Dual-listed Datatec says a non-cash revaluation of a put option on a minority stake at one of its Brazilian business units will weigh on net profit for the full year to February, but won't affect core earnings.
In March, Datatec said earnings per share and headline earnings per share for the year were expected to be around 32c and profit after tax was expected to be about $61 million. However, this was without taking into account the need to revalue a 30% put option liability held by minorities in one of its units.
In 2008, Datatec bought 70% of Brazilian-based Promon. However, the minorities have an option to sell the balance to Datatec by the end of 2012. As a result, Datatec carries the possible payout as a liability on its balance sheet, which has to be revalued each year, according to accounting rules.
An increase in the value of a put option has resulted in a non-cash fair value loss of $14.7 million, up from last year's $12 million. As a result of the revaluation, Datatec expects earnings per share and headline earnings per share to be about 23c a share, which is still an improvement on last year's 17c a share.
Underlying earnings per share* are not affected by the revaluation and should be about 38c a share, compared to the company's previous expectation of about 37c a share. Last year, underlying earnings per share were 30c.
Profit after tax will be about $46 million, an increase on last year's $32 million. Stripping out the fair value loss not being incurred, there would have been no change to the previously expected earnings per share, headline earnings per share and profit after tax.
Revenue is expected to be around $4.3 billion, after the company initially said it would be between $4.1 billion and $4.4 billion.
* Underlying earnings per share exclude goodwill and intangibles impairment, amortisation of acquired intangible assets, profit or loss on sale of assets and businesses, fair value movements on acquisition related financial instruments and unrealised foreign exchange movements.
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