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Strong Results and Market Share Gains

Published: Fri 19 Nov 2010 09:39 AM
Dimension Data Reports Strong Results and Market Share Gains
Asia’s revenue grew by 17.6% with operating profit of US$53.3million
Unaudited results for the year ended 30 September 2010
Financial Performance Summary
• Revenue growth of 19.4% in reported currency, and 9.9%(2) in constant currency
• Product revenues up 11.3%(2), strong second half recovery
• Continued growth in Managed Services revenue, up 13.2%(2)
• Continued robust performance from the Systems Integration business
• Operating profit up 22.3%(1) in reported currency, and 8.2% (1,2) in constant currency
• Operating margin (1) 50% (2009: 4.9%)
• Exceptional costs of $152 million relating to NTT transaction
• Earnings per share (1) 9.0 cents (2009: 7.6 cents)
• Total cash $613.6 million (net cash $435.4 million)
Notes:
1. Before exceptional items.
2. Adjusted for the impact of currency movements and, where relevant, before eliminating intercompany revenue.
Singapore, 18 November 2010 – Datacraft, a wholly owned subsidiary of South African headquartered specialist solutions and services provider, Dimension Data Holdings, today announced a strong set of results for the year to end-September 2010.
Revenue for the period was $4.74 billion, up 19.4% in reported currency over the prior period. These reported results were supported by the appreciation in the average exchange rates for the year of some of the Group’s main trading currencies (in particular the South African Rand and the Australian Dollar) against the US dollar. In constant currency, Group revenues grew by 9.9%. Operating margin expanded slightly to 5.0% (2009: 4.9%) and operating profit was $237.8 million, up 8.2% on the prior year.
The Group’s Systems Integration business delivered a very strong performance across all regions, growing revenue by 14.9% to $3.89 billion and operating profit by 31.8%, to $183 million, at an operating margin of 4.7%.
Group product revenues bounced back at $2.73 billion, up 11.3% in constant currency, while Services were $2.02 billion, up by 8.2%. Good Services growth in Systems Integration was supported by Managed Services growth of 14.1% and Professional Services growth of 14.7%. Internet Solutions showed strong growth, but this was offset by a sharp decline in Plessey.
The Group’s effective tax rate was 27.4% (2009: 26.7%), while earnings per share were 9.0 cents compared to 7.6 cents in 2009.
Commenting on the Group’s overall performance, Brett Dawson, CEO of Dimension Data Holdings said, “The Group’s vision of the market evolution which focuses on key, high-growth technology sectors including the network, unified communications and collaboration, and virtualisation, continues to stand us in good stead. Our growth rates are greater than the market, implying market share gains in nearly all of our areas of focus.”
The Group was recognised throughout the year for its industry leadership, receiving 96 industry and partner awards. From an employee perspective, for the fifth consecutive year since the initiation of the Group’s employee satisfaction survey, the employee satisfaction results increased.
In this review, growth rates are in relation to FY 2009 and, unless otherwise indicated, are calculated before eliminating intercompany revenue and are adjusted for the impact of currency movements (i.e. constant currency).
Dimension Data’s Systems Integration (SI) business delivered another robust performance for the year, with a strong recovery in Product volumes, solid Services growth, expanding gross margin, and operating profit up 31.8% to $183.3 million. The recovery in Product volumes, particularly in the second half of the year, and the continued growth in Managed Services were features of the year, as was the fact that most regions showed excellent improvement in profitability.
Bill Padfield, CEO, Datacraft-Asia said, “Looking at the SI business in Asia, revenues were up by 17.6%, with an operating profit result of $53.3 million. Looking within the region, India, Singapore, Malaysia, the Philippines, New Zealand and Thailand all delivered strong performances.”
“Our operating profit was consistent with our plans to make a range of strategic investments, while retaining operating margin in excess of 7%. However, the business also benefitted from cost savings initiatives undertaken in the prior year,” added Padfield.
Five acquisitions made during the year under review are expected to increase the Group’s global footprint and enhance its specialist IT solutions and services capabilities in selected geographies. These include the acquisition of interests in a Moroccan systems integrator, a Chilean systems integrator, an Australian infrastructure hosting business, an African Wi-Fi provider, and mVision, a UK video conference integrator.
Lines of Business
Across the lines of business, Network Integration delivered strong growth of 13.1% - more than twice the forecast market growth rates. This growth was driven mainly by a strong recovery in Product revenues, especially in data centre networking, wireless and mobility. Growth was also supported by success in multinational contracts and in the Group’s Managed Services base.
Looking at the other lines of business, Microsoft Solutions line of business grew revenue by 20.1%; Security Solutions revenues increased by 19.8%; Converged Communications line of business ended 18.4% up on 2009, and Data Centre Solutions increased by 32.2%. Dimension Data’s Customer Interactive Solutions (CIS) line of business recorded a decline of 1.8%, which represents a decline in Product revenues offset by an excellent performance in Managed Services.
“Our employees around the globe have worked extremely hard to build our business and I want to thank them for their commitment, focus, and steadfast pursuit of excellence on behalf of our clients.
“In the last seven years we have doubled the business and expanded from operating in 29 countries to 49 countries. We’ve built a winning culture and are widely recognised in many countries around the world as one of the best places to work. We continue to aggressively build on our value proposition across our Solutions and Services on a day-to-day basis,” said Dawson.
Outlook
Dawson believes the opportunities ahead for Dimension Data remain exciting. “Dimension Data’s solutions and services are well-suited to our clients’ needs. We will continue to strive for growth rates greater than market average.
“We believe that the network is the core platform for all forms of communications and IT. Technologies and services which are reliant on the network will only grow over time and we are well-placed to continue to exploit this opportunity.
“We place enormous emphasis on our outstanding employee base of technology and managed services specialists with the skills to offer value-added solutions and services to our clients - particularly in the areas of unified communications and collaboration, virtualisation, and network performance and optimisation. We will continue to invest in our employees to enable them to provide leading, world class capabilities to our clients.
“Our services journey remains on track and we envision Dimension Data developing and taking to market a richer array of Managed Services in the future. Increasingly our services opportunities are multi-year Managed Services, and we expect this to increase going forward,” Dawson concluded.
Note: Subsequent to the year end, Dimension Data was wholly acquired by NTT. Dimension Data has made applications to cancel the listing of Dimension Data Shares from the Official List of the United Kingdom Listing Authority and from the Main Board of JSE Limited (the "JSE") and has made applications to cancel admission to trading in Dimension Data Shares on the London Stock Exchange (the "LSE") and JSE's markets for listed securities (together the "Delisting"). The proposed Delisting is expected to take effect on 14 December 2010.
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About Datacraft
Datacraft is a wholly owned subsidiary of Dimension Data plc (LSE:DDT), a US$4 billion leading global IT solutions and services provider. Datacraft operates in over 60 offices across 13 Asia Pacific countries. We help clients plan, build, support, manage, improve and innovate their IT infrastructures. Datacraft combines an expertise in networking, security, data centre solutions, Microsoft solutions and converged communications & contact centre technologies, with advanced skills in consulting, integration, training and managed services to craft IT solutions for businesses. For more information, please visit www.datacraft-asia.com
About Dimension Data
Dimension Data plc (LSE:DDT), a specialist IT services and solutions provider, helps clients plan, build, support and manage their IT infrastructures. Dimension Data applies its expertise in networking, converged communications, security, data centre solutions, Microsoft and contact centre technologies, and its unique skills in consulting, integration and managed services to create customised client solutions. www.dimensiondata.com
ENDS

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