Datatec sees increased demand for its remote access computing

Information and technology company Datatec [JSE:DTC] announced in a shareholder notice released on Friday that it was taking precautions in relation to the coronavirus (Covid-19) pandemic, because it has learnt that the virus has spread to all regions where the company has operations.

Datatec is headquartered in South Africa, but has a presence in more than 50 countries on six continents. Divisions of Datatec include business technology distributor Wescon-Comstor and local IT solutions provider Logicalis SA.

In South Africa there was already 202 confirmed coronavirus cases in just two weeks, as of Friday. The government has advised social distancing and working from home where possible, which could prove challenging for some businesses to adapt to.

In October last year, Datatec posted an increase in profit and revenue for the six months to end-August, with earnings before interest, tax, depreciation and amortisation of $70.0 million, from $42.6m in the same period last year. Group revenues were up by 2.6% to $2.06 billion.

The company said the full impact of the coronavirus pandemic on its business and operations remained unclear. It said the forecast financial information the notice to shareholders was based on, had not been reviewed or reported on by the group’s external auditors.

"We are continuing to take appropriate action to ensure the safety of all our employees and customers, in addition to following the World Health Organisation and local country and government guidelines," the shareholder notice said.

Datatec pointed out that it had a solid financial performance for the financial year ended in February 2020 in all of its divisions and that its turnaround regarding Westcon International continued, with improvements in profitability over the financial year ended in February 2019.

"Logicalis is also expected to produce a strong result, especially in its Latin American region. Analysys Mason had another growth year with much improved profitability. The group's balance sheet remains strong and is expected to report a reduction in net debt at February, compared to net debt at August 2019," the group notice said.

For the first few weeks of the financial year 2021 to date, order intake for Westcon was ahead of this time last year, while at Logicalis, order intake for March is expected to be ahead of March last year.

"So far we have experienced limited supply chain interruptions. We are seeing increased demand for our remote access computing, security and collaboration networking solutions. We have closed a number of offices and encourage most of our employees to work remotely where possible," it said.

The notice said Datatec was promoting social distancing and has restricted business travel. Warehouses were still functioning with new protocols for staff care and safety.

On late afternoon trade on Friday the Datatec share price was up 44.38% to R26.35.

*This article has been edited to remove the name of Oracle, which is not a division of Datatec. We regret the error.

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