International information and communications technology (ICT) company Datatec’s integration and managed services division, Logicalis, produced strong results for the financial year ended February 28, despite emerging market currency headwinds, especially in its key Latin America region, CEO Jens Montanana said in a statement on Thursday.
The division grew its revenue by 11.3% and its earnings before interest, taxes, depreciation and amortisation (Ebitda) by 8.4%.
“Building on the successful turnaround of the 2019 financial year, we are confident that our operations are well positioned to improve their performances further and support our group strategy,” Montanana said.
JSE-listed Datatec’s strategy remains to deliver long-term, sustainable and above-average returns to shareholders through portfolio management and the development of its principal subsidiaries, providing technology solutions and services to targeted customers in identified markets.
Logicalis is the largest profit contributor for the group and also has the widest geographical exposure, the statement said. Datatec intends to continue to develop and grow Logicalis globally, through organic and acquisition activities.
Westcon International, which focusses on technology distribution, meanwhile, continued its recovery during the financial year, having met the principal objectives around shared services and central cost reduction, with further improvements expected going forward.
In line with the commitment made at the beginning of the year, the division has returned to Ebitda profitability and the central cost base has been reduced.
Further central cost reduction targets are expected to be met in the 2020 financial year.
According to Datatec, the enterprise resource planning system was now operating effectively after a long and disruptive multiyear implementation process. A full business process outsourcing reversal was completed, with in-house shared service centres established in the Philippines and South Africa.
The earn-out payment relating to the disposal of Westcon Americas to Synnex has not yet been determined and the parties are currently engaged in an arbitration process. Datatec expects the ruling by the arbitrator will be issued soon.
Datatec’s revenues increased by 10.4% year-on-year to $4.33-billion, while Ebitda was $86.8-million, more than three times higher than the year before.
Underlying earnings per share (UEPS) for the year under review were $0.07, compared with an underlying loss a share of $0.17 from continuing operations for the 2018 financial year.
During 2019, the company undertook three general share repurchases under separate shareholder mandates provided at a general meeting in July 2018, at the annual general meeting in September 2018 and at a general meeting in January 2019.
According to Datatec, these repurchases amounted to $43.9-million and included 23.8-million shares, which have been cancelled, reducing the company's shares in issue to 219.2-million at the end of the financial year.
From March 1 to May 14, Datatec repurchased a further 3.1-million shares at a cost of $6.9-million.
Despite global economic uncertainty, the Datatec board expects a continued improvement in its financial performance in the 2020 financial year.
Logicalis' performance is expected to strengthen over the next financial year, with its results potentially impacted on by currency movements, especially in Latin America; while Westcon International will build on its successful turnaround in 2018 and is expected to deliver a significant improvement in its operational performance and further central cost reductions.