Datatec manoeuvres for growth

JSE-listed Datatec is positioning itself for acquisitive growth in a period characterised by consolidation and convergence in the industry.

In the company`s 2006 annual report, released online on Friday, chairman Leslie Boyd said convergence of information and communications technology (ICT) is still the most significant trend in the global ICT arena.

Datatec intends benefiting from this trend through both organic growth and strategic acquisitions. Boyd said that, while the past year had been characterised by challenges, the market was supportive of growth. He cited aspects such as widespread consolidation in the industry, which placed pressure on margins. However, the group improved its margins from 10.4% to 11.4%.

He also commented that the upward trajectory of the oil price instilled "a degree of prudence and caution in markets that otherwise may well have been more robust". Despite these factors, European markets were unexpectedly strong, and Asian economies continued to perform well, he noted.

CEO Jens Montanana said consolidation in the industry is healthy, as "it affords us the opportunity to engage with clients at various stages of the supply chain in our chosen focus areas".

Part of its acquisitive strategy involves looking at a listing on the London Stock Exchange`s secondary market, the Alternative Investment Market, which the company indicated it might pursue in May.

Montanana said Datatec is "actively considering pursuing a secondary listing" on the London bourse. "The group feels that, with its significant international operations, raising capital in an internationally recognised exchange, such as London, will broaden its international shareholder base and help provide additional liquidity to fund contemplated and future acquisitions."

On its Web site, the company states its international operations contribute over 95% of its revenue, mainly from the US and Europe. Datatec employs 3 000 ICT professionals around the world in over 20 countries.

Datatec has re-scheduled its financing facilities with HSBC and now has "significant internal cash resources", said Boyd. For the year ended February 2006, it saw revenue of almost $3 billion -a record for the group - of which $2.9 billion was generated from continuing operations and $105 million from acquisitions.

Headline earnings per share in US cents improved to 27c, from 4c the previous year. In 2004 and 2003, it reported a headline loss per share of 7c, down from a 28c headline profit per share in 2002, which was down from 45c a share in 2001.

Looking forward, Montanana said the company expected to see "moderate economic growth in the markets we serve in the year ahead". Despite this, the company remains confident of growing margins.

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