Datatec Ltd Sa Unsp/Adr

Good morning and welcome to our FY26 interim first half results. As per our usual format, I'll be providing a summary followed by the CFO's presentation on the financial results and then followed by my operational review of the divisions and finally the concluding slides. Our results summary. Slide 4. We had an exceptionally strong H1 performance. All the group's divisions delivered strong year-over-year increases, with higher profits, better margins and good working capital management. These results translated into a staircase of improvement down the P&L, with strong operational leverage. Gross sales grew by 9%, gross profit close to 12%, adjusted EBITDA by 22% and underlying earnings per share jumped by 43%. The strong profit improvement and enhanced dividend payout ratio from last year led to a significant increase in our interim dividend up from 4.3 to 10 cents US dollars, an increase of 133%. As seen with the reporting of many tech companies, an AI-led generational upgrade to more advanced computing is beginning. It is hard to predict how long this will take or what impact it will have, but if it's like previous technology cycles, it will be evolutionary and take time to mature. The ubiquity of AI will eventually augment all uses of technology and will drive faster networking, distributed data centres, more local computing and increased cyber threats. If we can continue to adapt and operate in the right areas of our industry, then the future is very bright for all our businesses. The profitable progress across our divisions is well anchored and the fundamentals are strong and sustainable. A remarkable transformation in our business mix. Not so many years ago, the vast majority of what we sold was mainly hardware with attached services driving just over 10% of the total sales. Today, that ratio has completely turned around. with over 70% of our total sales or gross invoice income derived from software and services, while the vast majority of that is also recurring. As the businesses grow in a predictable way, so do the margins and profits as the leverage rises. We believe we are very well placed to continue to ride the core technology trends that we have long been associated with. I will hand over now to Ivan to go through the financial section.

Thank you Jens and good morning everyone.

We are very happy to present another set of excellent results with continued strong operational execution. As we indicated in our trading update issued earlier this month, With effect from this financial year, we have changed the definition of underlying earnings per share to further align to our adjusted EBITDA definition and to also align with peer reporting. Underlying earnings per share now exclude IFRS 2 or share based payment charges. The comparatives have accordingly been recalculated. Slide 8, the P&L. Revenues continue to be impacted by an increasing portion of software and services being accounted for on a net basis, including as a result of the accounting policy change in Wescon in the prior year. Revenue from sales arrangements where the company acts as an agent is accounted for on a net basis and the commission or gross profit earned on the transaction is recognised as revenue. Where the company acts as a principal in the transaction, the revenue is recognised on a gross basis. To get a sense of the real growth in the business, we therefore now show gross invoiced income or gross sales, which is not an IFRS term. Gross invoiced income grew by 9.4%, but more importantly, absolute gross profit grew by 11.7%. We had strong operating leverage with adjusted EBITDA growing by 22%. Reported EBITDA grew by 36% and included $15 million of settled tax litigation credits in Westcon, which are excluded from adjusted EBITDA. Finance costs were significantly lower than the prior year due to lower rates and efficient working capital management. Our quality of earnings down the P&L continued to improve. Our PBT increased by 92%, with an increase of 43% in underlying earnings per share, and HEPs more than doubled. Slide 9 shows the segmental income statements. This shows very pleasing improvements in gross profit to EBITDA conversion ratios in both the Logicalis businesses, with a steady state in Wescon. All three divisions had solid operational execution during the period. Slide 10. The geographic mix of our businesses has remained relatively stable year on year, with Europe representing about half of the group. we have once again seen an increased contribution from Asia Pacific. Fundamentally, our business involves selling US technology complemented by local services. Over 90% of our business is outside the US. Slide 11. Software and services continue to grow, driven by growth in annuity business. This analysis is presented on a gross invoiced income basis. Slide 12, the group balance sheet. The balance sheet remains strong. Net debt reduced significantly from the first half last year, driven by tight working capital management, with large reductions, especially in the two logicalis businesses. Equity reduced due to a $73 million debit cash flow hedge reserve in Westconn. This resulted from Wescon's hedge accounting program and is due to the much weaker US dollar prevailing during the first half. Slide 13 shows the divisional balance sheets and all the divisions have healthy balance sheets with strong liquidity. Slide 14, the cash flow statement. Despite the high growth during the period and resulting increased working capital requirements, especially in Wescon, operating cash generation improved over the prior year. Cash interest payments reduced and we saw an increase in cash and cash equivalents compared to the prior year's first half. We have declared an interim dividend of 10 US cents in line with our dividend policy. I will now hand over to Jens to cover the remainder of the presentation.