Datatec has continued its improved performance during the period 1 September to 31 December 2014.
According to the group’s interim management statement released today, it seems clear that an economic recovery is underway in the US but elsewhere in Europe and Emerging Markets economic conditions remain mixed, while capital and currency market volatility has increased.
Westcon has continued with its strong recovery, particularly in North America, with significant year-on-year growth in revenues. The global ERP transition is now progressing well with the new implementations in Singapore and Australia largely completed.
Logicalis is, as anticipated, experiencing an increase in revenues relative to the first half of the current financial year.
Datatec has increased its shareholding in Logicalis’ Latin American subsidiary Promon-Logicalis Latin America Limited (PLLAL) from 60% to 65%.
Jens Montanana, chief executive of Datatec, says: “The last few months have been strong across all divisions with North and South America in particular delivering robust performances.
“The Westcon turnaround of the first half has continued up to December and its ERP roll-out is now well on track.
“Logicalis’ trading has improved in the second half as expected,” he adds.
On the release of its interim results on 15 October 2014, the group reiterated its forecast for the financial year ending 28 February 2015 (FY15), being revenues above $6-billion and underlying earnings per share of more than 40 US cents. Based on current trading, prospects and market conditions, the board expects the group to achieve the forecast result for the 2015 financial year.
This forecast is based on the following assumptions: revenue growth will be largely driven by an improved performance at Westcon; Westcon’s revenues will constitute approximately 75% of the total revenue mix and Logicalis’ revenues 24%; a small improvement in operating margins at Westcon and Logicalis; an effective group tax rate of approximately 36%. The financial information on which this statement is based has not been reviewed and reported on by Datatec’s external auditors.
In the 10 months to 31 December 2014 Westcon increased revenue by over 20% compared to the ten months to 31 December 2013, with growth in all regions. In North America, revenues were over 40% higher than in the comparative period. A slight reduction in gross margins, driven by competitive increases in market share, was offset by cost efficiencies resulting in improved operating margins.
Logicalis’ revenue for the 10 months to 31 December 2014 is now in line with the comparative period, which is an improvement to the position at half year. Gross margins have continued to improve due to favourable product mix and an increase in the contribution from annuity services revenue.
Logicalis increased its shareholding in PLLAL from 60% to 65% by electing to take its share of a PLLAL dividend in the form of scrip (plus the acquisition of a small number of PLLAL shares from Promon in exchange for the issue of Datatec shares). In the six months to 31 August 2014, PLLAL contributed more than half of Logicalis’ EBITDA (before central costs). The business has a very good market share position, strong margins, an accomplished management team and excellent prospects.
Trading in the Consulting Services division has improved in comparison with the first half year. Revenues are down slightly on the comparative period and are impacted by the weaker Pound Sterling in which a majority of the billing is transacted.
The Group expects to release its results for the year ending 28 February 2015 on 13 May 2015.
