Datatec — Resilient performance despite challenges

Datatec (JSE: DTCJ)

Currency in ZAR

Last close As at 02/02/2023

ZAR34.21

1.17 (3.54%)

Market capitalisation

ZAR7,431m

Research: TMT

Datatec — Resilient performance despite challenges

Datatec reported a mixed performance in H123: strong demand for cloud infrastructure, cybersecurity and networking solutions drove revenue and order growth, while supply chain issues continued to hamper the ability to deliver orders. Currency headwinds further impacted profitability, however, healthy order backlogs across all divisions should support better revenue growth in H223/FY24 as supply chain issues ease.

Katherine Thompson

Written by

Katherine Thompson

Director

TMT

Datatec

Resilient performance despite challenges

H123 results

IT services

17 November 2022

Price

ZAR44.84

Market cap

ZAR9.9bn

ZAR17.3/$

Net debt ($m) at end H123*

*Continuing operations

111

Shares in issue

221.8m

Free float

86%

Code

DTCJ

Primary exchange

JSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

8.2

(6.2)

21.4

Rel (local)

(4.2)

(7.6)

18.6

52-week high/low

ZAR47.9

ZAR31.0

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 International (IT services); and Logicalis LatAm (IT services in Latin America).

Next events

FY23 trading update

March 2023

Analyst

Katherine Thompson

+44 (0) 203 077 5730

Datatec is a research client of Edison Investment Research Limited

Datatec reported a mixed performance in H123: strong demand for cloud infrastructure, cybersecurity and networking solutions drove revenue and order growth, while supply chain issues continued to hamper the ability to deliver orders. Currency headwinds further impacted profitability, however, healthy order backlogs across all divisions should support better revenue growth in H223/FY24 as supply chain issues ease.

Year end

Revenue ($m)

PBT*
($m)

Diluted EPS*
(c)

DPS
(c)

P/E
(x)

Yield
(%)

02/21**

4,109

73.1

13.2

6.6

19.6

2.5

02/22

4,546

69.1

14.2

39.3

18.2

15.2

02/23e

5,017

74.3

20.2

69.9

12.9

27.0

02/24e

5,282

95.6

23.3

7.5

11.1

2.9

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

A mixed performance in H123

Excluding the recently sold Analysys Mason, Datatec reported H123 revenue growth of 9% y-o-y (15% constant currency), adjusted EBITDA growth of 16% and underlying EPS (uEPS) of 2.2c (down 67% y-o-y). Westcon delivered very strong growth, and while currency headwinds reduced gross margins, reported a 1.5% increase in adjusted EBITDA margin. Logicalis International revenue growth of 6% y-o-y was suppressed by supply chain issues, with adjusted EBITDA reducing 7% and the margin declining 0.8pp. As the company indicated in May when it reported FY22 results, Logicalis Latin America faced more challenging trading conditions; the combination of supply chain issues and lower demand in certain countries resulted in a 21% revenue decline and 78% adjusted EBITDA decline. Working capital was helped by increased supplier payment terms, resulting in net debt for continuing operations of $111m at the end of H123.

Strong backlog helps offset weaker economy

All divisions experienced challenges in delivering orders due to supply chain issues, resulting in further growth in the backlog. However, as these pressures ease, we expect the backlog to begin unwinding to support strong revenue growth in H223 across all divisions, which should help counteract potential weakness from the uncertain economic environment. We have revised our forecasts to reflect the disposal of Analysys Mason and the new divisional split, with upgrades to continuing revenue and downgrades to continuing adjusted EBITDA and uEPS.

Valuation: More value to unlock

Datatec currently trades on an EV/adjusted EBITDA multiple of 3.9x FY23e and 3.6x FY24e, well below its peer group (c 8x for both years). On a conservative sum-of-the-parts valuation using peer group averages, we estimate that Datatec could be worth 22% more than the current share price, or 69% once the ZAR12.5 special dividend for Analysys Mason (due to be paid on 5 December) is stripped out of the share price. A return to revenue growth in Logicalis Latin America and improving profitability across the group will be key to reducing the discount to peers.

Review of H123 results

As Analysys Mason was sold post-period end, it has been accounted for in discontinued operations, with H122 and FY22 results restated to reflect this. The table below summarises Datatec’s performance in H123, with results down to profit after tax for continuing operations only.

Exhibit 1: H123 results highlights

$m

H122

H123

% y-o-y

Revenue

2,213.4

2,408.5

8.8%

Gross profit

354.3

337.8

-4.6%

EBITDA

67.9

57.9

-14.8%

Share-based payments

7.3

16.0

119.7%

Restructuring charges and other adjustments

0.0

13.7

N/A

Adjusted EBITDA

75.2

87.6

16.4%

Operating profit

34.0

24.6

-27.5%

Profit after tax

13.1

5.0

-61.9%

Minority interests

(4.3)

(0.5)

-87.2%

Discontinued operations

3.7

6.3

72.6%

Net income to equity holders - group

12.5

10.8

-14.0%

Net income to equity holders - continuing operations

9.5

5.8

-38.5%

Adjustments

0.1

1.7

N/A

Headline earnings - continuing operations

9.5

7.5

-21.1%

Adjustments

3.7

(2.7)

-173.8%

Underlying earnings - continuing operations

13.2

4.8

-63.6%

uEPS - group (c)

8.3

3.6

-56.6%

uEPS - continuing operations (c)

6.6

2.2

-66.7%

Net debt - continuing operations

161.1

111.0

-31.1%

y-o-y percentage points change

Gross margin (%)

16.0

14.0

-2.0

EBITDA margin (%)

3.1

2.4

-0.7

Adjusted EBITDA margin (%)

3.4

3.6

0.2

Operating margin (%)

1.5

1.0

-0.5

Source: Datatec

The company reported year-on-year revenue growth of 9% (15% in constant currency). As a large proportion of Westcon, and to a lesser extent, Logicalis International sales are denominated in euro or sterling while the majority of cost of goods sold are in US dollars, the strength of the US dollar during the reporting period reduced gross margin in H123 at a group level by 2pp. Included within operating expenses were $7.8m in restructuring charges within Logicalis (combined) and $16.0m of share-based payments, mainly relating to the Westcon incentive scheme. This resulted in an EBITDA decline of 15% y-o-y and an EBITDA margin decline of 0.7pp. The gains on forward contracts taken out to hedge currency exposure are reported within operating expenditure, mitigating the currency effect seen at the gross profit level. Adjusted EBITDA, which excludes share-based payments, restructuring costs, one-off tax items impacting EBITDA, and acquisition, integration and corporate actions costs, increased 16% y-o-y and the adjusted EBITDA margin increased 0.2pp y-o-y.

Due to the mix of losses in Latin America, profits in other geographies and the removal of the Analysys Mason contribution (which attracted a lower tax rate than the group average), the effective tax rate in H123 was 46.7%. Reported net income for continuing operations, after minority interest deductions, declined 39% y-o-y. After adjusting for restructuring charges and other one-off items, but still including $16.0m of share-based payments (vs $7.3m in H122), underlying earnings for continuing operations declined 64% y-o-y and uEPS declined 67% y-o-y.

Net debt declined 31% y-o-y to $111m for continuing operations. We discuss the reasons for this in the divisional performance section.

Divisional performance – new reporting format

With Analysys Mason now accounted for in discontinued operations, Datatec now reports three segments: Westcon, Logicalis International and Logicalis Latin America. At the EBITDA level, it also reports central costs separately. We discuss below the performance on the new divisional basis.

Exhibit 2: Divisional performance

Revenue

H122

H123

y-o-y

H122

H123

Westcon

1391

1614

16%

Logicalis International

545

576

6%

Logicalis Latin America

278

219

-21%

2213

2408

9%

Gross profit

Gross margin

y-o-y pp

Westcon

155

153

-1%

11.1%

9.5%

-1.7

Logicalis International

143

137

-5%

26.3%

23.7%

-2.5

Logicalis Latin America

56

49

-14%

20.2%

22.2%

2.0

354

338

-5%

16.0%

14.0%

-2.0

EBITDA

EBITDA margin

Westcon

31

52

66%

2.2%

3.2%

1.0

Logicalis International

28

18

-35%

5.2%

3.2%

-2.0

Logicalis Latin America

18

(1)

-106%

6.5%

-0.5%

-7.0

Central costs

(10)

(11)

15%

68

58

-15%

3.1%

2.4%

-0.7

Adjusted EBITDA

Adjusted EBITDA margin

Westcon

35

65

84%

2.5%

4.0%

1.5

Logicalis International

29

27

-9%

5.4%

4.6%

-0.8

Logicalis Latin America

18

4

-78%

6.6%

1.8%

-4.8

Central costs

(7)

(7)

1%

75

88

16%

3.4%

3.6%

0.2

Source: Datatec

Westcon seeing robust demand

Westcon generated strong revenue growth of 16% y-o-y in H123 (constant currency growth 23%). The business saw strong demand for cyber security and network infrastructure (up 22% and 16% respectively). Reflecting the currency impact of the strong US dollar versus sterling and the euro, gross profit declined 1% y-o-y resulting in a 1.7pp decline in gross margin to 9.5%. Foreign exchange hedging gains reported within operating expenses ($12.8m realised gains, $19.3m unrealised gains) meant that EBITDA increased 66% y-o-y, with the EBITDA margin increasing 1pp to 3.2%. Adjusted EBITDA (the main adjustment was for $12m in share-based payments) increased 84% y-o-y and the adjusted EBITDA margin increased by 1.5pp to 4.0%.

Semiconductor shortages and supply chain issues continued to constrain the division’s ability to deliver orders, resulting in another increase in the backlog (+95% y-o-y, +18% h-o-h) as per Exhibit 3. Software in the backlog tends to be part of a larger order that also includes hardware and cannot be installed until the hardware is available. Semiconductor availability has started improving and freight costs have fallen, and management believes that the backlog is likely to start to unwind through the course of H223. The division managed working capital well during the period (see Exhibit 4), with net working capital days reducing to 16 days from 22 days in H122 and divisional net debt reducing by $63m y-o-y. The main benefit came from suppliers, particularly Cisco, extending payment days.

The $12m in share-based payments recorded in H123 related to the Westcon International Equity Appreciation Plan (WI EAP), which is linked to the valuation of the Westcon business. Based on a starting valuation of $125m, 10% of the value of WI above the starting valuation will be paid to the EAP pool. If WI is not sold within five years of the start of the scheme (ie March 2023), it will be valued by an independent valuer. At the end of H123, the group recorded a $33.5m short-term payable for cash-settled share-based payments. We understand that more than $20m of this relates to the WI EAP. Adding a further $12m to this balance (our estimate for share-based payment charges in Westcon in H223), this implies a total of $32m is owed to participants in the Westcon scheme and that Westcon is currently valued at c $445m.

Exhibit 3: Westcon backlog, H122–H123

Exhibit 4: Working capital progression, H122–H123

Source: Datatec

Source: Datatec. Note: *DSO: days sales outstanding, DPO: days purchases outstanding.

Exhibit 3: Westcon backlog, H122–H123

Source: Datatec

Exhibit 4: Working capital progression, H122–H123

Source: Datatec. Note: *DSO: days sales outstanding, DPO: days purchases outstanding.

Logicalis International held back by supply chain challenges

Logicalis International, which operates across North America, EMEA and Asia Pacific, grew revenue by 6% y-o-y. Revenue from North America and Asia Pacific saw strong growth (up 24% and 23% respectively), while EMEA revenues declined 21%, partly due to currency translation and partly due to supply chain disruption. Demand for public cloud services was lower but remained strong for private or hybrid cloud services, with cloud revenue increasing 41% y-o-y to make up 17% of divisional revenue (H122: 13%).

Gross profit declined 5% y-o-y and gross margin declined 2.5pp to 23.7%, mainly due to product mix and the strong dollar versus sterling and euro, which reduced the translated value of European services. EBITDA declined 35% y-o-y and the EBITDA margin declined 2pp to 3.2%, due to the lower gross profit, $5.2m in restructuring costs to split out Logicalis International and Logicalis Latin America and $2.6m in tax-related charges at the EBITDA level. Adjusted EBITDA declined 9% y-o-y and the adjusted EBITDA margin declined 0.8pp to 4.6%.

Similar challenges as in Westcon resulted in further growth in the backlog during the period (+38% y-o-y, +7% h-o-h), although management believes the peak in the size of the backlog is fast approaching (see Exhibit 5). This division reduced net working capital days (see Exhibit 6), also benefiting from longer payment periods from suppliers, resulting in a decrease in net working capital of $75m y-o-y.

Exhibit 5: Logicalis International backlog, H122–H123

Exhibit 6: Working capital progression, H122–H123

Source: Datatec

Source: Datatec

Exhibit 5: Logicalis International backlog, H122–H123

Source: Datatec

Exhibit 6: Working capital progression, H122–H123

Source: Datatec

Logicalis Latin America had a more challenging six months

The division saw challenging trading conditions during H123 and revenue declined 21% y-o-y, with particular weakness in Brazil (down 31% y-o-y) and southern Latin America (SOLA, down 16% due to Chile and Argentina), while northern Latin America (NOLA) grew 22% due to good demand from Mexico and Colombia. Cloud revenue grew 36% y-o-y to make up 21% of revenue (H122: 12%). Hardware and software sales were held back by supply chain issues and this division saw the fastest growth in backlog since the end of FY22 (+84% y-o-y, +21% h-o-h) – see Exhibit 7.

Gross profit declined 14% y-o-y but gross margin increased 2pp to 22.2% helped by a higher proportion of services in the mix. EBITDA declined 106% y-o-y and the EBITDA margin declined 7pp y-o-y to -0.5%. This included $2.6m in restructuring costs and $2.2m in costs related to the aborted Brazilian IPO. Adjusted EBITDA declined 78% y-o-y and the adjusted EBITDA margin declined 4.8pp to 1.8%. The division has a relatively high fixed cost base, but management is loath to reduce the size of the workforce while there is a large backlog that needs to be delivered once supply chain issues recede. While DSOs and inventory days increased, extended payment periods from suppliers meant that net working capital reduced slightly year-on-year (Exhibit 8).

Exhibit 7: Logicalis Latin America backlog, H122–H123

Exhibit 8: Working capital progression, H122–H123

Source: Datatec

Source: Datatec

Exhibit 7: Logicalis Latin America backlog, H122–H123

Source: Datatec

Exhibit 8: Working capital progression, H122–H123

Source: Datatec

Recurring revenue growth outpaces group revenue growth

On a group basis, recurring revenue grew 13% y-o-y to make up 43% of total revenue (H122: 41%). On a divisional basis, growth in recurring revenue varied widely (see Exhibit 9). Notably, recurring revenue made up more than half of Logicalis Latin America revenue in H123, reflecting the weaker sales of hardware and software due to supply chain constraints.

Exhibit 9: Recurring revenue and growth

Exhibit 10: Recurring revenue/total revenue

Source: Datatec

Source: Datatec

Exhibit 9: Recurring revenue and growth

Source: Datatec

Exhibit 10: Recurring revenue/total revenue

Source: Datatec

Disposal of Analysys Mason

Datatec sold its effective 71.2% shareholding in management consulting firm, Analysys Mason, on 27 September (see Management buyout of Analysys Mason for further discussion). It received cash of £128m and will receive a deferred payment of £7.1m three years after the completion date; the deal also includes an earnout of up to £7.1m based on an EBITDA target for FY23, payable on 28 February 2025. The company will pay a special dividend totalling £135m (equivalent to 1,250 ZAR cents per share), with a cash or scrip alternative, to shareholders as at 2 December. The company will bear the costs of the disposal.

The division that was previously called Corporate and Management Consulting now only includes central costs. On a reported basis, central costs increased 15% y-o-y, while on an adjusted basis (mainly excluding share-based payments), they increased only 1% y-o-y.

Outlook and changes to forecasts

The uncertain macroeconomic environment and supply chain disruption are likely to present challenges for Datatec for the remainder of the year. However, the accelerating use of digital technologies and the ongoing shift to the cloud and hybrid working provide ongoing demand drivers for the company. As supply chain issues improve, the company should be able to start delivering more of its backlog.

We have revised our forecasts to reflect the sale of Analysys Mason (previous forecasts contained the business in the revenue and profit lines), the new divisional structure and H123 performance. We have made the following changes:

Westcon: we have increased our revenue forecasts for FY23–25 reflecting stronger than expected growth in H123. While we have trimmed our FY23 EBITDA forecast to reflect the impact of the stronger US dollar, we assume this stabilises in FY24/25 and we upgrade our EBITDA forecasts.

Logicalis International/Logicalis Latin America: this is the first time we have forecast the two parts of Logicalis separately. For both businesses, we forecast a recovery in revenue in H223, and for Latin America, as H123 was so weak, we also forecast further recovery in FY24. Our combined revenue forecast is slightly lower for FY23 and essentially unchanged for FY24/25. In FY23, our combined EBITDA forecast is reduced by lower revenue, lower gross margins and restructuring and other one-off charges.

Tax rate: the effective tax rate in H123 was 46.7%, higher than the 32–33% normalised rate due to losses made in Latin America. We maintain this rate for H223 and increase FY24/25 from 32% to 35% to reflect the disposal of Analysys Mason, which attracted a lower tax rate.

Underlying earnings per share: this is for continuing operations only whereas our prior forecast included Analysys Mason. The remaining decline in FY23 is due to reduced EBITDA combined with higher net finance costs and a higher effective tax rate.

Net debt: the main variable when forecasting net debt is working capital. End H123 net debt benefited from extended payment terms from suppliers; we have assumed that these are reduced during H223 so that net debt increases half-on-half.

Exhibit 11: Changes to forecasts

2023e

2024e

2025e

Old

New

%
y-o-y

% change

Old

New

%
y-o-y

% change

Old

New

% y-o-y

% change

Revenue

4,919

5,017

10%

2%

5,117

5,282

5%

3%

5,323

5,534

5%

4%

Gross profit

829

717

(2)%

(14)%

871

794

11%

(9)%

915

842

6%

(8)%

Adj. EBITDA

191

175

10%

(8)%

201

192

9%

(5)%

218

215

12%

(1)%

EBITDA

168

130

(10)%

(23)%

188

185

43%

(1)%

204

208

12%

2%

Normalised operating profit

135

111

11%

(17)%

148

137

23%

(8)%

167

160

17%

(5)%

Profit before tax (norm)

96

74

8%

(23)%

107

96

29%

(11)%

125

116

21%

(7)%

Net income (normalised)

42

47

58%

11%

55

53

17%

(3)%

65

66

23%

0%

EPS – diluted, normalised (c)

19.0

20.2

42%

6%

24.5

23.3

15%

(5)%

29.3

28.7

23%

(2)%

Company underlying uEPS (c)

19.6

6.8

(58)%

(65)%

25.2

22.6

234%

(10)%

30.2

28.1

24%

(7)%

Dividend (c)

6.5

69.9

8.4

7.5

10.1

9.4

Revenue growth (%)

6.1

10.4

4.0

5.3

4.0

4.8

Gross margin (%)

16.9

14.3

17.0

15.0

17.2

15.2

Adj. EBITDA margin (%)

3.9

3.5

3.9

3.6

4.1

3.9

Normalised operating margin

2.7

2.2

2.9

2.6

3.1

2.9

Operating cash flow

74

91

97

98

114

145

Closing net debt/(cash)

154

155

161

168

157

140

Source: Edison Investment Research. Note: Old forecasts include Analysys Mason; new forecasts continuing operations only.

Valuation

On a group basis, Datatec is valued on an EV/adjusted EBITDA of 3.9x FY23e and 3.6x FY24e and on a normalised P/E basis of 12.9x FY23e and 11.2x FY24. To more accurately reflect the dynamics of the different divisions, we continue to value Datatec on a sum-of-the-parts basis. Although Logicalis is now reported through two divisions (International and Latin America), we continue to combine them in the valuation as their business models are similar. We have stripped out the value of Analysys Mason as the cash receipt from the disposal will be paid out as a special dividend. We note that the current share price (until 2 December) includes the benefit of this special dividend, at ZAR12.50 per share. Using the EV/EBITDA peer multiples in Exhibit 12, average net debt for FY23 (we add c $100m to our year-end forecast as the group typically operates at this level of net debt across the year), and a 30% discount (South Africa sovereign risk and holding company discount), we arrive at a per share valuation of ZAR54.74. This implies 22% upside from the current share price, and stripping out the special dividend, 69% upside from the ex-div share price.

Exhibit 12: Sum-of-parts valuation

 

Revenues ($m)

Adjusted EBITDA ($m)

2023e

2024e

2023e

2024e

Logicalis

1,753

1,855

93

101

Westcon

3,264

3,427

98

108

Central costs

 

(16)

(17)

Peer multiples

Revenues (x)

EBITDA (x)

Logicalis

0.7

0.7

8.2

7.6

Westcon

0.3

0.3

7.7

7.7

Central costs

 

8.0

8.0

Implied EV ($m) based on

Enterprise value

Revenues

EBITDA

Economic interest

Mean EV

Logicalis

1,265

1,235

766

769

86%

660

Westcon

1,039

1,052

756

828

92%

729

Central costs

 

(128)

(136)

100%

(132)

Source: Edison Investment Research, Refinitiv (as at 9 November)

Exhibit 13: Financial summary

Year end 28 February

$'k

2020

2021

2022

2023e

2024e

2025e

INCOME STATEMENT

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

Revenue

 

 

4,214,421

4,109,463

4,546,398

5,017,420

5,282,239

5,533,573

Cost of Sales

(3,472,843)

(3,418,926)

(3,816,630)

(4,300,518)

(4,487,752)

(4,691,632)

Gross Profit

741,578

690,537

729,768

716,903

794,488

841,941

Adjusted EBITDA

 

 

166,280

152,503

158,922

175,242

191,787

214,703

EBITDA

158,657

118,632

143,457

129,509

185,287

208,203

Normalised operating profit

 

 

105,157

97,872

100,540

111,432

136,857

159,815

Amortisation of acquired intangibles

(11,297)

(8,635)

(10,100)

(5,200)

(3,941)

(2,987)

Exceptionals

(3,700)

(27,771)

0

(9,840)

0

0

Share-based payments

(7,623)

(11,493)

(15,465)

(32,056)

(6,500)

(6,500)

Reported operating profit

82,537

49,973

74,975

64,336

126,416

150,327

Net Interest

(25,874)

(25,692)

(31,051)

(37,607)

(41,301)

(43,728)

Joint ventures & associates (post tax)

(204)

908

(427)

480

0

0

Exceptionals

2,029

59

540

45

0

0

Profit Before Tax (norm)

 

 

79,079

73,088

69,062

74,304

95,556

116,086

Profit Before Tax (reported)

 

 

58,488

25,248

44,037

27,253

85,115

106,599

Reported tax

(31,809)

(19,540)

(9,470)

(12,731)

(29,790)

(37,310)

Profit After Tax (norm)

34,615

30,039

36,179

48,298

62,112

75,456

Profit After Tax (reported)

26,679

5,708

34,567

14,522

55,325

69,289

Minority interests

(13,772)

(3,103)

(6,431)

(2,892)

(9,051)

(9,953)

Discontinued operations

1,332

0

5,766

120,137

0

0

Net income (normalised)

20,843

26,943

29,748

45,406

53,061

65,503

Net income (reported)

14,239

2,605

33,902

131,768

46,274

59,336

Average number of shares outstanding (m)

210.5

198.8

203.2

219.1

221.7

221.7

EPS - normalised (c)

 

 

9.9

13.6

14.6

20.7

23.9

29.5

EPS - diluted normalised (c)

 

 

9.7

13.2

14.2

20.2

23.3

28.7

EPS - basic reported (c)

 

 

6.8

1.3

16.7

60.1

20.9

26.8

EPS - Company underlying uEPS (c)

 

 

9.9

13.6

16.0

6.8

22.6

28.1

Dividend (c)

7.0

6.6

39.3

69.9

7.5

9.4

Revenue growth (%)

(2.7)

(2.5)

10.6

10.4

5.3

4.8

Gross Margin (%)

17.6

16.8

16.1

14.3

15.0

15.2

Adj. EBITDA Margin (%)

3.9

3.7

3.5

3.5

3.6

3.9

Normalised Operating Margin

2.5

2.4

2.2

2.2

2.6

2.9

BALANCE SHEET

Fixed Assets

 

 

512,598

554,690

613,155

576,358

570,877

565,631

Intangible Assets

291,279

314,486

320,089

279,971

276,812

273,735

Tangible Assets

43,300

39,987

32,517

27,998

25,676

23,507

Right-of-use assets

83,953

94,837

80,639

80,639

80,639

80,639

Investments & other

94,066

105,380

179,910

187,750

187,750

187,750

Current Assets

 

 

2,083,928

2,242,568

2,399,078

2,731,334

2,830,448

2,976,642

Stocks

253,271

242,005

309,227

435,943

430,332

449,883

Debtors

1,110,510

1,108,105

1,223,824

1,402,128

1,490,605

1,561,529

Cash & cash equivalents

347,189

488,632

453,926

480,174

495,336

549,860

Other

372,958

403,826

412,101

413,089

414,175

415,371

Current Liabilities

 

 

(1,765,823)

(1,980,013)

(2,152,175)

(2,444,686)

(2,488,694)

(2,570,320)

Creditors

(1,259,013)

(1,385,208)

(1,526,163)

(1,759,846)

(1,770,781)

(1,821,017)

Tax and social security

(16,677)

(16,596)

(18,035)

(18,035)

(18,035)

(18,035)

Short term borrowings

(338,945)

(392,877)

(433,176)

(478,055)

(503,286)

(527,233)

Lease liabilities

(34,325)

(36,398)

(32,870)

(32,870)

(32,870)

(32,870)

Other

(116,863)

(148,934)

(141,931)

(155,880)

(163,722)

(171,165)

Long Term Liabilities

 

 

(187,610)

(176,624)

(229,112)

(237,183)

(241,721)

(246,028)

Long term borrowings

(18,638)

(42,371)

(56,440)

(62,287)

(65,575)

(68,695)

Lease liabilities

(95,148)

(77,847)

(61,523)

(61,523)

(61,523)

(61,523)

Other long term liabilities

(73,824)

(56,406)

(111,149)

(113,373)

(114,623)

(115,810)

Net Assets

 

 

643,093

640,621

630,946

625,823

670,910

725,924

Minority interests

(70,778)

(57,465)

(67,516)

(70,408)

(79,459)

(89,412)

Shareholders’ equity

 

 

572,315

583,156

563,430

555,416

591,451

636,513

CASH FLOW

Op Cash Flow before WC and tax

169,980

157,901

162,842

171,405

191,787

214,703

Working capital

57,231

79,903

(76,807)

(56,152)

(62,838)

(31,609)

Exceptional & other

19,330

(3,453)

10,677

(11,389)

(1,087)

(1,195)

Tax

(36,941)

(36,597)

(26,282)

(12,731)

(29,790)

(37,310)

Operating cash flow

 

 

209,600

197,754

70,430

91,132

98,072

144,590

Capex

(28,036)

(35,145)

(24,841)

(25,395)

(25,977)

(26,588)

Acquisitions/disposals

(9,179)

(3,694)

(16,424)

127,770

0

0

Net interest

(30,972)

(25,745)

(31,265)

(37,607)

(41,301)

(43,728)

Equity financing

(51,683)

(2,808)

0

(1,929)

0

0

Dividends

(15,137)

(4,905)

(43,136)

(155,086)

(16,738)

(20,775)

Other

20,019

1,880

(8,184)

(27,861)

(27,413)

(26,042)

Net Cash Flow

94,612

127,337

(53,420)

(28,976)

(13,357)

27,457

Opening net debt/(cash)

 

 

100,753

139,867

60,861

130,083

154,561

167,918

FX

(9,270)

(6,287)

3,304

4,498

0

0

Other non-cash movements

(124,456)

(42,044)

(19,106)

0

0

0

Closing net debt/(cash)

 

 

139,867

60,861

130,083

154,561

167,918

140,461

Source: Datatec, Edison Investment Research. Note: FY20 and FY21 include Analysys Mason in continuing operations.


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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.

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Frankfurt +49 (0)69 78 8076 960

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60325 Frankfurt

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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

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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.

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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 2022 Edison Investment Research Limited (Edison).

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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.

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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.

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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

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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