logicalis annual review 2009

Annual Review 2009

PROVEN

EXPERIENCEADDING

VALUE

Organisations looking to transform their business to deal with the challenges and opportunities of the 21st century need to get smarter, leaner and faster.

Successful companies will boost productivity through seamless communications and collaboration, lowering operating costs in their data centre and making smart use of managed services, so that they can focus in-house IT resources on areas of true strategic advantage.

Logicalis has the expertise, innovative approach and business tools to help organisations optimise their IT investments.

It’s about business and technology working as one.

Contents01 Financial highlights02 Our world04 Chairman’s statement06 CEO’s review08 Board of Directors 10 Our strategy12 Our business18 International operations20 Our corporate social responsibility22 Financial overview24 Financial resultsIbc Our subsidiaries

www.logicalis.com 01

FINANCIAL HIGHLIGHTS

EBITDA increased by

Operating profi t increased by

Total sales increased to

Gross margin increased by

to $56.9 million (2008: $35.1 million) by 21% (2008: $830 million)Note: Excluding acquisitions; organic growth was 2% on a constant currency basis

to $39.3 million (2008: $25.1 million) to $221.7 million (2008: $187.3 million)

62%

57%

$1bn

18%

Logicalis Annual Review 2009

Logicalis is an international provider of integrated information and communication technology (ICT) solutions and services founded on a superior breadth of knowledgeand expertise, resulting in greater business benefi ts for its customers.

Our business model is built around helping our customers use technology to embrace, support and drive their strategic business processes. We help them manage complexity to meet business challenges with advanced skills, world-class products and proven experience.

Headquartered in the UK, Logicalis Group was formed in 1997 when Datatec acquired Logical Networks plc; a UK based networking integrator that had been operating since 1988. Datatec then embarked on a strategy to expand and globalise its business. By the year 2000, Datatec had acquired more than 20 IT integration and services companies operating throughout Europe, North and South America and Australasia.

Today, Logicalis Group is a $1billion business with over 1,600 employees and more than 5,000 commercial and public sector customers worldwide.

We provide...Communications and Collaboration Logicalis is a recognised leader in the design, implementation and support ofhighly integrated Communications and Collaboration solutions, with best-in-class products from Cisco, IBM, Microsoft, Tandberg and other leading vendors.

Voice & IP Telephony * Contact Centre * Messaging * Presence * Rich Media Conferencing * Collaborative Content/Web 2.0 * Video * Security *

Data CentreLogicalis’ expertise in Data Centre solutions helps organisations operate their data centres at the peak effi ciency, minimal cost, and maximum effectiveness, and provides the environmental benefi ts required today.

Virtualisation and Consolidation * Enterprise Computing * Storage * Cloud Solutions * Hosting * Switching * Security *

Professional and Managed ServicesLogicalis’ experienced and certifi ed specialists deliver a portfolio of full lifecycle management services, backed by comprehensive Managed Services expertise. These encompass the voice and data infrastructure (fi xed and mobile), data centre, and applications found in today’s enterprise ICT environments.

Consulting * Application Integration & Development * Managed Services * Remote Monitoring & Management * Hosting * Co-location * Managed Infrastructure Services * Security *

INTERNATIONALLY

DIVERSE

02

www.logicalis.com

Our World Our offi ces

UKSlough (HQ)LondonWarrington LivingstonCardiff

USAChandler, Scottsdale (Arizona)San Francisco, Irvine, San Mateo (California)Shelton (Connecticut)Atlanta (Georgia)Lisle (Illinois)Indianapolis (Indiana)Boston (Massachusetts)Bloomfi eld Hills (Michigan)Golden Valley (Minnesota)St Louis (Missouri)Denville (New Jersey)New York (NY)Charlotte (N Carolina)Cincinnati, Dublin (Ohio)Houston (Texas)Dallas (Texas) San Antonio (Texas)Seattle (Washington)Green Bay, Milwaukee (Wisconsin)

GermanyBerlinCologne

BrazilSão PauloRio de Janeiro

ArgentinaBuenos AiresCórdobaMendozaRosário

ChileSantiago

ParaguayAsunción

PerúLima

UruguayMontevideo

LOCAL

EXPERTISEPreferred Partner

Our strategic technology partners:

03


“ I am delighted to report another successful year for Logicalis despite the challenging times. Our performance demonstrates the success of a focused strategy and the strength of our management team.”Jens MontananaChairman, Logicalis

All main regions were profi table, the biggest increase coming from South America. Revenues grew 21% topping $1 billion for the fi rst time, while gross profi t increased by 18% to $222 million; operating costs grew much less by a tightly controlled 8%. As a result EBITDA and operating profi ts grew by over 55% and margins expanded to 5.6% and almost 4% respectively, our best performance to date. These ratios are amongst some of the very best-in-class for this sector, and our long term goal is to improve further over the cycle as better conditions return.

Operating profi t has gone from just over $6 million in FY2005 to approaching $40 million this year, or equivalent to a CAGR of 60% over 4 years.

The focus and repositioning of Logicalis since the dot com crisis has really paid off. The acquisition

Boosted by the very successful acquisition of a majority stake in Promon Tecnologia in Brazil, and its subsequent merger with Logicalis’ existing South American operations, Logicalis revenues rose by 21% to just over $1 billion. In constant currency terms, organic revenues would also have grown.

The overall performance of Logicalis has been exceptional, margins and operating profi ts are at their highest levels ever and EBITDA alone grew by over $20 million or 62% to almost $57 million. Annuity and managed services continue to grow strongly and help underpin the development of the Group, improving the quality of customer relationships.

It’s pleasing to report that as product sales have come under pressure in this environment, our services mix and business quality have improved.

CHAIRMAN’SSTATEMENT


The biggest increase came from South America with the inclusion of the Promon Tecnologia acquisition in Brazil, refl ected in the revenues for much of the year. The US grew strongly organically and the decline in the UK was driven by the dramatic fall in the pound; in constant currency terms the UK was fl at. Germany is expected to contribute profi tably next year as we have increased our presence in that market. Overall we are extremely encouraged by these impressive results.

Inventories fell as we minimised lead times and shortened our bookings to billings gap. DSO (debtors) days have moved out due to the full year inclusion of the Promon acquisition in Brazil. We do however expect this number overall to come back into the 50 days. Payables (creditors) days also elongated refl ecting the longer credit terms expected, which is typical in Brazil.

Our cash at year end remained at above $40 million, compared with $44 million last year. Given the investments in working capital on the back of this strong growth, we believe our balance sheet remains very well managed and ungeared.

We believe we are very well positioned to take advantage of our competitiveness. Gaining market share and consolidating our industry position, in our key markets, drives our strategic focus. We had a number of large one off projects in the fi rst half of last year that will not recur this year.

We expect our underlying performance to remain strong this year and our annuity services base to grow in proportion to the rest of the business. With our much larger platform in South America now, including Brazil, we should be able to grow on our dominant position regionally. Germany which has been subscale for us for a number of years should now contribute positively, as we have recently completed a synergistic acquisition.As always we remain vigilant to the macro environment and focused on our cost base.

in Brazil has considerably helped balance the geographic split. We expect going forward that over 30% of revenue will be derived from each ofthe regions of the US, South America and Europe (the latter being the UK and Germany). The US is likely to remain the largest region. Germany this year is set to get a boost from a recently completed small acquisition which should at least double its contribution. We expect to concentrate our efforts and resources into developing these regions.

The revenue versus services split remained very similar to last year, the slight increase in product sales was due to a number of large Cisco project wins, coming mainly in South America. We would expect our services contribution to grow in proportion this year, slower market conditions tend to favour services and we are starting to see increasing traction in our managed services business. We have remained close to this 80/20 split in recent years, it is worth pointing out that at 20% of $1 billion in total revenues for Logicalis, our pure services business now generates a revenue stream of more than $200 million.

In the last few months, our services revenues have improved even as product sales have slowed. The signifi cant increase in the proportion of Cisco business was mainly as a result of the acquisition of Promon Tecnologia in Brazil. We are now the most signifi cant integration partner for Cisco in the South American market, representing over 30% market share in the key countries.

We continue to invest in maintaining a balanced portfolio and expect soon to drive IBM and HP solution sales in South America, as this region moves to adopt the model we have successfully developed in the US and UK. We believe we are extremely well placed to take advantage of Cisco’s recent entry into the Data Centre market as we have been representing technologies such as IBM, HP and EMC, as well as offering services in this space for some time.

The most encouraging trend in Logicalis’ recent performance has been the sustained improvement in profi tability. EBITDA reached $57 million this year from $35 million last year. From an EBITDA margin of around 2% 5 years ago, EBITDA profi ts and margins have grown steadily every year to touching almost 6% this year. We expect these margins to stay around or above 5%, even in these tougher market conditions, as our scale and geographic diversifi cation supports continued strong profi tability.


CEO’S REVIEW

“ We are focused on building a strong business through organic growth and acquisition and we are perfectly positioned to deliver an impressive performance in this challenging economic climate.”Ian Cook Chief Executive Offi cer, Logicalis


Logicalis’ performance, with revenues up 21%, is very encouraging. Is this performance improvement sustainable?

Revenue growth is always important as long as it isn’t achieved at the expense of gross margin. The good news is that our gross margins are holding up well under the current economic pressures. As for sustainability, our sales mix is increasingly service rich which means we are less reliant on transactional business. As we develop and deliver more innovative managed services, our annuity based revenues will continue to grow.

What is the reason behind the turnaround in Logicalis’ fortunes? Presumably, there was more to it than just sorting out the US?

The integration of our acquisitions in the US and UK is now complete. As a result,we currently have exactly the right mix of vendor partners and the ability to offer a rich blend of solutions and services through a single sales force. Our new structure is more effi cient, more focused and more effective and places our business in the ideal position to meet our short term objectives and long term goals.

Logicalis’ services business appears to be growing strongly. What service areas are driving this growth and how?

As well as a growing portfolio of Managed Services, we also have specialist business teams focusing on the Data Centre and Communications and Collaboration; two areas where the demand is growing and the opportunities are service rich due to the characteristics of the technologies involved. One of Logicalis’ key services is the provision of complex technology based solutions. So we have managed to position ourselves in exactly the right place at exactly the right time.

Is there an argument that Logicalis should become a services only business or are the product sales important in pulling through the services revenues?

There’s no doubt that Logicalis will continue to maintain a strong focus on services. However, we have absolutely no intention of abandoning our product based solution sales. The excellent relationships we have built with our key vendor partners are at the very heart of our success. We will continue to build our service offerings around the most innovative and effective technology products. Products are the foundation of many of Logicalis’ solutions and are, therefore, fundamental to our business strategy.

Are there any more plans to make further acquisitions this year?

Absolutely. We will continue to look for opportunities in our existing territories to consolidate or add a new facet to our businesses. Opening in new territories both organically and by acquisition, is also on our agenda as new markets develop. We are focused on building a strong business through organic growth and acquisition and we are perfectly positioned to deliver an impressive performance in this challenging economic climate.

What does the future hold for Logicalis?

We all work within a period of unprecedented economic uncertainty. However, there are some things of which we can be certain. Organisations throughout the world will always need information and communications systems to drive their businesses forward. Our solutions and services enable customers to improve collaboration, effi ciency and productivity, and lower their operational costs and carbon footprint. Logicalis delivers business solutions that have a predictable and measurable ROI. Technology is the route and we have the solution. As long as we take good care of our customers, the future will take care of itself.

EBITDA increased by Total sales increased to

to $56.9 million (2008: $35.1 million) by 21% (2008: $830 million)

62% $1bn


BOARD OF DIRECTORS

01

02

03

04

01 Jens Montanana ChairmanJens is the founder and chief architect behind Datatec, which he established in 1986. Between 1989 and 1993 Jens served as managing director and vice-president of US Robotics (UK) operations, a wholly owned subsidiary of US Robotics which was acquired by 3Com. In 1993 he co-founded US start up Xedia Corporation in Boston, MA, an early pioneer of network switching and one of the market leaders in IP bandwidth management, which was subsequently sold to Lucent Corporation. In 1994 Jens became Chairman and Chief Executive Offi cer (CEO) of Datatec which listed on the JSE in November 1994 and on the Alternative Investment Market of the London Stock Exchange in 2006. Jens is also Chairman of the 100% owned subsidiary company Logicalis, a role he assumed in March 2007. Jens is non-executive director of Versatile Systems, Inc. a Toronto and London listed Canadian company.

02 Ian CookChief Executive Offi cerIan Cook joined Logicalis as CEO, European Operations in 2003 and became CEO of Logicalis Group in March 2007. Since then Logicalis has become an international brand and a respected partner of the major technology vendors.

Ian has extensive experience in the technology industry spanning more than 25 years. He joined Logicalis from Damovo where he had extensive involvement in their international operations as COO.

Prior to Damovo in 1990, Ian led the Board of Cablestream which became Siemens Network Systems Ltd (now Affi niti), one of the UK’s leading network integrators. Over a 10 year period at SNSL he rose to Group Managing Director responsible for operations across Europe. Previously he was Sales & Marketing Director at Case Communications Ltd, a manufacturer of data communications equipment with operations in the UK, USA and Asia Pacifi c.

03 Mark RogersChief Operating Offi cerMark Rogers joined Logicalis in 2003 as Finance Director for Logicalis UK, and in 2004 he became Chief Financial Offi cer, European Operations. Since March 2007, he has taken on the role of Chief Operating Offi cer for Logicalis Group.

Mark has extensive experience in the technology and service sectors both in the UK and internationally. He spent 20 years at Racal Electronics/Thales of which 13 years were at Finance Director level within divisions providing Managed Network Services, Telecoms and Survey & Positioning Services. Whilst at Thales he was also Chairman of Citylink Telecommunications, a joint venture company which had secured a £1.2 billion, 20 year PFI contract by London Underground. Also, he has signifi cant M&A experience including the sale of Racal Telecom to Global Crossing for £1 billion as well as acquisition and integration of smaller businesses.

He started his fi nance career with Revlon where he qualifi ed as a Chartered Management Accountant.

04 Nigel Drakeford-LewisChief Financial Offi cer Nigel Drakeford-Lewis is a Fellow of the Institute of Chartered Accountants in England and Wales and also has an honours degree in Economics and Accountancy from Exeter University. Nigel joined Datatec in June 2000 initially to help build an advisory services division which was subsequently merged with Logicalis. He then moved across to Logicalis Group in November 2000 to focus on the reshaping of the Logicalis Group and help redefi ne its strategic direction. Since April 2001 Nigel has been Chief Financial Offi cer of the Group with responsibility for the fi nancial management and control of all the operations, covering 20 companies in 9 countries.

After qualifying as a Chartered Accountant with Grant Thornton, Nigel held senior fi nancial positions with Black & Decker, Grand Metropolitan (now Diageo) and Dixons Group. Prior to joining Datatec, Nigel worked for 5 years as a senior consultant with Arthur D Little on strategy, corporate fi nance and performance improvement assignments, primarily in the fi xed and mobile telecommunications sector.


05 Ivan Dittrich Non-Executive Director Ivan is a Chartered Accountant and has been with Datatec for the past 10 years. He was appointed as non-executive director to the Logicalis Board on 22 April 2008, and later became Datatec’s Group Finance Director on 1 May 2008. Previously, he was Group Corporate Director and Group Company Secretary with Datatec for 5 years, as well as Corporate Finance Manager. Ivan successfully managed the Group’s dual listing in London during 2006. Prior to joining Datatec, Ivan worked for PriceWaterhouseCoopers in London.

06 Luiz Fernando T. Rudge Non-Executive Director Luiz Rudge is Executive Director/CFO and a member of the Board of Directors of Promon SA. Following the acquisition by Logicalis of a majority stake in Promon Tecnologia in May 2008, Luiz then became non-executive director on the Logicalis Board.

He joined Promon SA in 1982 and served as Treasurer (1987/1991) and Finance Director from 1991 to 2001, when he was elected to his current position. He led several corporate fi nance deals on behalf of Promon, including M&A transactions as well as fi nancing arrangements to support Promon’s proprietary investments and its contracts with clients. Prior to joining Promon during 1986/1987 Luiz Rudge was engaged in foreign trade activities.

Luiz holds a BA degree in Business Administration from Fundação Getulio Vargas (FGV/São Paulo), completed the M.A. programme in Geography (Urban Development) of the University College/University of London and the Advanced Management Program of the Harvard Business School.

10 Logicalis Annual Review 2009

A STRATEGY FOR

Gaining strength, capability and market share within our key markets is our clear strategic focus.

TODA


AND

TOMORROWOur strategic business model is built around helping our customers use technology to embrace, support and drive their strategic business processes. We understand our customers’ businesses and it is this business know-how that enables us to create competitive advantages for our customers and us.

YStrategic principles

01 Innovative services 02 Technical excellence

Maximise growth in profi t and value

03 Business know-how

TodayLogicalis’ business strategy has always been clear: to provide its customers with business value and business transformation through innovative ICT.

Today, Logicalis is a business that is able to implement and support its customers’ entire ICT environment; both their front and back offi ce. We offer a complete portfolio of professional and managed services that enable our customers to optimise and extend the lifetime value of their ICT investments.

By building close working relationships with our strategic partners, we have become leading experts in achieving business transformation through ICT. By investing to attain the highest level of partner accreditations we have become masters of today’s technologies

and one of the fi rst to test and then prove emerging technologies. Logicalis is now recognised as a technology business partner that is able to drive business growth in both existing and new markets.

TomorrowOur strategic goal is to establish Logicalis as the ICT partner of choice for customers worldwide. As we pursue our goal, we shall continue to seek and adopt innovative technologies and services that will transform the organisations of today into the organisations of tomorrow.

Cloud Computing, Streaming Video and Next-Generation Services are just a few of the new concepts, solutions and services that Logicalis is working on today to enable its customers to work more effectively and profi tably tomorrow. The pace of change means tomorrow is not so far away; Logicalis is determined to be there fi rst.


One side of the brain delivers creative ingenuity. The other delivers practical capability. When both sides work together as one, they deliver the power to innovate.

Organisations now recognise that it is ICT that drives businesses forward. They recognise that innovative ICT solutions enable more fl exible, responsive and productive ways of working. And they lead to greater opportunity, competitive advantage and shareholder value.

USING THE

LEFT RAND


Innovation in ICT is not about enabling technology to do remarkable things. It’s about enabling your customer’s business to do remarkable things. Great ideas are no substitute for great achievements.

Logicalis recognises that innovation in ICT is about enabling its customers’ people, departments, partners, suppliers and customers to communicate effectively and collaborate more productively.

Experience proves that it’s people, not technology, that drive organisations forward. When you can get a diverse and complex group of people to work together as one, you are then able to get a complex set of technologies, systems and processes to work as one. Organisations who embrace this will derive the benefi ts.

The left hand has to know what the right hand is doingLogicalis is early to master and market emerging technologies within its fi elds of expertise. We identify the technologies that we believe will have most positive impact on our customers’ business transformation. We invest to attain the highest accreditations with our key vendor partners in order to gain a deep understanding and early experience of new technologies. This enables us to deliver tried, tested and proven solutions into our customers’ environment; reducing risk and time to market.

Collaborative workingWe create project teams that bring together technical experts and system architects across multiple vendor platforms and systems to design and deploy complex highly integrated solutions. Logicalis’ collaborative working environment enables easy access to in-house technical experts and sharing of customer references across its international operations.

Technology partnersOur focus on emerging and innovative technologies and our breadth of integration expertise encourages close cooperation with our key technology partners. Our close partner relationships mean we are often fi rst to market and to deploy new technologies, especially in the areas of Communications and Collaboration, and the Data Centre.

Our customersBy ensuring we always develop an intrinsic understanding of our customers’ business challenges and goals, Our approach to their ICT requirements will always focus upon how best to help our customers become smarter, leaner and faster.

SIDES OF THE BRAINIGHT

CiscoLogicalis has the highest level of accreditation and an excellent reputation with Cisco that delivers signifi cant technical and support benefi ts to customers; with specialisations in Communications & Collaboration, TelePresence, Data Centres, Wireless LANs, Network Security and Network Infrastructure.

HPLogicalis is one of HP’s highest accredited partners, capable of effectively supporting HP solutions to enterprise and mid-size organisations, from Blade Server Virtualisation through to large enterprise Data Centre total refresh projects.

IBMLogicalis is a Premier IBM Business Partner and recognised by IBM for our excellence in delivering a variety of technology solutions and services built

around IBM technology. Logicalis is also one of the only integrators to support all IBM hardware server platforms (Systems x,i,p,z), and their complete range of middleware software and services.

MicrosoftLogicalis is a Microsoft Gold Certifi ed Partner with certifi cations in Portals & Collaboration, Business Intelligence, Data Management, Unifi ed Communications, Infrastructure, and Hosting.

Our Strategic Technology Partners


MAKING THE

COMPL Our approachMore and more organisations are seeking innovative ways to manage the growing complexity of their IT environments.

The pressures of everyday business place an increasing range of demands on the organisation’s IT and communications infrastructure and services: customers demand a seamless and immediate experience across all channels; suppliers and stakeholders are adopting streamlined, internet-driven processes; and employees expect immediate access to applications and real-time data to work effectively. At the same time, organisations face the challenge of being able to bring new applications and services on-line without disrupting their existing business operations.

The constant pressure to deploy the latest technologies required to meet a growing set of diverse needs, has led organisations to create a proliferation of hybrid environments that are proving extremely diffi cult to manage, and increasingly ineffi cient.

Increasing competitive advantageLogicalis is a specialist in aligning IT with business goals. We help defi ne, develop and implement ICT strategies and technologies that enable our customers to stay ahead of the demand cycle and improve performance and competitive advantage.

Our focus is upon creating agile network and communications environments that can adapt quickly to respond to constant change. We give our customers the ability to roll out new applications that

deliver real business benefi ts in days not weeks, the capacity to meet rapidly changing customer demands, comply with government regulation, and respond to whatever challenges their competitors present.

Service mentalityOver 40% of Logicalis employees are consultants, technical architects, application developers and customer support personnel. All are part of an international service delivery team with the breadth of skills and experience needed to support our customers’ end-to-end ICT environments.

Organisations who are struggling both to retain the breadth of skills they require and to justify the associated cost of staffi ng, are choosing Logicalis as their Managed Service partner, to manage the growing complexity of their IT environments.

Managing complexityStaying ahead of the game with emerging and complex technologies, and determining how best to integrate with an organisation’s business processes and existing infrastructure, are challenges Logicalis overcomes every day.

Our experience and breadth of skills in supporting these complex environments, with best practice ITIL based methodologies, guarantees and delivers the highest levels of service quality and consistency that are available today.

Removing complexity for our customers is what we do best. It’s as simple as that.


The most successful businesses today are those that effectively manage complexity. As customers become more demanding, data more prolifi c and regulations more stringent, organisations are forced into deploying the most up-to-date technology to ensure they stay ahead of the game. At Logicalis, we understand our customers’ businesses and have the unique blend of commercial and business acumen coupled with technological excellence.It’s about technology and business working as one.

“ I can buy Cisco equipment anywhere. What I can’t get anywhere are people who understand how we want to run the Cisco equipment. That’s where Logicalis comes in. They can do it all; or they can do just as much as we want them to. That is important because it provides me a lot of fl exibility.”

Ken Plummer, Vice President of IT, Amec

“ We pride ourselves as a corporation on building lasting relationships. We’re always looking for people who know where we are going and understand what our goals are, and are confi dent enough to be able to tell us “have you considered this or that?’’ Logicalis is a great example of that kind of partner.”

Bill Demsky, Chief Architect, Valassis

EXSIMPLE


BUSINESS KNOW-HOW ACROSS

PUBLICLogicalis can help to transform organisations with an infrastructure that supports innovative, collaborative applications and improves business agility. We make it easier for our customers to share skills and knowledge, to make fast decisions and move swiftly to exploit change.

01 02

SECTORSPRIVATE

Providing consultation and services to both public and private sector organisations such as education, fi nancial services, health, local government, manufacturing, distribution, retail and media.

01 Education – University of Southampton (UK), Central Michigan University (US) and Universidade Federal do Rio Grande do Sul (Brazil), are examples of the many higher education institutions that have chosen Logicalis to provide the technology needed to meet the ever changing demands and expectations of their student body, faculty members and administrative staff.

02 Health – GE Healthcare (UK), Meoclinic (Germany) and Hospital de Pediatría S.A.M.I.C., (Argentina) are amongst a growing number of healthcare organisations that trust Logicalis to provide the ICT infrastructure that is now critical to the delivery of high quality patient information and care.

03 Banking – Logicalis provides ICT solutions and services to a number of retail and private banking institutions and hedge-fund organisations. One of the largest being Santander, for whom Logicalis provides ICT infrastructure support across Brazil, Argentina, Uruguay, Germany and the UK.

04 Manufacturing – Logicalis supports manufacturing organisations of all sizes within its local geographical markets. Goss International (US), ABB Energy & Automation Technics (Germany) and Pirelli (South America) are just a few of the manufacturing clients that Logicalis has helped create seamless supply-chains, increase productivity and reduce downtime.

03

04



INTERNATIONAL OPERATIONS

USA

Headquartered in Bloomfi eld Hills, Detroit, Logicalis US has more than 30 regional offi ces and around 550 employees supporting the full spectrum of ICT solutions.

The company’s background in enterprise computing and strong relationships with HP and IBM, places it in an ideal position to help its customers meet their Data Centre challenge. In recent years, Logicalis US has developed its customer base in Cisco Advanced Technology, boosting sales of Cisco based solutions to $70 million, to make them a partner of equal standing.

Today, around 30% of the company’s employees are engaged in services roles applying their specialist expertise in Applications Development, Business Consultancy and Managed Services.

AwardsCisco National Global Enterprise * Partner of the Year 2009Cisco Central Region * Commercial Partner of the Year 2009IBM Beacon Award for * Outstanding Virtualization and Consolidation Solution 2009

South America

Logicalis’ South American operation has its main offi ces in São Paulo (Brazil) and Buenos Aires (Argentina) and employs 580 staff. The company also has a local presence in Chile, Paraguay, Peru and Uruguay.

Its scale and revenue contribution for the Logicalis Group has been augmented through the acquisition of a majority stake in Promon Tecnologia, and the subsequent merger with its South American operations.

The company is now the largest independent integrator for Cisco throughout the region and a major supplier to the leading telecoms providers. A recent local partnership with IBM will now begin to create opportunities within the Data Centre market.

Headcount

employees

550Percentage contribution to Group revenue40%

Percentage contribution to Group revenue28%

AwardsCisco Emerging Markets Theatre * Partner of the Year 2009 – PromonLogicalis Latin America Cisco Enterprise Partner * of the Year for the APU Region (Argentina, Paraguay and Uruguay)Cisco Service Provider Partner * of the Year 2009 – Brazil (PromonLogicalis)

Headcount

580employees


AwardsCisco Unifi ed Communications * Partner of the Year 2009 – UK&ICisco Data Centre Partner * of the Year 2009 – UK&I

United Kingdom

Logicalis UK has its headquarters in Slough, with offi ces in London, Warrington, Wales and Scotland, and employs over 450 staff. The company has adopted a hybrid sales approach to delivering multi-vendor integrated solutions across IBM, Cisco, HP, Microsoft and other complementary technologies.

Logicalis UK has a rich heritage in delivering Professional and Managed Services. This area of the business now accounts for some 30% of the company’s sales with strong annuity revenues being generated from a growing Managed Service customer base. Logicalis UK’s Managed Service Centres based in Slough and London, and its Tier III Data Centre, provides 24x7 enterprise performance management, co-location and managed hosted solutions.

Germany

With its headquarters in Cologne, Logicalis Germany has a strong presence in both the North Rhein Westphalia (the largest economic area in Germany by GDP) and the Berlin markets. The company is important strategically to Logicalis for its ability to target new business opportunities within the Euro zone.

The German operation is comparatively small with around 50 employees. However, the recent acquisition of Minters, a Cisco Silver Partner, has created a stronger business that has an excellent reputation, within both Cisco and its customer base, for its technical capabilities.

The business now has growing annuity revenues and is perfectly positioned to provide IT and communication solutions to the German mid-market for both Communications and Collaboration and alsoData Centre solutions.

Headcount

employees

450Percentage contribution to Group revenue31%

Percentage contribution to Group revenue1%

Headcount

employees

50


OUR CORPORATE SOCIAL RESPONSIBILITY

Our People Logicalis aims to be an employer of choice; attracting, developing and retaining the best people. Our personnel practices ensure that every employee, wherever they work, whatever their role, is treated equally, fairly and respectfully at all times. Adherence to international health and safety standards ensures that our people are properly protected and cared for, wherever they operate.

We maintain consistent and transparent diversity policies across all our markets. We fi rmly believe that career opportunity, recognition and reward should be determined by a person’s capabilities and achievement, not their age, sex, race, religion or nationality. Wherever we operate, we strive to maintain a workforce that refl ects the skills, ethnicity and demographics of the local population.

We recognise that it is the ideas, skills and capabilities of our people that drives our development and growth. In return, we will invest in whatever training and resources our people need to ensure that they are able to develop and grow with us.

EnvironmentAs a responsible international provider of ICT solutions, we seek to measure and minimise the way in which any of our commercial activities may impact the environment. We are also committed to providing practical advice and support to our customers and suppliers to help them along the path to ever cleaner and greener ICT solutions.

As an early adopter of the Green ICT ideas and activities, Logicalis recognises that a responsible attitude to Green ICT can lead to signifi cant reductions in energy consumption and carbon emissions. As well as reducing greenhouse gases and operational costs, the technologies we promote, such as remote working and video and teleconferencing, enable more fl exible working, greater productivity and improved business continuity. Green ICT is good for the planet and it’s good for business.

01 Junior Achievement02 Creche Santa Tereza de Jesus03 A.D.A.N.D.04 Capuchin Soup Kitchen

01

Our policy is to actively and enthusiastically support the welfare of our people, the environment and local communities wherever we have a presence.


Community We encourage our operating companies in every territory to create initiatives that help improve the quality of life for their local communities. Here are just a few highlights:

VolunteerMatch is a US initiative supported by our Logicalis US operation, that saw our employees give over 1,000 hours of their personal time throughout FY09 to support a range of community charities. They also made donations to Big Brothers, Big Sisters of Metropolitan Detroit and donated holidays to 21 charities.

For the third year in succession, Logicalis UK made donations to the Berkshire Community Foundation which provides grants to local voluntary groups to support grassroots projects. These include young people with special needs, the disabled, the elderly and the homeless.

Logicalis South America made donations to local community charities including Fundacion Gospa, Asociacion Sordos Mudos, and A.D.A.N.D, an organisation that helps vulnerable children. Other initiatives include a recycling programme to support the Foundation of Garrahan Hospital for children.

In Brazil, PromonLogicalis supported Junior Achievement, an organisation that teaches children about work readiness and entrepreneurship; Creche Santa Tereza de Jesus, a nursery for socially vulnerable children; and Ação Comunitária do Brasil, an organisation that provides education, culture and citizenship programmes to advance social inclusion.

PromonLogicalis is also involved in ‘Programa de Preparação para o Trabalho’ which helps young people develop the attitudes and skills needed to improve employment prospects and social inclusion. Participants are welcomed into our local offi ces in Brazil, to receive advice and guidance from our staff on self-development, employability, writing CVs and preparing for interviews.

02

03

04


FINANCIAL OVERVIEW

Improved geographical mixThe acquisition of a majority stake in Promon Tecnologia, Brazil, in May 2008, has considerably helped balance the geographical mix of Logicalis’ regional operations. Profi ts are expected to be derived almost equally between the three regions; the US, South America and Europe (UK & Germany).

1 US 40%2 South America 28%3 UK 31%4 Germany 1%

Sales mix remained steadyThe revenue versus services split has remained fairly constant, with a slight increase in product sales due to a number of large Cisco project wins. A higher proportion of services business in the future is expected to contribute to the sales mix, with more favourable conditions and greatertraction for managed services.

1 Solutions 81%2 Professional Services 9%3 Maintenance & Managed Services 10%

$ 200m

Services business in consulting, design and integration, support, hosting and managed services

Cisco largest vendor partner following Brazil acquisitionThe signifi cant increase in the proportion of Cisco business is as a result of the acquisition with Promon Tecnologia. Logicalis is now the most signifi cant integration partner for Cisco in the South American market. Continued investment will be made in maintaining a balanced portfolio to also drive IBM and HP solution sales in South America, adopting the same model as the US and UK businesses.

1 IBM 27%2 Cisco 44%3 Others 12%4 HP 17%

Revenue % geographical split2009

1

2

3

4

Revenue segmental split2009

21

3

Revenue product vendor mix %2009

1

2

3

4


Solid improvement in US profi tability and strong Brazil acquisition contributionThe most encouraging trend in Logicalis’ recent performance has been the sustained improvement in profi tability. EBITDA profi ts and margins have grown steadily every year, touching almost 6% in FY2009. The biggest increase came from South America with the inclusion of the Promon Tecnologia acquisition in Brazil, refl ected in the revenues for much of the year, as well as strong organic growth in the US, and a signifi cant increase in Managed Services revenues in the UK.

Logicalis Revenue

FY05Revenue $340.9m

FY06Revenue $505.4m

FY07Revenue $696.2m

FY08Revenue $830.3m

FY09Revenue $1,007.4m

Logicalis EBITDA

FY05EBITDA $9.6m

FY06EBITDA $16.7m

FY07EBITDA $26.8m

FY08EBITDA $35.1m

FY09EBITDA $56.9m

NotesFigures from Logicalis Group Limited published Statutory Accounts.FY06 restated for Net Revenue accounting adjustment as published in FY07 Statutory Accounts.FY08 and FY09 excludes Intact Integrated Services Limited (transferred to Datatec on 28 February 2009).


FINANCIAL RESULTSIncome statement – unaudited 2009 2008 US$m US$m

Revenue 1,007.4 830.3 Cost of sales (785.7) (643.0)Gross profi t 221.7 187.3 Administrative expenses (164.8) (152.2)EBITDA 56.9 35.1 Depreciation of property, plant and equipment (5.3) (4.4)Amortisation of intangible fi xed assets (12.3) (5.6)Operating profi t 39.3 25.1 Net fi nance costs (5.7) (3.1)Datatec management fees (3.4) (3.1)Impairment of goodwill (20.9) –Revaluation of minority interest buy-out liability 13.7 –Profi t before tax 23.1 18.9 Tax on profi t on ordinary activities (14.6) (5.2)Profi t for the year for continuing operations 8.5 13.8 Profi t from discontinued operations 10.3 1.1 Profi t for the year 18.8 14.8

Balance sheet – unaudited 2009 2008 US$m US$m

Goodwill and other intangible assets 139.6 120.3 Property, plant and equipment 13.6 14.5 Deferred tax asset 11.9 11.6 Total non-current assets 165.1 146.4 Inventories 20.0 28.0 Trade and other receivables 202.4 172.7 Cash and cash equivalents 40.9 45.1 Total current assets 263.3 245.7 Total assets 428.4 392.2 Trade and other payables (213.8) (222.1)Bank overdrafts and loans 0.0 (0.8)Deferred consideration on acquisition of subsidiaries (11.4) (0.7)Total current liabilities (225.2) (223.6)Net current assets 38.2 22.2 Amounts owed to holding company and fellow subsidiaries (31.3) (3.1)Obligations under fi nance leases (7.7) (0.1)Liability for minority interest buy-out (22.2) 0.0 Deferred consideration on acquisition of subsidiaries (11.5) (1.3)Deferred tax liabilities (10.7) (10.2)Other long term liabilities (1.1) (5.7)Total non-current liabilities (84.5) (20.4)Total liabilities (309.7) (244.0)Net assets 118.7 148.2 Share capital and share premium 130.2 130.2 Minority interest buy-out reserve (22.2) 0.0 Foreign currency exchange and other non-distributable reserves (49.0) (17.2)Retained earnings 39.5 35.1 Attributable to equity holders of the parent 98.5 148.1 Minority interest 20.2 0.1 Total equity 118.7 148.2

www.logicalis.com

OUR SUBSIDIARIES Proportion of ordinary shares heldSubsidiary Country of registration and operation Activity 2009 2008

Logicalis Group Services Limited England and Wales Group management services 100% 100% Logicalis UK Limited England and Wales Professional services and IT solution provider 100% 100%Satelcom Limited England and Wales Dormant 100% 100%Logical Group Limited England and Wales Intermediate holding company (dormant) 100% 100%PromonLogicalis Latin America Limited England and Wales Intermediate holding company 70% 100%(formerly Logicalis South America Limited) Logicalis Computing Solutions Limited England and Wales Dormant 100% 100%Logicalis Computing Solutions Finance Limited* England and Wales Dormant 100% 100%Hawke Systems Limited England and Wales Dormant 100% 100%TBC Group Limited England and Wales Intermediate holding company (dormant) 100% 100%TBC Limited* England and Wales Dormant 100% 100%Logicalis Limited England and Wales Dormant 100% 100%Logicalis Ireland Limited Ireland Professional services and IT solution provider 100% 100%Logicalis Deutschland GmbH Germany Intermediate holding company 100% 100%Logicalis Networks GmbH* Germany Professional services and IT network integration 100% 100%Logicalis US Holdings, Inc. USA Intermediate holding company 100% 100%Logicalis, Inc.* USA Professional services and IT solution provider 100% 100%ActiveSymbols, Inc. USA Professional services and IT solution provider 100% 100%Logicalis South America Inc* USA Professional services and IT solution provider 70% 0%PLLAL International LLC* USA Professional services and IT solution provider 70% 0%PromonLogicalis Tecnologia e Participações Ltda* Brazil Professional services and IT solution provider 70% 0%PTLS Comércio, Exportação e Importação Brazil Professional services and IT solution provider 70% 0%de Equipamentos de Telecomunicação Ltda* Logicalis Brasil Importação Exportação Ltda* Brazil Professional services and IT network integration 70% 100%Logicalis Argentina S.A.* Argentina Professional services and IT network integration 70% 100%X-Net Cuyo S.A.* Argentina Electronic commerce enablement services 70% 100%Logical Uruguay S.A.* Uruguay Professional services and IT network integration 70% 100%Logicalis Inc S.A.* Uruguay Professional services and IT network integration 70% 100%Logicalis Paraguay S.A.* Paraguay Professional services and IT network integration 70% 100%Logicalis Chile S.A.* Chile Professional services and IT network integration 70% 100%Logicalis Andina S.A.C.* Peru Professional services and IT network integration 70% 100%

All subsidiaries are owned directly by Logicalis Group Limited, except those marked * which are held indirectly via an intermediate subsidiary. All subsidiaries listed above have been included in the consolidation. The proportion of voting rights of subsidiaries held by the Group is the same as the proportion of shares held.

Logicalis Group110 Buckingham AvenueSloughBerkshireSL1 4PF

Tel: +44 (0)1753 777 200

www.logicalis.com

This brochure has been printed in the UK, our printers are Environmental Management System ISO 14001 accredited and Forest Stewardship Council (FSC) chain of custody certifi ed. All inks are vegetable based.

Designed and produced by The College www.thecollege.uk.com

logicalis annual review 2009

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