Highlights
• Revenue up 16% to $1,7 billion (2005: $1,4 billion)
• Operating profit up 44% to $43,3 million (2005: $30,1 million)
• Headline earnings per share up 30% to 15,65 US cents (2005: 12,02 US cents)
• Completion of London listing provides broader access to international investors
Jens Montanana, Chief Executive of Datatec commented: “We are pleased to report strong revenue and earnings growth so soon after our listing in London. With our focus on the fast growing networking and IT services sector, we are in an excellent position to exploit our scale and resources to develop the Group internationally through organic and acquisitive growth. We remain committed to delivering sustainable value to our shareholders.”
Westcon’s revenue increased by 10% to $1,26 billion (2005: $1,14 billion)and the growth was attributable to all three regions, the Americas up 6%, Europe up 17% and Asia Pacific up 17%. Excluding once-off benefits in the prior year, gross margins increased from 8,1% to 8,3%, with increases primarily in Europe and Asia Pacific. Operating expenses of $65,5 million increased slightly (2005: $64,9 million). Demonstrating the operating leverage, operating expenses as a percentage of revenue decreased from 5,7% in 2005 to 5,2%. EBITDA margins increased to 3,0% (2005: 2,7%). Operating profit increased by 27% to $32,9 million (2005: $26,0 million).
Westcon’s operating activities used $9 million in cash compared to $10 million generated during the six months to 31 August 2005. An increase in net income during the current period was offset by higher working capital consumption, largely attributable to changes in the working capital of the newly acquired Ronco business. At 31 August 2006 Westcon’s net cash position was $80 million (2005: $50 million).
Cisco product sales made up 59% of Westcon’s revenue, Nortel 12%, Avaya 8%, Security Solutions 6%, Affinity and Development products 15%. 54% of Westcon’s revenue was generated in the Americas, 37% in Europe and 9% in Asia-Pacific.
Datatec’s other main division, Logicalis saw revenue up 39% to $342,6 million (2005: $247,3 million). Adjusting for the full year impact of acquisitions, revenue increased by 11% on a like-for-like basis. Total gross margin stayed constant at 20,1%.
Costs continue to be tightly managed, resulting in operating expenses increasing by less than the growth in total revenue.
EBITDA increased 59% to $11,8 million (2005: $7,4 million), while EBITDA margins expanded to 3,5% (2005: 3,0%). After charges for depreciation and amortisation of intangible assets, operating profit was up 65% to $8,5 million (2005: $5,2 million).