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Datatec first-half earnings rocket

Johannesburg - International ICT networking and services business Datatec [JSE:DTC] on Wednesday reported a 122% rise in headline earnings per share (Heps) for the first half of its financial year, as the group continued to benefit from operating leverage and an improving business mix.

Heps for the six months to end-August 2011 increased to 19.5 US cents from 8.8c in the comparative period last year.

Excluding the effect of put option fair value adjustments, Heps went up by 56% to 19.5c from 12.5c previously.

The group declared its first interim capital distribution per share of 7c.

Group revenues increased by 14% to $2.44bn from $2.13bn with 33% of group revenue generated from North America, 34% from Europe, 13% from Asia Pacific, 12% from Latin America and 8% from AIME.

Gross margins improved to 14.1% from 13.2% in the first half of last year.

"These are very good results, given the current environment. Despite the difficult economic conditions around the world, we have been able to grow revenues and improve margins in all divisions," said Datatec CEO Jens Montanana.

"Gross margins and profits are up significantly as we continue to benefit from operating leverage and an improving business mix," he said.

Gross profit rose by 22% to $343.7m while earnings before interest, tax, depreciation and amortisation (Ebitda) went up 46% to $85.4m, which includes net unrealised foreign exchange gains of $0.5m. Operating profit increased by 65% to $66.2m and underlying earnings per share increased by 38% to 21.8c.

The group's operations generated $17.0m cash during the period and at end-September it had net debt of $8.8m, after deducting long-term debt of $19.1m and short-term debt of $8.6m.

Montanana said in this economic climate many customers and suppliers were increasingly seeking to do business with large, well capitalised multinational companies - something that was directly benefiting the group since its businesses were gaining market share in many of the markets and geographies in which it operates.

"Based on current trading conditions and exchange rates, our forecast for the full year remains unchanged," said Montanana, adding that the group's first interim capital distribution would result in a total of $125m (about R1bn) having been distributed to shareholders since 2006.

Datatec said it would continue to pursue its long-term strategy of delivering sustainable, above-average returns to shareholders by focusing on a combination of organic growth in fast growing sectors of the ICT market, geographic expansion and earnings enhancing acquisitions.

During the first half, the group announced the acquisition of three businesses aimed at strengthening its position in existing major markets.

"The group will seek to improve its competitive position and believes that the current economic climate has created a window of opportunity for further attractive consolidation opportunities to enhance margins, facilitate consolidation in proven markets and extend the group's geographical reach," it said. 

Datatec shares jumped over 3% on the JSE on Wednesday morning.
 
Datatec, which is also listed in London, is trading 3.1% higher at R39.87.

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