Datatec CEO Jens Montanana. Picture: MARTIN RHODES
Datatec CEO Jens Montanana. Picture: MARTIN RHODES

JSE-listed ICT group Datatec says that even though it returned to profits in the year ended February, it will not pay a dividend but rather buy back more of its shares.

“The group delivered on the commitments set in the prior year, resulting in a much-improved financial and operational performance across all divisions,” said CEO Jens Montanana.

The company reported headline earnings of $1.7m for the year, from a $41.3m loss previously.

“The level of underlying earnings in financial year 2019 only supported a small dividend under [the group’s] policy, and as a result the board decided not to declare a dividend,” it said. But Datatec said it had spent $50.8m on share repurchases since March 2018 “to return cash to shareholders”.

Datatec’s results were “solid”, said Aslam Dalvi, portfolio manager at Kagiso Asset Management. “The growth outlook for the group remains positive with Westcon International now firmly on the path to recovery.”

Graphic:RUBY-GAY MARTIN
Graphic:RUBY-GAY MARTIN

Montanana said Datatec’s Logicalis business “produced strong results despite emerging-market currency headwinds, especially in its key Latin America region”.

“Westcon International’s recovery is now established, having met the principal objectives around shared services and central cost reductions, with further improvements expected,” he said. “Building on the successful turnaround of financial year 2019, we are confident our operations are well positioned to improve their performances further and support our group strategy.”

Datatec said it expects “a continued improvement in the financial performance for financial year 2020”.

Logicalis’s performance is expected to “strengthen” over the next financial year, though its results could be affected by currency movements, especially in Latin America.

Westcon International is expected to deliver “a significant improvement in its operational performance and further central cost reductions”.

hedleyn@businesslive.co.za

PODCAST: Behind the class action lawsuits against Tiger Brands