The initial public offering of Datatec`s US subsidiary Westcon has been postponed. Datatec has also warned shareholders to revise their headline earnings per share forecasts for the group as a result of various changes.
The group also says that its directors may consider a buy-back of shares.
Datatec released a shareholder update this morning which says the restructuring of the Logical Group will be completed by the end of March.
The restructuring involved exiting the low margin desktop PC business, exiting other non-core business areas and merging similar businesses in common geographical regions.
The Microsoft services and solutions business, Logical SA, was deemed to be non-core and has been disposed of by way of a management buy-out.
The restructuring puts Logical into the higher margin professional services and network integration business.
"As already communicated to the market, Logical`s strategically necessary restructuring has had the temporary effect of reducing the division`s profitability this year," says Datatec executive chairman Jens Montanana.
"With restructuring on track to be completed by the end of this month, we are confident that the new financial year will see the benefit of this reorganisation and repositioning."
Siltek, which recently reported an operating loss of R39 million, has also affected Datatec, which has a 23% stake in the company. The stake will result in an equity accounted loss of 10.9c per share from Siltek for the current financial year.
Montanana says the postponement of Westcon`s Nasdaq IPO is due to weak capital market conditions.
"While we would have preferred to list Westcon sooner, the delay will now allow for the inclusion in the S-1 registration statement of Westcon`s audited financial results for their full financial year ended 28 February 2001, as opposed to the original filing which was based on the preceding nine-month period."
With effect from 31 March this year, Datatec will consolidate Westcon`s financial results to 28 February each year - Westcon`s year-end.
"The impact of this change in accounting treatment, had it been applied to Datatec`s financial year ended 31 March 2000, would have been a reduction in reported headline earnings per share excluding restructuring cost from 351.6c per share to 325.8c per share," says Montanana.
The change in accounting treatment will form the basis of the comparative figures shown on a pro-forma basis when the group releases its results for the year to 31 March 2001, expected on 23 May.
Montanana says that in light of the various factors, shareholders should revise their forecasts of headline earnings per share for the year to 31 March.
Datatec`s share was 605c or 26.7% down at 1 665c by mid-afternoon.
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