Datatec - Strong performance drives increased dividend payout policy

Datatec reported a strong set of results for FY25, with gross profit, adjusted EBITDA and underlying EPS all ahead of our forecasts. All three divisions reported strong growth in adjusted EBITDA, highlighting improving conversion of gross profit to adjusted EBITDA. Net debt reduced materially as the company generated a strong operating cash inflow of $286.8m. This better performance has prompted an increase in the dividend payout ratio. The company expects the trend towards higher software sales and annuity services to continue, which should further benefit Datatec's margins and cash profile. The board expects all divisions will continue to improve their financial performance in FY26 and remains focused on unlocking shareholder value through its ongoing strategic review. We are reviewing our forecasts.

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