Growing Datatec acquires four firms

ICT group Datatec has acquired four companies in the US, UK, Australia and Channel Islands for $46 million.

Johannesburg - International information and communications technology group Datatec acquired four companies in the US, UK, Australia and Channel Islands for $46 million (R698m).

Datatec chief executive Jens Montanana said the company concluded the transactions to acquire 100 percent of White Label Intelligence, Advanced Technology Integration Group, Lekscom and Thomas Duryea Consulting through its Logicalis division.

Delivering the company’s annual report for the year to the end of February yesterday, Montanana said as a result of the acquisitions, goodwill and other intangible assets increased by $28.5m and $29.1m, respectively.

He said revenue and earnings before interest, tax, depreciation and amortisation (Ebitda) included from these acquisitions in the financial year were $53.6m and $2.9m, respectively. The Ebitda for the period was $162.1m, down from $206.4 in the last period.

Montanana said revenue attributable to the acquisitions would have been about $138.5m for the period. “The group’s performance in Africa, reported through the Westcon AME (Africa and Middle East) region, was impacted mainly by the weakened economic outlook for Angola driven by the fall in the price of crude oil.”

Revenue

Datatec operates three divisions: Westcon, which accounted for 75 percent of the group’s revenue; Logicalis, which accounted for 24 percent; and Consulting, which accounted for 1 percent.

Overall the group reported a flat revenue increase of 1.56 percent to $6.5 billion slightly up from the $6.4bn reported in the previous period.

The company recorded its profit before tax to $88.4m compared with $140.2m during the corresponding period last year.

Montanana said the company, however, expected the results to improve. He said the company would continue to seek acquisitions to bolster its portfolio in the future.

Peter Takaendesa, a portfolio manager at Mergence Investment Managers, said the year had been a “tropical storm” for Datatec with significant headwinds from a stronger US dollar, weaker global economy, restructuring costs and a higher tax rate.

The headwinds had resulted in underlying earnings declining by more than 20 percent in US dollars, “but this is largely offset by a weaker rand to South African shareholders”, Takaendesa said.

Datatec shares rose 3.55 percent to close at R44 on the JSE.

BUSINESS REPORT