Datatec considers shareholder payout

Technology group Datatec has said it is considering returning as much as $500m to shareholders by way of share repurchases or a specific dividend.

The money is from the sale of its subsidiary Westcon-Comstor to US-based Synnex for $830m, which was completed in September 2017.

Datatec said it would retain $130m of the proceeds for various operational needs and working capital for expansion.

Datatec said it expected underlying earnings per share for the six months to August to fall as much as 92% to between 1 US cent and 2c from 12.5c in the previous period.

Headline loss per share would be between 5c and 6c, from 9.1c earlier.

Consolidated revenue will fall to $2.99bn, from $3.04bn with a gross margin of 13.3%, from 13.8% previously. Datatec attributed the decline in earnings to another poor performance from Westcon-Comstor, which continued to experience disruption as a result of the final systems, applications and products (SAP) implementation in Europe, the Middle East and Africa.

“The interim results have remained weaker than the recovery the market expected and much weaker when compared with the same period in 2016,” said Mergence Investment Managers’ Peter Takaendesa.

“While the roll-out of the SAP system in Westcon has been completed, it has continued to have a significant impact on operations.

“If that is the only reason for the weaker performance, then we expect earnings to start to show a strong recovery in the second half and into calendar year 2018,” he said.