Datatec this morning said its March trading update of higher earnings was too conservative and warned that it is changing its accounting practices.
In a separate notice to shareholders, it said it was raising ₤17.5 million (R245 million) through the placement of 7.2 million new shares with institutional investors.
During March, the global IT player said it expected full-year earnings per share to be up between 30% and 40% on the previous year, with earnings before income tax depreciation and amortisation (EBITDA) to come in at $117 million, significantly up on last year's $85 million.
Today, Datatec said it expects EBITDA for the year ended 28 February 2007 to be approximately $119 million (R833 million). Headline earnings and attributable earnings are both expected to be approximately 40 US cents per share, aided by a lower than expected tax rate.
Additionally, Datatec said it will change its accounting practices to include only the gross profit element from the sale of vendor maintenance contracts, where the maintenance service is provided by the equipment supplier directly to the customer.
This change brings the company in line with its industry peers and would not affect the group's gross profit, EBITDA, net income, balance sheet or cash flow statement, Datatec said. However, it does decrease revenue and cost of sales by approximately $330 million (R2.3 billion).
New shares
The 7.2 million new shares, of R0.01 each, are to be placed with institutional investors at a price of 243 pence per share (R34.09). The proceeds of this placement will be used to satisfy the cash consideration payable for the acquisition of Crane Telecommunications Group and "general corporate purposes".
All the conditions to the R300 million acquisition of Crane Telecommunications announced early last month have now been satisfied, said Datatec.
The consideration, payable on completion, will comprise the issue of 3.9 million new ordinary shares and ₤11.5 million in cash, which is to be satisfied by the proceeds of the institutional placing.
The acquisition of Crane Telecommunications is expected to be completed later today. Datatec is due to publish its results for the year ended 28 February on 16 May.
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