Logicalis Annual Review 2010

KNOW

KNOW

KNOW

hOWWhENWhErE

Annual Review 2010

Knowledge is the key component of commercial advantage in today’s competitive business environments.As complex technologies converge, companies seek long-term relationships with trusted IT advisors.We don’t just know how to solve IT problems; we know when our solutions will deliver the maximum impact and, through our growing international presence, we can meet our customers’ needs wherever in the world they may be.We work closely with our customers to understand their business drivers and turn ideas for performance improvements into real-life deployments of the latest technologies.It’s about business and technology working as one.

Contents 01 Financial highlights 02 Our growing global presence 04 Chairman’s statement 06 CEO’s review 08 Know how 10 Know when 12 Know where 14 Public and private sectors 16 International operations 18 Our corporate social responsibility 20 Financial overview 22 Board of Directors 24 Financial results 25 Our subsidiaries

01www.logicalis.com

FINA NCI A L

hIGhLIGhTSSales

Net cash

EBITDA

Annuity revenues

841$

$76.4 million $117.5 million

$42 million

5

upup

of salesmillion

% %

%

87 17

02 Logicalis Annual review 2010

OUr GrOW ING

GLOBAL PrESENCE

Communications and Collaboration Logicalis is a recognised leader in the design, implementation and support of highly integrated Communications and Collaboration solutions, with best-in-class products from Cisco, IBM, Microsoft, Tandberg (now part of Cisco) and other leading vendors.

Voice and IP Telephony* Network Infrastructure * 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 peak efficiency, minimal cost and maximum effectiveness, and provides the environmental benefits required today.

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

Professional and Managed ServicesLogicalis’ experienced and certified specialists deliver a portfolio of full life-cycle services, backed by comprehensive Managed Services expertise. These encompass the voice and data infrastructure (fixed and mobile), data centre, and applications found in today’s enterprise ICT environments.

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

Our business – a superior breadth of knowledge and expertise in integrated solutions and services working with the world’s leading ICT vendors

Global presenceLogicalis is a global ICT integrator with nearly 2,000 employees across four regions; Europe, North America, South America and Asia Pacific, supporting over 5,000 corporate and public sector customers.

03www.logicalis.com

Our partnersOur strategic technology partners:

Our offices

Europe

UKSlough (HQ)London WarringtonLivingstonCardiff

GermanyBerlinCologne

North America

Scottsdale (Arizona)Irvine, San Diego (California)Shelton (Connecticut)Atlanta (Georgia)Lisle (Illinois)Indianapolis (Indiana)Waltham (Massachusetts)Farmington Hills, Commerce Twp. (Michigan)Minneapolis (Minnesota)St Louis (Missouri)Bridgewater (New Jersey) New York (NY)Charlotte (N Carolina)Cincinnati, Dublin (Ohio)Houston, Plano, San Antonio (Texas)Bellevue (Washington)Green Bay, Brookfield (Wisconsin)

CiscoLogicalis provides support for all aspects of the network life cycle and is a specialist in key areas such as Unified Communications, Data Centres, Wireless LANs, Network Security and Network Infrastructure. Logicalis received 8 Cisco Partner awards in 2010, including Global Partner of the Year for Technical Excellence.

HP Logicalis is one of HP’s highest accredited partners, supporting HP solutions from Blade Server Virtualisation through to large enterprise Data Centre total refresh projects. In 2010, Logicalis was awarded HP’s Data Centre Specialist of the Year for UK and Ireland.

IBMLogicalis is a Premier IBM Business Partner and also one of the only integrators to support all IBM hardware server platforms and their complete range of middleware software and services. In 2010, Logicalis was awarded IBM’s Beacon Award for the Outstanding Power Systems Solution for Major Markets (USA).

Microsoft Logicalis is a Microsoft Gold Certified Partner with certifications in Portals and Collaboration, Business Intelligence, Data Management, Unified Communications, Infrastructure and Hosting.

South America

BrazilBelo HorizonteBrasíliaManausRio de JaneiroSão Paulo

ArgentinaBuenos AiresCórdobaRosário

ChileSantiago

ParaguayAsunción

PeruLima

UruguayMontevideo

Asia Pacific

AustraliaSydneyMelbourneBrisbane

MalaysiaCyberjayaKuala Lumpur

Hong KongHong Kong

ChinaXiamenShanghaiSuzhou

SingaporeSingapore

TaiwanTaipeiKaohsiungHsinchuTaichung

New territoryIn January 2010, Logicalis increased its global footprint after acquiring NetStar, a leading IP network infrastructure services provider in Asia Pacific. Now fully integrated into the Logicalis Group, and rebranded as NetstarLogicalis, the regional operation’s network of offices spans Australia, China, Hong Kong, Malaysia, Singapore and Taiwan.


Jens Montanana, Logicalis Chairman and Chief Executive of Datatec, commented:Logicalis delivered a sound financial and operational performance in its 2010 fiscal year, ending 28 February 2010. Strong operational cash generation and steady margins were the defining features of the company’s robust response to tough trading conditions.

As we have stated previously, the longer-term and contractual nature of its customer relationships means that Logicalis’ experience of recovery tends to lag behind improvements in the overall economy by several months. However, we are confident that this recovery is now underway in many parts of the world where we operate, despite the United Kingdom expecting to remain under pressure as reductions in public spending and the weaker pound weigh on overall sentiment.

I’m pleased to report that the second half of the year was both sequentially better than the first half, and comparatively better than the second half of the 2009 financial year.

In markets worst hit by the economic slowdown, our UK operations still managed to post a very strong year end, and staff in our US operations have rallied hard to put that market’s inflection point firmly behind them as activity picks up.

Trading in South America, meanwhile, remained strong throughout the year, in line with the Group’s expectations, while Logicalis gained an Asia Pacific presence in January 2010, with the acquisition of NetStar Group Holding Ltd (‘NetStar’).

Revenue was $840.6 million, including a $19 million contribution from two acquisitions, Minters and NetStar, compared to $1,007.4 million in 2009. We saw demand for technology products contract, and Logicalis’ main vendor partners, Cisco, HP and IBM, experienced double-digit declines in product revenues. In addition, telecommunication operators and services providers in South America, an important customer segment for Logicalis in this region, cut capital expenditure significantly.

Ch A Ir m A N’S

STATEmENT

Jens Montanana Chairman, Logicalis

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We are encouraged by the fact that revenues from services remained resilient and saw no significant year-on-year decline from 2009 levels, while annuity revenues rose by 17%.

Overall, effective cost management and increasing activity towards the end of the year, combined with well-maintained services margins and an improved services mix, helped Logicalis mitigate against the potential impact of recessionary conditions.

Despite depressed demand for technology products and spending cutbacks in many of the industries in which we operate, Logicalis emerges from this difficult period as a stable company in an excellent cash position.

Logicalis emerges from this difficult period as a stable company in an excellent cash position.


The economic downturnIt’s been a tough couple of years for companies worldwide. Like others, Logicalis experienced a severe slow-down in business in the last quarter of 2008 across all of its markets, especially in Europe and the USA.

Our response, I’m pleased to say, was swift and effective. By analysing our cost base and cutting in areas where action could be taken, we were able to counteract the slowdown and protect profitability.

At the same time, we have remained mindful of the need to prepare for economic recovery. Past experience shows that recessions tend to mark an inflection point; the business environment that follows a recovery is often markedly different from the pre-downturn environment.

For that reason, the Group has stayed closely committed to customer needs and market trends during the turbulence of the past year. We have accelerated organisational change and made significant investments in the technologies and systems needed to drive further efficiencies and to position ourselves in areas of emerging demand, such as cloud computing and data centre services.

Our three-fold focus on efficiency gains, investment in systems and market-driven opportunities will ensure that Logicalis emerges from the global downturn in a strong position.

Our marketsLogicalis is rolling out a managed services portfolio across all our markets. In every country that we operate in, management’s goal is to reposition the company from a reseller of ICT equipment to a broad-based ICT partner, offering a range of innovative services geared to customer requirements.

While the provision of vendor-based infrastructure systems remains at the heart of our business, we know that managed and professional services are the key to fostering deeper, more strategic relationships with our customers.

One trend that we have seen in all markets is that buying decisions are no longer made solely by IT department personnel, but also by functional and business-unit managers.

At the same time, the boundaries that have historically separated communications, computing platforms and applications are increasingly blurring, leading to more complexity in decision-making.

These issues are driving a need for Logicalis to engage with its customers on a business level, understanding the issues that they face and designing, implementing and managing the solutions to overcome them.

Our approach of focusing on communications and collaboration, data centre and managed services has been key to our customer engagement strategy. Operating at all levels – up to and including Board level – we can offer business-led, technical solutions and services that move us from a position of ICT infrastructure provider to strategic ICT partner.

All our markets are aligned with this model and a measure of our success is the 17% increase in annuity service revenues in the past year.

Setting the scene

ChIEF EXECUTIVE OFFICEr’S

rEVIEW

Ian Cook Chief Executive Officer, Logicalis

07www.logicalis.com

Building a strong businessBuilding a strong, profitable company, with growth in excess of the prevailing market rates and with world-class customer satisfaction ratings, remains our goal in the year ahead.

We know that every Logicalis customer is different. We serve organisations of varying sizes across a range of geographies and industry sectors, including enterprise organisations, mid-market commercial clients, telecom service providers and public sector bodies. But our approach to doing business with every customer is the same: listening closely, so that we understand their individual issues and concerns.

It’s only then that we will put our technical architects and service personnel to work on the solution; we continue to invest heavily in our people and their training – in order to tackle customers’ challenges with the very best in innovative and best-practice thinking.

When it comes to working with vendors, engagement is equally key. Local management across all our markets are encouraged to forge relationships with their vendor-based counterparts at all levels, enabling us to take the most innovative joint propositions to market.

As we look ahead, our healthy balance sheet and strong cash position will enable the Logicalis Group to continue to invest in systems and people, which will position the business for long-term growth.

Our expansion plans remain ambitious. South America and Asia Pacific are areas of opportunity for acquisitive growth in regions of the world where rising IT investment will deliver the greatest opportunities. In our established markets, we will continue to enhance our service offerings by investing in people and systems, as well as exploring acquisitions that will boost our managed services portfolio.

While early signs of economic recovery in all our markets are encouraging, we must remain vigilant. That means identifying new opportunities, finding new efficiencies within our business and aligning ourselves with those market segments that show the greatest growth potential. We will continue to focus on increasing the service proportion of our revenue to ensure that our margins are stable and sustainable going forward.

2010 achievements Our January 2010 acquisition

of the NetStar business in Asia Pacific, which has brought the Logicalis name and branding to operations in Australia, Singapore, Taiwan, Hong Kong, China and Malaysia.

Prestigious partner awards from Cisco, HP and IBM, in recognition of our significant contribution in a range of core technology disciplines over the past year.

Significant investment in TelePresence suites in London, São Paulo, Buenos Aires and Michigan, which are enabling Logicalis teams worldwide to share key expertise and knowledge for the benefit of customers.

The opening of a new, next-generation, high-density data centre in Slough, UK, which will provide Logicalis customers with the very latest in made-to-measure hosted, managed and cloud computing services.


K N O WhOW

At a time when it’s never been more important for organisations to embrace efficiency and stay ahead of the competition, a key organisational challenge for many is choosing a partner they can trust for advice on which technologies, vendors and deployment methods will best support their ICT requirements, both now and for the long term.

By focusing on its key business areas, Logicalis can offer a wealth of real-world experience in Communications and Collaboration; the Data Centre; and Professional and Managed Services.

We have proven ways to transform organisations with the latest advanced technologies and new deployment methods, from cloud computing to collaborative working. Our key partners have honoured us with numerous awards, in recognition of our ability to deliver innovation to the market and help customers achieve higher value and better business outcomes.

It’s our deep engagement with our customers that helps us build an ever-stronger understanding of what is needed to help them achieve true business value and true business transformation. Our goal is to help them understand what’s possible today, so that they make the best business and technology decisions, now and in the future.

www.logicalis.com

Data Centres and Cloud Computing

With its promises of elastic scalability, increased efficiency and reduced operational expenditure, it’s no wonder that businesses are rushing to the cloud. It’s where the corporate data centre meets a whole new world of high-availability, pay-on-demand services.

But in order to reap the benefits of private, community and ‘co-operative hybrid’ cloud infrastructures, many organisations will require expert advice and support. At Logicalis, our proven track record in advanced data centre virtualisation and managed services is helping our clients turn cloud hype into cloud reality.

Highlights:* Logicalis holds Cisco’s Unified Computing

System (UCS) certification across all its regions to design, integrate and support data centre infrastructures for its clients.

* We have invested in new Data Centres offering Enterprise Cooperative Cloud Services in the UK and US.

09

Logicalis Annual review 2010a

Communications and Collaboration

In a world where delayed decision-making robs a company of time, money and competitive edge, staying in touch has never been more important. Our applications of innovative and collaborative working techniques span fixed and mobile telephony, contact centres, messaging and the latest rich-media conferencing systems, enabling them to work together seamlessly in even the most complex multi-vendor environments.

Logicalis has achieved Cisco’s Master Accreditation for Unified Communications for Europe, North and South America, as well as Authorised Technology Partner (ATP) in Cisco TelePresence.

Professional and Managed Services

Sometimes, being free to focus on what makes your business unique means knowing when to let go of non-core operations. Logicalis has over 20 years of experience in monitoring and managing IT systems on our clients’ behalf, according to the latest Information Technology Infrastructure Library (ITIL) best practice.

Logicalis offers a range of Professional Services from Project Services, Consultancy and Applications Services as well as an extensive portfolio of managed services via its 24/7 Managed Services Operation Centres, located in the USA, UK, Argentina, Brazil and Malaysia.

HOW can your organisation

deploy the right technologies to deliver maximum value and

transformation? LOGICALIS KNOWS.

K N O W

Our ApproachIt’s all in the timing.

As the economic recovery gathers pace, companies are once again looking to resume their investments in enterprise IT. But smart companies are interested only in those technologies that will deliver maximum competitive advantage and generate the fastest return on investment (ROI). At Logicalis, we make it our business to know which technologies will get your business where it wants to go, in the fastest timescale possible.

CollaborationWhen Logicalis develops a technology roadmap and strategy for your business, you can be sure that it will be based on input from key stakeholders from across the organisation: sales and marketing, finance, human resources, manufacturing and distribution. It’s only by understanding their current challenges that we can help your business create future opportunities.

Increasing Competitive AdvantageAs companies continue to accelerate out of the downturn, it’s never been more important to be the first to identify and address every opportunity that presents itself. At Logicalis, we aim to help you cross the finishing line before your competitors do.


WhEN

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Welsh Assembly Government

In 2007, the Welsh Assembly Government, Wales being one of the four countries that makes up the United Kingdom, appointed Logicalis as their strategic partner to design, build and manage a unique communications service that will ultimately connect up to 10,000 public sector sites within Wales.

Initially connecting over 1,000 sites within healthcare, local government, and higher education, the network is growing rapidly, and new organisations, including blue light emergency services, are now using this world-leading public sector communications service to lower the total cost of government communications in Wales and enable the country to move into a new era of shared public services.

Built on Cisco Borderless Networks platforms and managed by solutions from CA Technologies, the seven-year Public Sector Broadband Aggregation (PSBA) contract is a flagship government project for Logicalis.

Working closely with the Welsh Assembly Government, Logicalis is proud to be a partner in creating public sector service innovation in Wales.

Valassis

Michigan-based Valassis is a leading global organisation offering media and marketing services to more than 15,000 advertisers.

Through a series of mergers and acquisitions and changing business requirements, the proliferation of data centres at Valassis was creating problems: spiralling costs, inefficiencies and the risks of a disparate IT configuration. Valassis needed an expert partner to help evaluate requirements, options and technology and one that could understand future business requirements.

After a thorough evaluation of Valassis’ existing IT infrastructure, Logicalis was able to develop a deep understanding of present and future requirements in order to apply its innovative thinking to developing the right environment.

Logicalis has consolidated Valassis’ data centre into a re-engineered and redesigned dynamic environment. This critical and complex operation set Valassis up to improve efficiencies, cope with future requirements and realise annualised cost savings of around $4.5 million in 2008.

WHEN is the timing right

for your organisation to invest in new systems that will generate the

fastest returns? LOGICALIS KNOWS.

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K N O W

Focusing on new marketsAs globalisation continues to advance, businesses of all sizes increasingly find themselves working across regional, national and international networks of colleagues, customers, suppliers and partners.

That’s true for Logicalis and it’s almost certainly true for your organisation, too. In the past few years, we have significantly expanded our geographic footprint, most recently with acquisitions in Germany (Minters) and Asia Pacific (NetStar).

At Logicalis, we believe that increased globalisation calls for increased collaboration, so that employees and business partners

can work closely together in virtual teams, sharing their knowledge and expertise, across geographies and time zones. It’s all about an organisation ‘working as one’ – regardless of the physical location of individual team members.

From the companies we speak to, we know that many other organisations share our goal. Using technology to achieve improved collaboration, efficiency and productivity is a major priority for many, as is lowering the operational costs and environmental impact associated with business travel. Today’s technology is helping us – and them – to achieve these targets.

WhErE

13 Logicalis Annual review 2010www.logicalis.com

NetStar acquisition

With the December 2009 announcement that Logicalis was to buy NetStar, the leading IP network services provider in Asia Pacific, we embarked on an exciting journey to open up new market opportunities in some of the world’s fastest growing economies.

With three main units in Australia, Singapore and Taiwan and further operations in Malaysia, Hong Kong and China, NetStar boasted an impressive roll call of over 800 customers across Asia Pacific, including some of the largest IP networks in Australia.

The skills of NetStar’s 300 staff were a major attraction, too, with strong Cisco network integration and data centre skills and major infrastructure-as-a-service (IaaS) clients including SingTel. We have been delighted to welcome this talented workforce into the wider Logicalis Group.

13

TelePresence: an immersive experience

For participants in a TelePresence session, it’s surprisingly easy to forget that they’re not in the same room – or even the same country – as the people they’re ‘meeting’. Life-sized images of other attendees, full eye contact and spatial sound are just some of the ways that the illusion is created. It’s turbo-charged videoconferencing that brings virtual meetings to life.

Our TelePresence methodology is designed to bring customers all the benefits of the immersive, face-to-face meeting experience that this technology offers – and we’re using it internally, too, with TelePresence suites in four cities worldwide: London, São Paulo, Buenos Aires and Farmington Hills, Michigan.

WHERE can technology help to bridge the geographic distances that stand

between your organisation’s employees, its partners

and its suppliers? LOGICALIS

KNOWS WHERE.

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BUSINESS K NOW-hOW ACrOSS

SECTOrS

PUBLIC &Pr I VAT E

Logicalis can help 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.

We provide consultation and services to both public and private sector organisations such as education, financial services, health, local government, manufacturing, distribution, retail and media.

15 Logicalis Annual review 2010 15www.logicalis.com

Education – Higher education institutions worldwide rely on Logicalis to provide the innovative technology needed by students, faculty and support staff to achieve excellence in learning and research. These include Nottingham Trent University (UK), Swinburne University (Australia) and the Universidad Argentina de la Empresa (Argentina).

Financial Services – Logicalis provides ICT solutions and services to some of the world’s most respected retail and private banking institutions and hedge funds. Santander relies on Logicalis for the provision of infrastructure support across its operations in Brazil, Argentina, Chile, Uruguay, Germany and the UK. In Asia Pacific, Logicalis works with Taishin Bank and SKL in Taiwan.

Government – Logicalis provides local and central government organisations around the world with the secure, compliant infrastructure solutions they need to deliver a wide range of innovative, efficient services to citizens.

Manufacturing – Logicalis has helped streamline supply chains, increase productivity and eliminate downtime for manufacturing organisations of all sizes and in many different areas of the world, including Mercury Marine (USA), ABB (Australia, China and Germany) and Ambev (South America).

Health – GE Healthcare (UK), University Hospital Bonn (Germany) and Hospital de Pediatría S.A.M.I.C. (Argentina) are among 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 optimal medical outcomes.


INTEr NATIONA L

OPErATIONS

Headcount

employees

500

AwardsIBM’s 2010 Beacon Award * for the Outstanding Power Systems Solution for Major Markets category

North AmericaHeadquartered in Farmington Hills, Michigan, Logicalis US has more than 20 regional offices and around 500 employees supporting the full spectrum of ICT solutions.

The company has a broad portfolio of communications and enterprise computing solutions through its equal standing partnerships with Cisco, HP and IBM. Its recent focus has been on augmenting its services business and, in particular, its Enterprise Cloud Computing services offering.

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


Headcount

employees

550

AwardsCisco Global Technology * Excellence Partner of the Year (Emerging Markets)Cisco Technology * Enterprise Partner of the Year – Virtualisation (LATAM – Emerging West)Cisco Enterprise Partner * of the Year (LATAM – Emerging West)Cisco Technology * Excellence Partner of the Year – Virtualisation (Brazil – Emerging West)Cisco Service Provider * Partner of the Year – (Brazil – Emerging West)Cisco Enterprise Partner * of the Year (Emerging West – Southern Cone)

South AmericaLogicalis’ South American operation has its main offices in São Paulo (Brazil) and Buenos Aires (Argentina) and employs 550 staff. The company also has a local presence in Chile, Paraguay, Peru and Uruguay.

The company is now the largest independent integrator for Cisco throughout the region and a major supplier to the leading telecoms providers. Special acknowledgement goes to Logicalis in South America for winning six Cisco Partner awards this year, including Global Technology Excellence Partner of the Year, in recognition of its significant expertise in the delivery of Cisco solutions and services.

Logicalis South America will continue to leverage its recognised expertise in data centre solutions and is developing its managed services capability across the region.

Percentage contribution to Group revenue40%




17www.logicalis.com 17www.logicalis.com

Headcount

employees

480

AwardsCisco European Data * Centre and Virtualisation Partner of the YearCisco Data Centre and * Virtualisation Partner of the Year – (UK&I)HP Data Centre Specialist * of the Year (UK&I)

EuropeLogicalis has its headquarters in Slough, UK with local offices in the UK and Germany employing 480 staff. The UK operation, with offices in Slough, London, Warrington, Cardiff and Livingston, has adopted a hybrid sales approach to delivering multi-vendor integrated solutions across IBM, Cisco, HP, Microsoft and other complementary technologies, and has a rich services offering with major investment in its Managed Services and Data Centre facilities.

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 very important strategically to Logicalis for its ability to target new business opportunities within the Euro zone.

Asia PacificIn January 2010, Logicalis acquired NetStar, a leading IP network services provider in Asia Pacific with capabilities and expertise across data, voice and security infrastructure. Now fully integrated into the Logicalis Group, and rebranded as NetstarLogicalis, the company has three main units centred in Australia, Singapore and Taiwan, with further operations in Malaysia, Hong Kong and China.

NetStar’s network of offices across the Asia Pacific region, combined with its primary Network Operations Centre in Malaysia, has the facilities to support the needs of multinational corporations, and currently services over 800 customers across the Asia Pacific region, including some of the largest IP networks in Australia.

This will be a key focus region for Logicalis to invest and increase its activities.

Headcount

employees

300Percentage contribution to Group revenue36%

Percentage contribution to Group revenue1% (represents six weeks trading only –16 January 2010 – 28 February 2010)


Percentage contribution to Group revenue1% (represents six weeks’ trading only –� 16 Jan 2010 to 28 Feb 2010)


OUr

COrPOrATESOCIALr ESPONSIBILIT y

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.

Logicalis maintains consistent and transparent diversity policies across all our markets. We firmly 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, Logicalis strives to maintain a workforce that reflects the skills, ethnicity and demographics of the local population.

Logicalis recognises that it is the ideas, skills and capabilities of our people that drives our development and growth. In return, Logicalis 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, Logicalis seeks 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 Green ICT ideas and activities, Logicalis recognises that a responsible attitude to Green ICT can lead to significant 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 flexible working, greater productivity and improved business continuity. Green ICT is good for the planet and it’s good for business.

Community Logicalis encourages 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:

During the 2009 holiday season, Logicalis US donated $25,000 to 32 charities in communities where its employees work and live. Their support of these local charities made a big difference. They also continued to make donations to Big Brothers, Big Sisters of Metropolitan Detroit.

In addition, Logicalis US has a ‘Give Back to the Community’ programme through which each employee is allowed to take off eight hours of work time each year to support charities of their choice. Logicalis US utilises VolunteerMatch to track employee volunteer hours (in excess of 4,000 since April 2008), celebrate individual and group volunteer efforts, and provide access to thousands of volunteer opportunities in local communities.

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

01

01 Arizona Animal Welfare 02 Gleaners Food Bank 03 Asylo João Evangelista 04 CCA Santa Teresa de Jesus 05 Pump Aid

02

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For the fourth 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 UK also changed its drinking water supplier and, in doing so, is now sponsoring Pump Aid, a charity that provides access to clean drinking water and safe, adequate sanitation to those in need in Zimbabwe, Malawi and Liberia.

Logicalis Southern Cone in South America participates in a recycling programme to support the Foundation of Garrahan Hospital in Argentina, focused on complex treatments for children. The programme consists of office collections of disposable paper and plastic caps, to be donated to the Foundation for recycling.

Another ecological initiative was the participation in the ‘A todo pulmón’ campaign in Paraguay. Logicalis employees committed to planting a tree to support the environment.

They also contributed to local community organisations which help children, such as A.D.A.N.D. and San Jose Providente; and made a donation to EGB Nº98 School, which needed technological equipment to develop a project for the improvement of writing and reading skills.

In Brazil, PromonLogicalis continues to support Junior Achievement, an organisation that teaches children about work readiness and entrepreneurship. A new programme was also established last year – the PromonLogicalis Volunteer Programme, providing education, work readiness, and social movements to children in the communities of São Paulo and Rio de Janeiro, supported through the following charities: Ação Comunitária, Asylo João Evangelista, CAMP Vila Isabel, CCA Santa Teresa de Jesus, Gotas de Flor com Amor and Lar Escola Recanto Cristão.

Another of these charities associated with the programme is Ser Cidadão, which provides vocational education for adolescents and young adults from poor communities. Formally set up four years ago, the association has a 20-year history grounded in the activities developed by the Educação de Trabalho (Education for Work) programme.

03

04

05


FINA NCI A L

OVErVIEW

23%Services business providing consulting, design and integration, support, hosting and managed services.

Expansion of geographic footprintThe acquisition of NetStar in the Asia Pacific region in January 2010, centred in Australia, Singapore and Taiwan, with operations also in Malaysia, Hong Kong and China, establishes an Asia Pacific footprint for Logicalis and provides the capabilities to support the needs of multinational customers in the region.

Revenue percentage geographical split2009

1

2

34

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

Revenue percentage geographical split2010

1

2

3

45

1 North America 40%2 South America 23%3 UK 34%4 Germany 2%5 Asia Pacific 1% (acquired January 2010)

Increased services Logicalis increased its annuity business in the 2010 financial year by 17%. Maintenance, Professional and Managed Services now equate to 23% of revenues, and continued growth is expected in the annuity-based managed services portfolio with the launch of our cloud services solutions.

Revenue segmental split2009

2

1

3

1 Product 81%2 Professional Services 9%3 Maintenance and Managed Services 10%

Revenue segmental split2010

2

1

3

1 Product 77%2 Professional Services 9%3 Maintenance and Managed Services 14%

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Balanced vendor partner mixWith the 2009 financial year boosted by an extraordinarily large Cisco project for a telecommunications company, the 2010 financial year performance provided a more balanced split of vendor sales across the Group.

Revenue product vendor mix percentage 2009

1

2

3

4

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

Revenue product vendor mix percentage 2010

1

23

4

1 IBM 31%2 Cisco 40%3 Others 11%4 HP 18%

Gross margins remained steady at 22%Despite product margins being under pressure, particularly in the USA for both HP and IBM products, the improved services mix kept the overall margin similar to last year.

Gross margin percentage

UK Germany North America South America Total Asia Pacific

20.418.3 18.6

28.1

24.421.3 20.6

28.7

35.1

22.1 22.2

2009 2010


BOA r D OF

DIrECTOrS

Jens Montanana ChairmanJens is the founder and chief architect behind Datatec, which he established in 1986, and also Chairman of Logicalis since March 2007. Between 1989 and 1993, Jens served as Managing Director and Vice-President of US Robotics (UK), 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 Officer (CEO) of Datatec which listed on the Johannesburg Stock Exchange in November 1994 and on the Alternative Investment Market of the London Stock Exchange in 2006. Jens is Non-Executive Director of Versatile Systems, Inc. a Toronto and London listed Canadian company.

Ian CookChief Executive OfficerIan 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 international operations as Chief Operating Officer (COO).

Prior to Damovo in 1990, Ian led the Board of Cablestream which became Siemens Network Systems Ltd (now Affiniti), 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 and Marketing Director at Case Communications Ltd, a manufacturer of data communications equipment with operations in the UK, USA and Asia Pacific.

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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 of Datatec for five 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.

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 (1991–2001), when he was elected to his current position. He led several corporate finance deals on behalf of Promon, including M&A transactions as well as financing arrangements to support Promon’s proprietary investments and its contracts with clients. Prior to joining Promon and in 1986/1987, Luiz was engaged in foreign trade activities.

Luiz holds a BA degree in Business Administration from Fundação Getulio Vargas (FGV/São Paulo), he also 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.

Mark RogersChief Operating OfficerMark Rogers joined Logicalis in 2003 as Finance Director for Logicalis UK, and in 2004 he became Chief Financial Officer (CFO), European Operations. Since March 2007, he has taken on the role of COO 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, and Positioning Services. While at Thales he was also Chairman of Citylink Telecommunications, a joint venture company which had secured a £1.2 billion, 20-year Private Finance Initiative contract with London Underground. Also, he has significant mergers and acquisitions (M&A) experience, including the sale of Racal Telecom to Global Crossing for £1 billion as well as experience in the acquisition and integration of smaller businesses.

He started his finance career with Revlon where he qualified as a Chartered Management Accountant.

Nigel Drakeford-LewisChief Financial Officer 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 Logicalis Group and help redefine its strategic direction. Since April 2001, Nigel has been CFO of the Group with responsibility for the financial management and control of the operations across 15 countries.

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


Income statement – unaudited 2010 2009 US$m US$m

Revenue 840.6 1,007.4 Cost of sales (654.2) (785.7)Gross profit 186.4 221.7 Administrative expenses (144.0) (164.6)EBITDA 42.4 57.1 Depreciation of property, plant and equipment (5.9) (5.3)Amortisation of intangible fixed assets (11.3) (12.3)Operating profit 25.2 39.5 Net finance costs (3.3) (5.7)Datatec management fees (2.8) (3.5)Impairment of goodwill – (20.9)Revaluation of minority interest buy-out liability (10.4) 13.7 Profit before tax 8.7 23.1 Tax on profit on ordinary activities (5.2) (14.6)Profit for the year for continuing operations 3.5 8.5 Profit from discontinued operations – 10.3 Profit for the year 3.5 18.8

Balance sheet – unaudited 2010 2009 US$m US$m

Goodwill and other intangible assets 154.0 139.6 Property, plant and equipment 29.4 13.6 Deferred tax asset 15.3 11.9 Total non-current assets 198.7 165.1 Inventories 33.7 20.0 Trade and other receivables 254.9 202.4 Cash and cash equivalents 82.8 40.9 Total current assets 371.4 263.3 Total assets 570.1 428.4 Trade and other payables (299.1) (213.8)Bank overdrafts and loans (6.1) 0.0 Deferred consideration on acquisition of subsidiaries (14.2) (11.4)Total current liabilities (319.4) (225.2)Net current assets 52.0 38.1 Amounts owed to holding company and fellow subsidiaries (47.1) (31.3)Obligations under finance leases (5.5) (7.7)Liability for minority interest buy-out (32.6) (22.2)Deferred consideration on acquisition of subsidiaries 0.0 (11.5)Deferred tax liabilities (15.8) (10.7)Other long term liabilities (7.8) (1.1)Total non-current liabilities (108.8) (84.5)Total liabilities (428.2) (309.7)Net assets 141.9 118.7 Share capital and share premium 130.2 130.2 Minority interest buy-out reserve (32.6) (22.2)Foreign currency exchange and other non-distributable reserves (35.4) (49.1)Retained earnings 52.2 39.6 Attributable to equity holders of the parent 114.4 98.5 Minority interest 27.5 20.2 Total equity 141.9 118.7

FINA NCI A L

rESULTS

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Percentage held

Statutory name Country of Incorp. 2010 2009Holding company Logicalis Group Limited England and Wales 100% 100%Subsidiaries of Logicalis Group Limited Logicalis Group Services Limited England and Wales 100% 100%Logicalis UK Limited England and Wales 100% 100%Promon-Logicalis Latin America Limited England and Wales 70% 70%Logicalis Limited England and Wales 100% 100%Logical Group Limited England and Wales 100% 100%Satelcom Limited (dormant) England and Wales 100% 100%Logicalis Computing Solutions Ltd (dormant) England and Wales 100% 100%Hawke Systems Ltd (dormant) England and Wales 100% 100%T.B.C. Group Limited (dormant) England and Wales 100% 100%TBC Limited (dormant)* England and Wales 100% 100%Logicalis Computing Solutions Finance Limited (dormant)* England and Wales 100% 100%Logicalis (Ireland) Limited Ireland 100% 100%Logicalis GmbH* Germany 100% N/ALogicalis Deutschland GmbH Germany 100% 100%Logicalis Networks GmbH* Germany 100% 100%Logicalis (US) Holdings, Inc. USA 100% 100%Logicalis, Inc.* USA 100% 100%ActiveSymbols, Inc. USA N/A 100%Logicalis South America Inc.* USA 70% 70%PromonLogicalis Tecnologia e Participacoes Ltda* Brazil 70% 70%PTLS Comercio, Exportacao e Importacao de Equipamentos de Telecommunicacao Ltda* Brazil 70% 70%PLLAL International LLC* Brazil 70% 70%Logicalis Brasil Servicos de Assessoria Tecnica Ltda* Brazil 70% 70%Logicalis Argentina S.A.* Argentina 70% 70%X-Net Cuyo S.A.* Argentina 70% 70%Logicalis Uruguay S.A.* Uruguay 70% 70%Logicalis Inc. S.A.* Uruguay 70% 70%Logicalis Paraguay S.A.* Paraguay 70% 70%Logicalis Chile S.A.* Chile 70% 70%Logicalis Andina S.A.C.* Peru 70% 70%NetStar Group Holding Limited British Virgin Islands 100% N/ANetStar Australia Holding (BVI) Limited (dormant)* British Virgin Islands 100% N/ANetStar Asia Holding (BVI) Limited (dormant)* British Virgin Islands 100% N/ANetstarLogicalis Australia Pty Limited* Australia 100% N/AnVisage GNC Malaysia Sdn Bhd* Malaysia 100% N/ANetstarLogicalis Malaysia Sdn Bhd* Malaysia 100% N/ANetstarLogicalis Singapore Pte Limited* Singapore 100% N/ANetstarLogicalis Shanghai Limited* China 100% N/ANetstarLogicalis Xiamen Limited* China 100% N/ANetstarLogicalis Hong Kong Limited* Hong Kong 100% N/A Note: * indicates a subsidiary which is owned indirectly via an intermediate holding company.

OUr

SUBSIDIArIES

Logicalis Group 110 Buckingham Avenue Slough Berkshire SL1 4PF

Tel: +44 (0)1753 777 200

www.logicalis.com

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