IT and networking services group Datatec has warned that it will report a headline loss per share for the 11 months to February.
Datatec issued a trading update this morning explaining that the loss is in part the result of unrealised foreign exchange losses caused by the rapid appreciation of the rand during the five months to end-February.
The foreign exchange losses in the five months are expected to be substantially higher than those incurred in the preceding six months.
Adding to this is the fact that the effective tax rate for the full financial year is expected to be higher than indicated in the first half, as a result of not raising deferred tax assets in certain loss-making operations.
"Although revenues in dollar terms seem to have stabilised, trading conditions remain difficult," it says.
These difficult trading conditions, combined with the foreign exchange losses and the high effective tax rate, will result in a rand-reported headline loss per share as well as a reduction in the rand-denominated net asset value.
The rand`s strengthening was also cited as a factor in the 91% decline in headline earnings per share at the interim stage. The six months to end-September last year saw Datatec`s headline earnings per share plunge to 12c from 142c in the same period a year before.
Although no mention has been made of the European-based Landis business, that operation was also cited as a reason for the interim earnings plunge.
Datatec`s Westcon subsidiary said in December it was nearing completion of a project aimed at revitalising the troubled Landis business it acquired last May.
The group said it moved aggressively to inject new energy and best practices into the distributor, with a Europe-wide "fit for business" programme aimed at equipping resellers to be more competitive.
The Datatec share was trading at 460c on the JSE this morning, down 40c or 8% from Friday`s close.
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