Datatec Limited UPDATE:CAUTIONARY ANNOUNCEMENT & TRADING STATEMENT (8657B)

TIDMDTC

RNS Number : 8657B

Datatec Limited

07 April 2017

7 April 2017

Datatec Limited

("Datatec" or "the Company")

UPDATE TO CAUTIONARY ANNOUNCEMENT AND TRADING STATEMENT

Datatec Limited (JSE/AIM: DTC), the international Information and Communications Technology (ICT) Company is publishing an update to its cautionary announcement and a trading statement for the year ended 28 February 2017.

The update to the cautionary relates to the possible sale of a major share of Westcon-Comstor's operations for a consideration (current and deferred) of more than US$800 million.

The trading statement advises that underlying earnings per share*, headline earnings per share and earnings per share are expected to be more than 50% lower than the prior year.

Update to cautionary announcement

On 25 January 2017, the Company issued a cautionary announcement, informing shareholders that it had entered into negotiations around a possible transaction. The Company renewed this cautionary announcement on 8 March 2017.

The Company is required to provide this further information pursuant to AIM Rule 10 of the AIM Rules for Companies to provide further context to the cautionary announcements made in January and March 2017.

The Company can now disclose that the cautionary announcement relates to a possible sale of a major share of Westcon-Comstor's operations for a consideration (current and deferred) of more than US$800 million. The proposed transaction is subject to contract and exclusivity provisions.

There can be no certainty that the transaction will be completed, nor as to the precise terms on which the transaction might be completed. Shareholders are therefore advised to continue to exercise caution when dealing in the Company's securities. The Company undertakes to announce further details of the potential transaction as soon as practicable.

Trading statement

In the Company's unaudited interim results announcement for the six months ended 31 August 2016, issued on 19 October 2016, shareholders were advised that, based on current trading and prevailing exchange rates, underlying earnings per share* in the second half of the financial year ended 28 February 2017 ("FY17") was expected to be sequentially better than H1 FY17 and also comparatively better than the second half of the previous financial year, and the full FY17 underlying earnings per share was expected to be better than the prior year.

In terms of the JSE Limited Listings Requirements, companies are required to publish a trading statement as soon as they are satisfied that a reasonable degree of certainty exists that the financial results for the period to be reported on next will differ by at least 20% from the most recent profit forecast or the previous financial year.

Accordingly, shareholders are advised that underlying earnings per share* for FY17 is expected to be more than 50% lower (or at least 16 US cents per share lower) than the prior year (FY16: 32 US cents). Headline earnings per share and earnings per share are also expected to be more than 50% lower (or at least 10 US cents lower) than the prior year (FY16: 19.4 US cents and 19.3 US cents respectively).

Datatec is still in the process of finalising the results for FY17 and will provide a more detailed trading statement as soon as practicable.

The year over year expected decline in earnings is as a result of a worse than expected result in Westcon-Comstor. There was a decline in fourth quarter financial performance in the Europe Middle East and Africa ("EMEA") region. Westcon-Comstor experienced disruption to the business as a result of final stages of SAP implementation in EMEA. Westcon-Comstor has made adjustments to the operating model and Datatec expects this to support a rapid recovery.

Logicalis trading was in line with management's expectation.

The forecast financial information contained in this trading statement has not been reviewed or reported on by the Company's auditors.

This announcement contains inside information.

*underlying earnings per share excludes impairments of goodwill and intangible assets, profit or loss on sale of investments and assets, amortisation of acquired intangible assets, unrealised foreign exchange movements, acquisition-related adjustments, fair value movements on acquisition-related financial instruments, restructuring costs relating to fundamental reorganisations and the taxation effect on all of the aforementioned

Enquiries:

 
 Datatec Limited (www.datatec.co.za) 
 Ivan Dittrich, Chief Financial         [phone] 
  Officer                                3301 
 
 Jefferies International Limited - Nominated 
  Adviser and Broker 
                                        [phone] 
 Nick Adams/Simon Hardy                  8000 
 
 Instinctif Partners 
 Frederic Cornet/Pietman Roos           [phone] 
  (SA)                                   3030 
 Adrian Duffield/Chantal Woolcock       [phone] 
  (UK)                                   2020 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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April 07, 2017 02:00 ET (06:00 GMT)