Datatec ("Datatec" or the "group", JSE and LSE: DTC), the international information and communications technology (ICT) group, is today publishing its first interim management statement* (IMS), covering the period from 1 September 2007 to 31 December 2007.
Group
Group trading in the first four months of the second half of the financial year has been much stronger than the first half, with significant improvements in the performance of Logicalis in particular, as a consequence of the restructuring undertaken in the US in August 2007. The group is on course to produce a strong second half performance and full year results in line with expectations.
Group revenue and profitability for the 10 months to 31 December 2007 improved in all areas when compared with the prior year's first 10 months. Continuing good demand for the group's technology solutions and services, coupled with a seasonally normally stronger second half performance, indicate that all divisions are positioned to deliver full year-on-year growth.
Both gross and operating profit margins have also improved in the second half, as a result of continuing favourable demand for the group's products and services, wider geographic reach and a strategy that has resulted in an improved product mix, a better balance between vendors and continued growth in services.
The board is confident the group will meet its target of achieving over $4 billion in revenue for the current financial year to 29 February 2008 (FY07: $3 billion). The group continues to execute a tightly controlled approach to managing its operating costs.
Westcon
Revenues have continued to grow in all regions with gross margins and operating profit margins expanding. The contribution from new initiatives in developing countries in Eastern Europe and South America is expected to grow rapidly. As earlier reported, Westcon has recently also established a Cisco distribution presence in Brazil. This new operation has the potential to grow rapidly and report incremental revenue of over $100 million over the next two years.
Logicalis
The early decision by management to restructure the US operations in response to the overall slowing of the market in the first half has resulted in a significant improvement in second half profitability. A strong second half performance in all regions is expected to produce a record performance for this division.
A number of long-term annuity deals, such as the $150 million contract with the Welsh Assembly Government (the largest ever contract awarded to Logicalis UK), exemplify Logicalis' growing services capabilities. We continue to look for opportunities in high growth markets and recently acquired the remaining 20% interest in Logicalis South America.
AnalysysMason
The consulting group has had a robust second half so far and is expected to produce year-on-year growth. The investments made in the early part of the year, within the research division, are starting to yield positive results. This area of the business is expected to contribute increasing profitability from next year.
Middle East and Africa
This division continues to grow revenue strongly. New countries across Africa, the Middle East and within emerging Asia are being targeted for further investment.
Preliminary results
The group expects to release its preliminary results for the year to 29 February 2008 on Wednesday 14 May 2008.
The financial information on which this statement is based has not been reviewed and reported on by Datatec's auditors.
Share
Datatec Limited is an international information and communications technology (ICT) group focused on the supply of advanced ICT and the delivery of professional services into the higher growth segments of the global market. The group's main lines of business comprise the global distribution of advanced networking and communications convergence products (Westcon Group Inc), IT infrastructure solutions and network integration (Logicalis Ltd) and strategic telecommunications consulting (Analysys Mason Group Ltd). Datatec is registered in South Africa and its shares are listed in Johannesburg and London. The group has more than 3 000 employees around the world.
In the year to 28 February 2007, the group reported an increase in revenue of 17% to $3.2 billion (2006 restated: $2.7 billion), operating profit increased 45% to $100 million (2006: $69 million), and headline earnings per share grew to 40.80 cents (2006: 26.9 cents).
* An interim management statement (IMS) is a statement that the UK Financial Services Authority now requires UK companies fully listed on the London Stock Exchange to issue during the first six-month period of the financial year and another statement during the second six-month period of the financial year. This statement must be made in a period between 10 weeks after the beginning, and six weeks before, the end of the relevant six-month period.
Although Datatec is listed on AIM in London, the board has decided to publish IMS statements in order to provide the financial markets with regular update on the group's trading performance. The group plans to publish its IMS statements in January and July each year.
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