Datatec Group HSBC – South Africa Conference 3 December 2012 Jens Montanana – Datatec Group, CEO
Datatec Group
HSBC – South Africa Conference
3 December 2012
Jens Montanana – Datatec Group, CEO
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Datatec Group
• Datatec is a global ICT solutions and services Group
- More than 6000 employees
- Operations in over 50 countries
• Holding company structure for three complimentary lines of business:
– Technology division: global distribution of advanced networking, security and unified communications
products (Westcon Group)
– Integration division: ICT infrastructure solutions and services (Logicalis)
– Consulting division: strategic and technical consulting (Analysys Mason, Intact and Via Group)
• Positioned as a multi-play investment opportunity in networking, security and unified communications
technologies
• Long term strategy to deliver sustainable above average returns to shareholders by:
– Focusing on organic growth in the faster growing sectors of the ICT market
– Geographic expansion
Overview
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Datatec Group Highlights
* Excluding goodwill and intangibles impairment, amortisation of acquired intangible assets, acquisition related adjustments,
profit or loss on sale of assets and businesses, fair value movements on acquisition related financial instruments and
unrealised foreign exchange movements
• Revenues increase by 7% to $2.62 billion (H1 FY12: $2.44 billion)
• Underlying* EPS up 8% to 23.5 US cents (H1 FY12: 21.8 US cents)
• Reduced leverage due to lower organic growth and higher opex at Westcon
• Significant expansion across Latin America
• Interim capital “dividend” distribution increases to 8 US cents from 7 US cents
Highlights – H1 2013
Highlights – FY 2012
• Revenue $5.03 billion, up 17%
• EBITDA $190.2 million, up 34%
• Underlying* earnings per share of 47,9 cents, up 26%
• Record financial results at all levels
• Final capital “dividend” distribution of 9 US cents (full year 16 US cents)
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Datatec Group Business stream analysis as at 31 August 2013
H1 2013
Revenue
19%
8%
73%
Distribution
ICT Solutions
Services
H1 2012
74%
7% 19%
H1 2013
24%
19%
57%
24%
H1 2012
19%
57%
Gross profit
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Trading Update
• Third quarter Westcon performance was below expectations and showed contraction
› European GDP expected to contract in Q4 according to estimates
› North American supply chain constraints due to Hurricane Sandy
› Weak demand from US Federal sector
• Investment slowdown as American “fiscal cliff” approaches
• Conditions continue to deteriorate in Europe
• Logicalis performance remains resilient
Dean Douglas, CEO Westcon
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Agenda
Westcon Today
Industry Trends
Game Changers for Growth
Wrap-up
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Westcon Today
Customers (70 Countries)
Westcon Group $4 bn in Distribution
100 Information Technology Vendors
Nortel
Nokia
Vendor
Resellers System Integrators Service Providers
17% 23% 60%
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Global Footprint
We are present in 55 countries
70+ sales offices and 20+ logistics/staging facilities
Logistics/Staging Facilities
Regional Sales Offices
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Revenue & EBITDA History
Revenue ($B) EBITDA ($M)
$0
$500
$1 000
$1 500
$2 000
$2 500
$3 000
$3 500
$4 000
$4 500
FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12
$0
$20
$40
$60
$80
$100
$120
$140
FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12
$1.6 $1.8
$1.9 $2.1
$2.4
$3.0 $3.1 $2.8
$3.2
$3.7
$27 $34
$28
$69
$88
$108
$68
$80
$105
$133
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Revenue Trend
FY 2005 FY 2013P
• Revenue increased 99% from $2.2B in 2005 to $4.3B in the 2013P
• Regional Revenue CAGR’s were 4% (NA), 41% (LA), 10% (EMEA) and 14% Asia Pacific
36%
6% 44%
14%51%
1%
41%
7%
North America
Latin America
EMEA
Asia Pacific
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EBITDA Trend
FY 2005 FY 2013P
82%
2%
5%
6%
39%
9%
41%
12%North America
Latin America
EMEA
Asia Pacific
• Profit (EBITDA) increased over 550% from 2005 to the 2013P
• Regional EBITDA CAGR’s were 6% NA, 41% LA, 39% EMEA and 26% APAC
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Customers & Segments
Reseller 59%
System Integrator 27%
Service Provider 14%
Total 100%
Segment Customers% of Total
• System Integrators comprise 3 of global top 10 customers
• BT largest global customer at 3% of revenues
• 350 Service Providers customers require multi-national focus, GPS and other capabilities
• Top 10 customers only 12-13% of revenue
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Geo Diversity Through Acquisition
Europe
• Triple AcceSSS (Jul ‘12)
• entrada Kommunikations GmbH (Jul ‘11)
• Crane (Apr ‘07)
Africa
• Comztek (Nov ‘12)
• Sentronics (Nov ‘11)
• Biodata (Sept ‘10)
• Sparnoon-Dynatech (Jun ’07)
Asia-Pac
• Netpoleon (Feb ‘12)
• Datastor (Oct ‘09)
• Inflow (Sept ‘08)
Latin America
• Afina (Jul ‘12)
• Cernet (Oct ‘07)
North America
• ReView Video (Jul ‘07)
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Organic Initiatives
• Westcon Solutions – January, 2012
› Opened offices in Taiwan, China (Shanghai), Singapore and Hong Kong
• Westcon appointed as Cisco distributor in Brazil – December 2007
› Expanded to Mexico – August, 2011
• Global Cisco Agreement – May, 2010
› Created Comstor Worldwide
• F5 Global Agreement – July, 2012
• Global Procurement Services Organization – March, 2010
› Global deployments and procurement
• Opened offices in Eastern Europe and the Nordic countries
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ERP System Evolution
Where we were
• 10+ year old JD Edwards platform
• 1,000+ customizations created system quirks and stagnant processes
• System quirks became business process inefficiencies
• Enhancements became cost prohibitive
• Poor performance in a virtualized environment
Where we are
• SAP rollout with single global template and single set of global business processes
• Deployment plans included extensive change management & training
• Implemented in North America during Fiscal Year 2013
• Able to quote, order, pick, pack, ship, invoice on day-one of each deployment
Where we are headed
• AsiaPacific in the first half of fiscal year 2014
• Subsequent deployments every 5-6 months Europe/Middle East, LATAM, Africa
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Agenda
Westcon Today
Industry Trends
Game Changers for Growth
Wrap-up
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Evolving Role of Distribution
• Logistics including inventory and shipment
• Fulfillment cycle financing
• Product expertise and marketing programs
• Solution expertise, Technical support
• Partner education and enablement
• Services to accelerate adoption
• Solution Integration
• XaaS Aggregation (Cloud)
• Partner Services
• Global Deployment Capability
+
+
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IT Industry Trends
IT Industry
Disruption Factor
2010 2000 1990 1980
IT Evolution
10
8
6
4
2
0
Client/Server
Internet/Web
.com
PDA
VoIP
Broadband
iPhone/iPad
& Mobility
Netbook
100Mb
Ethernet
PC
WiFi
56K
Modem
Mini
Unix WS Virtualization
Y2K
5
9 9 8
5 5
6
2 2
7
3
8 7 7
3
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Market Trends: BYOD / MDM
Gartner Group IT Survey
• Key area for investment in 2013 by IT organisations
Bring Your Own Device (BYOD)
• Connecting personal devices (smart phones, laptops) to corporate network
Mobile Device Management (MDM)
• Strategy for maximizing/securing mobile communications across corporate
network
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Agenda
Westcon Today
Industry Trends
Game Changers for Growth
Wrap-up
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Game Changers for Growth
Geographic expansion
• Broaden geographic footprint to mitigate reliance on any marketplace
• Create scale through vendor and skills portfolio
• Greater vendor relevance
• Leverage global systems and regionally based management
• Manage global deployments
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Game Changers for Growth
Technology portfolio
• Software, Server, Storage and Services (“4S”)
• Will not disrupt specialty nature of our business model
• Address new market requirements for Unified Communications and Security
• Create integrated solutions for vendors moving away from specialty
hardware to software only models
• Serve new virtualization markets and trends
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Agenda
Westcon Today
Industry Trends
Game Changers for Growth
Wrap-up
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Summary
Mitigating reliance on a few markets
• Solid presence across six continents
• Both organic and through acquisition
• 2/3rd of revenues outside North America
Addressing market trends
• Technology trends with innovative solutions
• Industry challenges as value based distribution evolves
Executing a strategy that differentiates Westcon
• Creating value through global coverage
• Augmenting portfolio to address market requirements