JSE-listed global technology firm Datatec has cut its dividend after reporting a decline in profit for the year ended February 2024. But the underlying business is performing well.

The dividend has been cut from R1.95/share for the 2023 financial year to R1.30/share now.

Stripping out a range of once-off effects, underlying earnings per share (EPS) climbed by 231% to approximately US$0.20/share. With the once-offs included, however, earnings per share fell by 44.7%.

Underlying EPS excludes impairments of goodwill and intangible assets; profit or loss on sale of investments and assets; amortisation of acquired intangible assets; unrealised foreign exchange movements; acquisition-related adjustments; fair-value movements on acquisition-related financial instruments; restructuring costs relating to fundamental reorganisations; once-off tax items; costs relating to acquisitions; integration and corporate actions; and related taxes.

A spokesman for Datatec explained that the 2023 financial results had a number of major once-offs. These included:

The impact of the profit on sale of Analysys Mason, which resulted in a R2.7-billion special dividend;
Westcon International performance improvements driving an increased valuation and a consequent high once-off accounting charge relating to its share-based remuneration plans put in place to drive the turnaround.
In turn, the 2023 ordinary dividend was calculated by normalising underlying earnings per share (excluding all share-based payment charges) and applying the group’s dividend cover policy to underlying earnings.

CEO Jens Montanana said the group “maintained a strong operational performance in the second half of the year to deliver a solid full-year result as global demand continues for our technology solutions and services”.

“Operationally, Westcon International continues on its growth trajectory, delivering an exceptional performance in FY24. Logicalis International also performed well; however, Logicalis Latin America faced numerous challenges in Argentina and Brazil, which impacted its financial performance.”

Westcon, Logicalis

Group revenue rose by 6.1% to reach $5.46-billion (R100.3-billion), while gross profit rose 15.8% to reach $862.2-million.

Westcon International’s revenue increased by 7.7% to $3.69-billion due to strong demand for network infrastructure and cybersecurity solutions, Datatec said. The business’s gross profit increased by 22.7% to $403.4-million. Earnings before interest, tax, depreciation and amortisation rose by 150% to $121-million.

Logicalis International’s revenue increased by 1.5% to $1.25-billion, while Ebitda climbed by 31.7% to $66.5-million. Logicalis Latin America performed well operationally, but was hit by forex losses, which reduced its Ebitda margin to 2.2% from 4.3% in 2023.

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“We are optimistic about FY25 and remain focused on unlocking value for shareholders,” Montanana said of the outlook for the current financial year.

Datatec’s shares were trading 0.5% lower on Monday in Johannesburg following publication of its 2024 financial results. Over the past year, to Friday’s market close, they are up 2.3%. Year to date, they have lost 7.7% of their value. – © 2024 NewsCentral Media