with Latin America the most challenged region. Both Logicalis and Westcon delivered higher revenues in Europe, with Westcon also seeing higher revenues in Asia-Pacific. The decrease in revenues elsewhere was attributable to the difficult trading conditions caused by the COVID-19 pandemic. Emerging markets such as Brazil, Argentina, Chile, Mexico, Indonesia and South Africa were affected by local currency weakness in FY21, which reduced their dollar-reported contribution to the results.

Outlook: Established trends remain the drivers of growth

Looking ahead, although the COVID-19 pandemic continues to cloud the horizon, particularly in emerging markets, management expects the technology trends of FY21 to continue in FY22. Software and services are expected to grow as a proportion of sales, with the group continuing to focus on networking, security and cloud infrastructure. As a potential concern, we would note the global semiconductor shortage continues to have an impact on the entire technology value chain.

However, Datatec has a diversified mix of businesses, with a broad global presence, making it well-placed for a recovery. With FY21 net debt of US$60.9m, the group has a strong balance sheet to support growth and the increasing penetration of software and sales (FY21: 47% of revenues) means that the business is becoming less asset intensive and has made structural working capital improvements. That having been said, although Westcon benefits from significant operating leverage, as it grows it has an increased need for working capital that will reduce cash generation in FY22 over FY21. Project work slowed materially in FY21 as a result of lockdowns and travel restrictions, but we expect a degree of catch-up of major projects in FY22.

Estimates: FY22 and FY23 estimates tweaked

We have made some small changes to our FY22 and FY23 estimates following Datatec’s FY21 results, although the changes primarily reflect a slightly lower starting point in FY21 than we had previously assumed. However, notably we expect a 45% tax rate in FY22 (FY21: 77% effective rate), falling to 40% in FY23. We also assume that management revert to its policy of 3x uEPS dividend cover in FY22 and FY23 from 2x in FY21. Finally, with the anticipated growth of Westcon in particular, we conservatively assume weaker operating cash flow leading to increasing net debt in FY22 and FY23, of US$84m and US$113m respectively.

Exhibit 4: Revised estimates

Year end 28 February
US$’000

2020

2021

Change

Old
2022e

New
2022e

Y-o-y growth

Change

Old
2023e

New
2023e

Y-o-y growth

Change

Revenue

4,214,421

4,109,463

(2)%

4,418,935

4,316,503

5%

(2)%

4,613,564

4,548,473

5%

(1)%

Gross profit

741,578

690,537

(7)%

711,027

727,284

5%

2%

763,314

774,995

7%

2%

EBITDA

158,657

118,632

(25)%

164,955

163,070

37%

(1)%

189,153

185,253

14%

(2)%

Normalised operating profit

105,157

97,868

(7)%

110,399

105,613

8%

(4)%

135,957

130,149

23%

(4)%

Profit before tax (norm)

79,079

73,084

(8)%

84,625

79,052

8%

(7)%

110,263

101,625

29%

(8)%

Net income (normalised)

20,843

26,932

29%

32,848

33,299

24%

1%

54,602

50,497

52%

(8)%

EPS - underlying (uEPS) (c)

9.90

13.56

37%

16.38

16.61

22%

1%

27.23

25.19

52%

(8)%

Dividend (c)

7.00

7.30

4%

5.46

5.54

(24)%

1%

1%

9.08

8.40

52%

(8)%

Revenue growth (%)

(2.7)

(2.5)

3.8

5.0

4.4

5.4

Gross margin (%)

17.6

16.8

16.1

16.8

16.5

17.0

EBITDA margin (%)

3.8

2.9

3.7

3.8

4.1

4.1

Normalised operating margin (%)

2.5

2.4

2.5

2.4

2.9

2.9

Operating cash flow

178,628

172,909

(3)%

100,141

95,090

(45)%

(5)%

112,291

99,567

5%

(11)%

Closing net debt/(cash)

139,867

60,861

(56)%

116,927

83,925

38%

(28)%

103,078

112,515

34%

9%

Source: Datatec accounts, Edison Investment Research

Valuation: Defensive growth with a 3.4% dividend yield

All three of Datatec’s divisions can now point to a track record of solid profitability. Despite this, the group currently trades on 3.0x FY22e EV/EBITDA and 12.9x FY22e P/E, reflecting its historical challenges rather than the current opportunity for sustained growth across all three divisions. Our belief is that this valuation is backward-looking and does not reflect the positive transformation of the business, its improved operational performance or its future growth prospects as the global economy recovers. This view is supported by the simple sum-of-the-parts analysis we highlighted in our initiation (Starting to unlock underlying value) as well as by comparison with peer multiples, where a blended multiple of 9x FY22 EV/EBITDA or 15x FY22 P/E would appear justified.

Exhibit 5: Peer group for Logicalis

Name

Share price

Quoted ccy

EV ($m)

Gross margin 1FY (%)

EBITDA margin 1FY (%)

EBIT margin 1FY (%)

EV/sales 1FY (x)

EV/sales 2FY (x)

EV/ EBITDA 1FY (x)

EV/ EBITDA 2FY (x)

P/E 1FY (x)

P/E 2FY (x)

Div yield 1FY (x)

Atea ASA

162

NOK

2,319

21.1

4.2

2.6

0.5

0.5

11.2

9.9

23.0

19.1

3.2

Bechtle AG

156.4

EUR

8,058

14.9

6.3

4.8

1.0

0.9

16.2

14.9

30.9

28.0

1.0

Bytes Technology

517.5

GBp

1,711

23.3

9.9

8.8

2.9

2.6

29.2

27.1

40.1

37.5

1.0

Cancom SE

49.08

EUR

1,911

29.2

8.6

5.4

0.9

0.8

10.9

9.5

29.7

25.0

1.5

CDW Corp

166.73

USD

26,428

16.9

8.2

7.7

1.3

1.3

16.0

15.3

22.6

20.7

1.0

Computacenter PLC

2666

GBp

4,562

13.3

4.7

3.4

0.5

0.5

11.0

10.7

20.1

19.6

2.0

Econocom Group SE

3.23

EUR

1,028

21.0

6.5

4.4

0.3

0.3

4.8

4.7

9.5

8.6

3.4

ePlus inc

94.9

USD

1,226

24.8

7.8

7.5

0.7

0.7

9.5

8.8

14.6

13.7

NM

Indra Sistemas SA

7.09

EUR

2,177

50.8

10.1

6.7

0.6

0.5

5.5

5.0

10.4

8.7

1.3

Insight Enterprises

102.87

USD

3,912

15.4

4.2

3.9

0.4

0.4

10.5

9.5

15.3

13.7

NM

PC Connection Inc

49.15

USD

1,195

16.5

3.7

3.2

0.4

0.4

11.7

10.6

19.7

16.6

NM

Softcat PLC

1804

GBp

4,994

21.3

9.7

9.3

2.8

2.6

29.4

28.6

38.7

38.1

1.9

Sopra Steria

149.1

EUR

4,720

42.3

11.1

7.0

0.8

0.8

7.6

6.8

14.1

12.1

1.6

Sykes Enterprises Inc

41.45

USD

1,584

35.1

11.4

8.6

0.9

0.8

7.5

6.9

13.5

12.1

NM

Mean (All)

 

 

 

24.7

7.6

6.0

1.0

0.9

11.8

10.5

21.6

19.5

1.8

Mean (core comparator group – BOLD)

 

26.7

7.1

5.3

0.6

0.6

8.8

8.1

15.6

13.8

2.3

Median (All)

 

 

 

21.2

8.0

6.0

0.8

0.8

10.9

9.7

19.9

17.9

1.5

Source: Refinitiv (priced at 26 May 2021). Note: the companies highlighted in bold form the core comparator group.

Exhibit 6: Peer group for Westcon International

 

Share price

Quoted ccy

EV ($m)

Gross margin 1FY (%)

EBITDA margin 1FY (%)

EBIT margin 1FY (%)

EV/sales 1FY (x)

EV/sales 2FY (x)

EV/ EBITDA 1FY (x)

EV/ EBITDA 2FY (x)

P/E 1FY (x)

P/E 2FY (x)

Div yield 1FY (x)

Also Holding AG

261.5

CHF

3,684

5.8

2.0

1.7

0.2

0.2

12.0

10.9

21.5

19.0

1.6

Arrow Electronics Inc

122.07

USD

11,150

11.1

4.4

3.9

0.3

0.3

7.4

7.1

10.1

9.4

0.0

Avnet Inc

44.3

USD

5,281

11.3

2.5

1.9

0.3

0.3

10.8

8.3

18.8

12.4

1.9

Esprinet SpA

13.49

EUR

961

4.6

1.6

1.4

0.2

0.2

9.6

8.5

16.4

13.9

2.3

Scansource Inc

29.61

USD

904

10.7

NM

2.3

0.3

0.3

NM

8.3

13.5

10.8

NM

SYNNEX Corp

125.38

USD

6,690

7.2

3.3

3.1

0.3

0.3

10.0

9.5

15.3

14.4

0.0

TESSCO Technologies

7.24

USD

94

17.6

-2.4

-3.3

0.2

0.2

NM

-17.6

NM

NM

NM

Wesco International

103.67

USD

9,505

20.1

5.8

4.7

0.6

0.5

9.6

8.6

14.6

12.1

NM

WPG Holdings Ltd

50.7

TWD

7,036

3.6

1.9

1.7

0.3

0.3

14.6

13.5

9.9

9.7

7.2

Mean (All)

 

 

 

10.2

2.4

1.9

0.3

0.3

10.6

6.4

15.0

12.7

2.2

Mean (core comparator group - BOLD)

 

8.4

3.1

2.7

0.3

0.3

9.0

8.4

13.8

12.1

0.8

Median (All)

 

 

 

10.7

2.3

1.9

0.3

0.3

10.0

8.5

14.9

12.2

1.8

Source: Refinitiv (priced at 26 May 2021). Note: the companies highlighted in bold form the core comparator group.

Although COVID-19 lowered Datatec’s trajectory in FY21, its core focus on software & services in networking, security and cloud infrastructure looks set to support growth for some time to come. Management remains focused on unlocking Datatec’s underlying value.

Exhibit 7: Financial summary

Year end 28 February

US$’000s

2019

2020

2021

2022e

2023e

INCOME STATEMENT

IFRS

IFRS

IFRS

IFRS

IFRS

Revenue

 

 

4,332,381

4,214,421

4,109,463

4,316,503

4,548,473

Cost of Sales

(3,644,637)

(3,472,843)

(3,418,926)

(3,589,219)

(3,773,478)

Gross Profit

687,744

741,578

690,537

727,284

774,995

EBITDA

 

 

86,761

158,657

118,632

163,070

185,253

Normalised operating profit

 

 

89,727

105,157

97,868

105,613

130,149

Amortisation of acquired intangibles

(10,217)

(11,297)

(8,635)

(8,586)

(8,046)

Exceptionals

(21,323)

(3,700)

(27,771)

(6)

(6)

Share-based payments

(9,764)

(7,623)

(11,493)

0

0

Reported operating profit

48,423

82,537

49,969

97,021

122,098

Net Interest

(22,577)

(25,874)

(25,692)

(26,560)

(28,525)

Joint ventures & associates (post tax)

(1,403)

(204)

908

0

0

Exceptionals

(228)

2,029

55

0

0

Profit Before Tax (norm)

 

 

65,747

79,079

73,084

79,052

101,625

Profit Before Tax (reported)

 

 

24,215

58,488

25,240

70,460

93,573

Reported tax

(20,959)

(31,809)

(19,540)

(31,707)

(37,429)

Profit After Tax (norm)

17,554

34,615

30,035

43,479

60,975

Profit After Tax (reported)

3,256

26,679

5,700

38,753

56,144

Minority interests

(1,816)

(13,772)

(3,103)

(10,180)

(10,478)

Discontinued operations

11,694

1,332

0

0

0

Net income (normalised)

15,738

20,843

26,932

33,299

50,497

Net income (reported)

13,134

14,239

2,597

28,573

45,666

Average number of shares outstanding (m)

237.8

210.5

198.6

200.5

200.5

EPS - normalised (c)

 

 

6.62

9.90

13.56

16.61

25.19

EPS - diluted normalised (c)

 

 

6.55

9.74

13.20

16.18

24.53

EPS - basic reported (c)

 

 

5.52

6.77

1.31

14.25

22.78

EPS - Company underlying uEPS (c)

 

 

6.61

9.90

13.56

16.61

25.19

Dividend (c)

0.00

7.00

7.30

5.54

8.40

Revenue growth (%)

10.4

(2.7)

(2.5)

5.0

5.4

Gross Margin (%)

15.9

17.6

16.8

16.8

17.0

EBITDA Margin (%)

2.0

3.8

2.9

3.8

4.1

Normalised Operating Margin

2.1

2.5

2.4

2.4

2.9

BALANCE SHEET

Fixed Assets

 

 

437,786

512,598

554,690

586,356

620,633

Intangible Assets

284,877

291,279

314,486

333,525

349,507

Tangible Assets

60,306

43,300

39,987

39,469

41,600

Right-of-use assets

0

83,953

94,837

107,983

124,147

Investments & other

92,603

94,066

105,380

105,380

105,380

Current Assets

 

 

2,284,521

2,083,928

2,242,568

2,355,303

2,480,717

Stocks

332,256

253,271

242,005

263,893

287,778

Debtors

1,258,853

1,110,510

1,108,105

1,193,253

1,291,165

Cash & cash equivalents

344,400

347,189

488,632

493,252

495,682

Other

349,012

372,958

403,826

404,905

406,093

Current Liabilities

 

 

(1,909,272)

(1,765,823)

(1,980,013)

(2,079,906)

(2,186,085)

Creditors

(1,358,928)

(1,259,013)

(1,385,208)

(1,455,970)

(1,529,510)

Tax and social security

(15,826)

(16,677)

(16,596)

(16,596)

(16,596)

Short term borrowings

(413,770)

(338,945)

(392,877)

(412,671)

(434,848)

Lease liabilities

0

(34,325)

(36,398)

(38,232)

(40,286)

Other

(120,748)

(116,863)

(148,934)

(156,437)

(164,844)

Long Term Liabilities

 

 

(100,805)

(187,610)

(176,624)

(184,945)

(194,268)

Long term borrowings

(31,383)

(18,638)

(42,371)

(44,506)

(46,897)

Lease liabilities

0

(95,148)

(77,847)

(81,769)

(86,163)

Other long term liabilities

(69,422)

(73,824)

(56,406)

(58,670)

(61,207)

Net Assets

 

 

712,230

643,093

640,621

676,809

720,998

Minority interests

(63,303)

(70,778)

(57,465)

(67,645)

(78,123)

Shareholders equity

 

 

648,927

572,315

583,156

609,164

642,875

CASH FLOW

Op Cash Flow before WC and tax

117,848

169,980

157,896

163,076

185,259

Working capital

(19,941)

57,231

79,903

(36,274)

(48,257)

Exceptional & other

(28,917)

(11,642)

(28,293)

(6)

(6)

Tax

(38,531)

(36,941)

(36,597)

(31,707)

(37,429)

Operating cash flow

 

 

30,459

178,628

172,909

95,090

99,567

Capex

(36,886)

(28,036)

(35,145)

(36,036)

(36,971)

Acquisitions/disposals

(25,318)

(9,179)

(3,694)

0

0

Net interest

(22,434)

(25,874)

(25,692)

(26,560)

(28,525)

Equity financing

(43,881)

(51,683)

(2,808)

0

0

Dividends

(53)

(15,137)

(4,905)

(11,099)

(16,831)

Other

1,991

20,019

1,880

(44,459)

(45,830)

Net Cash Flow

(96,122)

68,738

102,545

(23,064)

(28,590)

Opening net debt/(cash)

 

 

6,380

100,753

139,867

60,861

83,925

FX

(15,116)

(9,270)

(11,312)

0

0

Other non-cash movements

16,865

(98,582)

(12,227)

0

0

Closing net debt/(cash)

 

 

100,753

139,867

60,861

83,925

112,515

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 £49,500 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 £49,500 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

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