Datatec is seeing signs of a more sustainable recovery after a difficult 2004 financial year, says CEO Jens Montanana.
"We are encouraged by the improving performance of the last few months and the more positive trading and forward-looking statements from some of our major vendors," he writes in the group`s annual report.
"Against this backdrop one must assess the overall trading performance. While comparison with our peers and suppliers does not necessarily produce direct parallels, the indicators support a more optimistic outlook."
Stronger corporate profit recovery, productivity gains and signs of modest inflationary pressures are underpinning an improved global economic performance.
Montanana says the coming Nasdaq listing of Datatec`s Westcon subsidiary has been an objective for some time.
"Previously, the decline in global markets compelled us to postpone this process. The group was therefore pleased when advisors in the US indicated that conditions were appropriate to restart the Westcon IPO (initial public offering) process."
Equal terms
Datatec chairman Leslie Boyd says the IPO will unlock value for Datatec and its shareholders in the long term, as exposure to US interest on the Nasdaq will allow Westcon to compete on equal terms and on similar ratings to its peers.
He says the IPO will also provide liquidity to Datatec, fund the growth of Westcon through acquisitions and reduce the funding burden on Datatec for Westcon`s future expansion strategies.
In addition, it will improve Westcon`s existing capital structure, gain access to the US domestic investor base and attract, reward and retain employees through stock-based compensation plans.
"Before we initiated the IPO process, the group reviewed a number of related issues. Key among these is the dilutional impact on Datatec in terms of consolidated profit and earnings.
"However, we believe this will be more than offset by the appreciation in value that we will derive when the group is viewed as sum-of-the-parts rather than a consolidated earnings play."
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