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DATATEC GROUP AUDITED RESULTS
FOR THE YEAR ENDED 29 FEBRUARY 2004
Jens MontananaCEO
DATATEC GROUPTrading Environment
• Positive signs for global economy
• Profit recovery in corporate sector
• Modest IT recovery for some in the sector
• Trading conditions show a slight improvement
DATATEC GROUPPerformance Highlights
• 14 % Improvement in dollar revenues
• Strong balance sheet
• Return to operating profit
• Westcon - improvement in revenues mainly as a result of
increased sales through Landis operations
• Logicalis sale of ANZ operations to IBM for $66 million
DATATEC GROUPRevenues
$2.35 B
FY 2004
$2.06 B
FY 2003
DATATEC GROUPRevenues By Regions
North America51%
South America1%
Europe34%
Asia9%
South Africa+ME5%
DATATEC GROUPGross Margin
$275.42 M
$252.22 M
FY 2003 FY 2004
DATATEC GROUPEBITDA
$23.79 M
$18.25 M
FY 2003 FY 2004
DATATEC GROUPTotal Headline Loss Per Share
(6.59)
FY 2004FY 2003
(7.14)
US Cents
DATATEC GROUPNet Cash
Cash position remains strong
$88.7 M
$115.6 M
FY 2003 FY 2004
Shows investment into working capital – revenue growth
DATATEC GROUPSegmental Analysis
Revenue
82%1%
17%
Gross Margin
65%3%
32%
Westcon Mason Logicalis
EBITDA
94%
6%
DATATEC GROUPProspects
• Westcon IPO
• Growth opportunities in US and UK markets for Logicalis
• Return to meaningful profitability in Mason for FY 2005
• Westcon AME and Online now positively contributing to Group results
• Strong balance sheet and cash position
WESTCON GROUP
WESTCONConsolidated Results - Highlights
Operating Results:
• Revenue grows 13.2% over FY 2003
- 8.7% organic revenue growth; 16.4% in Europe, 5.5% in Americas
and Asia Pacific
- 80% YR over YR revenue growth for Westcon II (Landis) subsidiaries
- 4th half yearly period of sequential revenue growth
• Gross margin of 8.8% down slightly from 8.9% in FY 2003
- Higher margins on increased IP device sales
- Westcon II margins increased from 9.7% to 10.9%
- Increase in organic revenue largely driven by sales of Cisco
products which generate lower gross margins
WESTCONConsolidated Results - Highlights
• Operating costs increase over FY 2003
- Increased revenues resulted in increased selling expenses
- Weak U.S. dollar increases SG&A expense at non-US subsidiaries
- FY 2004 results include $4.8 million in restructuring costs
- FY 2004 includes foreign exchange loss of ($2.3 m) vs. $4.1 m
gain in FY 2003
Financial Position and Cash Flow:
• Company utilized $32 million to grow business during FY 2004
• Year-end consolidated net debt of $8.0 million
WESTCONRevenues
$931
0
100
200
300
400
500
600
700
800
900
1,000
1,100
Mar-Aug Sep-Feb Mar-Aug Sep-Feb Mar-Aug Sep-Feb
2002 2003 2004
807842
880
1,004
931 756 781 767 798 903
$
Note: Represents Westcon II
Sales 1,626 1,841Gross Profit 144 162Gross Profit % 8.9% 8.8%Operating Costs 110 126Operating Costs % 6.8% 6.8%EBITDA 34 36EBITDA % 2.1% 2.0%Dep & Amort 37 24D&A % 2.2% 1.2%Interest Exp, Net 3 4Int Exp % 0.2% 0.2%Pre-tax Income (6) 8Pre-tax % (0.4%) 0.5%
Note: Excludes Datatec Intercompany transactions which eliminate in consolidation
(US $, in millions) FY 2003 FY 2004
WESTCONConsolidated Results of Operations – SA GAAP
(% of total revenue)
Cisco 51.7% 55.7%
Nortel 11.6% 10.3%
Avaya 11.5% 9.3%
IP Devices 25.2% 24.7%
Total 100.0% 100.0%
Vendor FY 2003 FY 2004
WESTCONConsolidated Sales by Vendor %’s
FY 2003 FY 2004
(% of total revenue)
Americas 60% 56%
Europe 35% 38%
Asia Pacific 5% 6%
Total 100% 100%
WESTCONConsolidated Sales by Geography
WESTCONHeadcount (continuing operations)
Total headcount reduced by 19.8% to 1,065 heads
FY 2003
FY 2004
0
100
200
300
400
500
600
700
Europe Americas Asia Pac
800711
509 499432
118 124
WESTCONWorking Capital (US Stated)
Note: Ratios based on trailing twelve month averages.
Accounts Receivable 236 311
DSO (days) 51 60
Inventory 171 222
Inventory Turns 9.0x 7.8x
Accounts Payable 278 364
DPO (days) 66 77
Current Ratio 1.5 1.5
(US $, in millions) FY 2003 FY 2004
WESTCONCapitalization (US stated)
Cash $141 $114
Working Capital Line (72) (84)
Datatec Loan (35) (38)
Net Cash (Debt) 34 (8)
Equity 261 284
Debt to Capitalization 0.29 0.30
Liabilities to NTAV 1.61 1.87
Note: Net debt (cash) calculation includes WG note payable to Datatec which is eliminated consolidation
(US $, in millions) FY 2003 FY 2004
WESTCONConsolidated Cash Flows (US stated)
Cash generated by (used in)Operations:
Cash Earnings 25 23Working Capital 116 (55)Total 141 (32)
(US $, in millions) FY 2003 FY 2004
Net cash consumption from Feb 2003 to Feb 2004: $32 M - invested into working capital
FINANCIAL OVERVIEW Net Cash Trend - FY 2000 to Current
Note: Amounts noted on graph represent the average net cash during FY 01, 02, 03 and 04.
Net Cash
-$350,000,000
-$300,000,000
-$250,000,000
-$200,000,000
-$150,000,000
-$100,000,000
-$50,000,000
$0
$50,000,000
$100,000,000
Feb-2000
May- Aug- Nov- Feb-2001
May- Aug- Nov- Feb-2002
May- Aug- Nov- Feb-2003
May- Aug- Nov- Feb-2004
($224,336,852)
($139,544,122)
($59,842,704)
($30,701,555)
WESTCONProspects
• New CEO appointment, Tom Dolan, to drive next phase as company
returns to profitable growth
• IPO process on track
• Prospects growing, pipeline improving, margin expansion
LOGICALIS
LOGICALISHighlights
• Improvement in EBITDA performance
• Balance sheet greatly strengthened by sale of Australia/New
Zealand operations in March 2004
• Continued improvements in working capital management
• Logicalis brand change now complete
• Strengthened management team in the UK/Europe
• Reshaped US business model in Q4 FY 2004
LOGICALISFinancial Performance - Summary
Improvement in EBITDA performance
Notes: 1) FY2003 was an 11 month period
2) ANZ operating expenses include $1.1M for share of Group costs (FY2003 $1.0M)
3) Operating expenses for continuing operations include re-branding and staff
reduction exceptional costs of $1.6M (FY 2003 $2.1M)
4) Excludes Datatec Intercompany transactions which eliminate in consolidation
US$’000 FY 2003 FY 2004 FY2004 FY 2004 FY 2004
Total Total Continuing
ANZ Other
Revenue 313,538 362,937 98,174 1,082 263,681
Gross Profit 72,862 81,243 23,891 373 56,979
As % of revenue 23.2% 22.4% 24.3% 34.4% 21.6%
Operating expenses 73,984 78,848 21,019 488 57,341
As % of revenue 23.6% 21.7% 21.4% 45.1% 21.7%
EBITDA (1,122) 2,395 2,872 (115) (362)
As % of revenue (0.4%) 0.7% 2.9% (10.6%) (0.1%)
Operating profit / (loss) (8,351) (4,987) 932 (137) (5,782)
As % of revenue (2.7%) (1.4%) 0.9% (12.7%) (2.2%)
Exceptional items 2,343 635 - 635 -
Discontinued
LOGICALIS Group transformed by Australian/New Zealand businesses disposal
• Net sale proceeds of $64.5 million available to fund growth• Balance sheet greatly strengthened by profit on disposal • Total return to Datatec R146 million (50% return on investment)• Fully-valued multiples achieved:
• Limited scope for significant organic growth in Australia and New Zealand
• Logicalis Group now focused on USA and UK
Australia / NZ
FY04 Actual
Sales $98M
EV/Sales 0.67
EBITDA $2.9M
EV/EBITDA 23
LOGICALISRevenue (continuing operations)
North America comprises two-thirds of continuing operations
North America 67% 68%
South America 3% 4%
Germany 2% 2%
UK 28% 26%
TOTAL 100% 100%
(% of revenue)
FY 2003 FY 2004
LOGICALISHeadcount (continuing operations)
Headcount now 657
Heads
FY 2003
FY 2004
0
50
100
150
200
250
300
350
Europe North America South America Group
285
200
317
280
173 168
9 9
LOGICALISEBITDA ($000 - continuing operations)
All operations, except UK, EBITDA positive$’000 FY 2003
FY 2004
Note: FY2003 was an eleven month period
(1,000)
(500)
0
500
1,000
1,500
2,000
UK Germany North America South America
LOGICALISRegional Contributions – (continuing operations)
Revenue Split USA now comprises two-thirds of Group
Gross Margin SplitGross Margin broadly tracks revenues
Germany2%
UK26%
South America4%
North America68%
North America63%
Germany2%
UK29%
South America6%
LOGICALISRevenue Streams (continuing operations)
Technology product contributes 76% of total revenue (with increase from product led recovery)
Note: FY2003 was an eleven month period
Product 73%
Prof Serv12%
Maintenance8%
Managed Service
7%
FY 2003 FY 2004
Product 76%
Prof Serv9%
Maintenance8%
Managed Service
7%
LOGICALIS Key Product Vendors (Revenue %)
HP and Cisco remain our dominant vendors
Note: Continuing operations
IBM5% EMC
5%
Others20%
HP40%
Cisco30%
LOGICALISWorking Capital
Tight working capital management has continued
Net Cash Improvement from February 2003 to February 2004: $9.6M
Working Capital Management ($000) Feb 2004Feb 2003
Inventory 16,76621,273
Average Stock Days (excluding spares stock) 2526
Accounts Receivable 48,09749,526
DSO Days 4347
Accounts Payable (42,568)(41,048)
DPO Days 7376
Net Cash 25,79716,166
Note: Figures include Australia and New Zealand
LOGICALISNet Cash
31/03/01
31/03/0230/09/02 28/02/03
29/02/04
30/09/01
31/08/03
-10
-5
0
5
10
15
20
25
30
Feb-01 Aug-01 Feb-02 Aug-02 Feb-03 Aug-03 Feb-04
Solid improvement in net cash over the last three years
$M
LOGICALISProspects
• Certain major vendors have indicated a recovery (IBM / Cisco)
• Increase in activity will leverage restructured cost base
• Focus on improving services and product mix
• Better pipeline converting into higher revenues
• New management team in UK making progress
• Consolidation opportunities exist
DATATEC GROUPOutlook
• Return to profitability
• Strong balance sheet and cash position
• Targeted acquisitions to increase focus, market share and
profitability
• Big relative gap exists between share price and NTAV
