Regional Head Office Contact Details Africa The Campus 57 Sloane Street Bryanston Sandton, 2191 South Africa Tel +27 (0)11 575 0000 Fax +27 (0)11 576 0000 Asia* 6 Shenton Way #24-11 DBS Building, Tower Two Singapore 068809 Tel +65 6322 6688 Fax +65 6323 7933 Australia 121-127 Harrington Street The Rocks, NSW 2000 Australia Tel +61 (0) 2 8249 5000 Fax +61 (0) 2 8249 5369 Europe Dimension Data House Building 2, Waterfront Business Park Fleet Road, Fleet Hampshire GU51 3QT Tel +44(0)1252 779000 Fax +44(0)1252 779010 United States 110 Parkway Drive South P.O. Box 13308 Hauppauge NY, 11788 Tel +1 631 543 6100 Fax +1 631 514 3065 *trading as Datacraft Asia Ltd
www.dimensiondata.com
ANNUAL REPORT
2005
HIGHLIGHTS
> Group revenues up by 15.2%
> Network Integration revenues up by 7.7%
> Strong Solutions revenue growth, up by 41.9%, exceeding revenue of US$750 million for the first time
> Gross margin at 20.4% (2004: 20.7%)
> Overheads well controlled, as a percentage of Group revenues improving to 18.1% (2004: 19.6%)
> Group operating profit(1) more than doubles to US$61.7 million (2004: US$25.7 million), reflecting the Group’s operational leverage
> Group operating margin(1) more than doubles to 2.3% (2004: 1.1%)
> Cash inflow from operations up by 43.1% to US$110.9 million compared to US$77.5 million in 2004
> Basic earnings per share 1.3 US cents (2004: loss 2.8 US cents) Notes: (1) Before associates, goodwill amortisation, impairment and exceptional items (2) Before goodwill amortisation, impairment and exceptional items
001
ANNUAL REPORT
2005
FINANCIAL SUMMARY
2005
2004
$’000
$’000
2,727,857
2,368,044
99,052
115,990
2,826,909
2,484,034
Group operating profit(1)
61,692
25,666
Net profit/(loss) for the year
17,764
(37,803)
Adjusted profit for the year(2)
18,643
11,434
US cents
US cents
1.3
(2.8)
1.4
0.9
Group turnover Associates turnover Total turnover
Basic earnings/(loss) per ordinary share Adjusted earnings per ordinary share
(2)
30%
20%
10%
+15%
+13%
+6%
+140%
+56%
+43%
Revenue
Gross Profit
Overheads
Operating Profit(1)
Adjusted EPS(2)
Cash from Ops
0%
% change 2005 vs 2004
002
003
ANNUAL REPORT
2005
CONTENTS
chairman’s statement
006
chief executive officer’s operating review
008
chief financial officer’s financial review
020
directors’ report
026
corporate governance report
029
audit committee report
033
employees
034
corporate social responsibility report
035
remuneration report
038
board of directors and executives
046
statement of directors’ responsibilities
049
shareholder information
050
five-year review
051
independent auditors’ report
053
annual financial statements
055
contacts and corporate information
097
Today businesses are focused on delivery, on execution, on results. They want technology-based solutions and services that enable their businesses and exceed their expectations. They’re reaching their goals by partnering with companies that bring deep technical expertise, local execution skills and support, and a vision for how technology is evolving. They’re choosing partners with a passion for excellence and who love what they do.
005
ANNUAL REPORT
2005
CHAIRMAN’S STATEMENT
The Group’s focus for the current year was on ensuring excellent service to our clients, and on improving the depth and breadth of our market offerings. While over the past few years we have engaged in exiting some non-core assets, this year we have undertaken some measured acquisition activity to extend our capabilities across our lines of business and consolidate our position as a leading global IT infrastructure solution provider. In December 2004 we acquired Euricom, a Microsoft-focused consultancy business in Belgium. In August 2005 we acquired an additional 20% shareholding in Internet Solutions, which increased our holding in this South African Internet Service Provider to 80% (effective 77.91%), and in September 2005 we acquired Bellerephon, an Australian-based provider of Microsoft management and infrastructure solutions. At 30 September 2005, the Group reflected cash and short term I am pleased to report on a year of significant progress for
investments of US$417 million. We consider it important to retain
Dimension Data.
a strong positive cash position to provide a sense of stability to our customers, and to allow us to take advantage of opportunities that
During the year, Dimension Data gained market share in many of
continue to present themselves across our Group. The Board is
the key markets in which it operates and strengthened its global
mindful of the ultimate objective of providing an acceptable cash
Solutions offerings. This was reflected in much improved operating
return to shareholders and our dividend policy is under review.
returns. We are pleased to have appointed Wendy Lucas-Bull to our Board Demand for our IT infrastructure Solutions and Services remained
of Directors, as an independent non-executive director. Wendy is a
healthy, driven by positive market momentum in most sectors
respected member of the South African business community with a
within which the Group is positioned, and strong reception for our
wealth of experience in the financial and consulting industries. The
Solutions offerings. Impressive growth in revenues led to Group
Board currently comprises the Chairman, four executive directors
(1)
operating profit of US$62 million, more than double the prior year.
and seven non-executive directors, of whom six are independent.
Credit goes to the management and staff of Dimension Data who have delivered this strongly improved operating performance and
I would like to thank all of our employees around the world for
continue to put in place the building blocks for future growth.
their dedication and hard work during the year.
They are the
key ingredient to our continued success. As we move into the A critical ingredient in our success remains our ability to attract
new financial year, I believe that our business is in an improved
and retain high quality people. To this end, we engaged this year
competitive position to benefit from what we expect to be stable
in our first Group-wide employee survey to canvass the opinions of
demand conditions in most of our key markets and territories.
our employees. Feedback from employees was very positive, and
We will continue to apply our resources, energy and capital to
employee morale in the Group continues to improve. The survey
differentiate us from our competitors, win market share, provide
identified several important areas for improvement; for example,
excellent service to our clients and deliver improved returns to our
career development and training remain key priorities. In December
shareholders.
we also revised our employee share incentive programme, by way of implementing a Share Appreciation Rights Scheme and a Long Term Incentive Plan.
Jeremy Ord Chairman
Note: (1) Before associates, goodwill amortisation, impairment and exceptional items
006
Meet Dimension Data We are a specialist IT services and solutions provider with 20 years of experience helping companies achieve business improvements through custom designed and integrated technology solutions and services. We are industry recognised experts in networking, IP telephony, security, operating environments, messaging, data centre and storage, and contact centre technologies. But most importantly… we make technologies work together to improve business performance.
007
ANNUAL REPORT
2005
CHIEF EXECUTIVE OFFICER’S OPERATING REVIEW
During the course of the year, market trends continued to play to the strengths we have developed through our lines of business. The network continues to play a critical role as the integration point in the convergence of disparate technologies, and in particular voice and data. This trend, together with our networking heritage, positions us well to help clients optimise their IT architectures, reducing operating expenses and improving return on investment.
Evidence of IT
convergence was most marked in our Converged Communications line of business, where revenues grew by 97%. Here we continue to upgrade our clients’ IT architectures and transform their voice calls into IP-based data traffic, thereby streamlining their communications network and reducing telecommunications costs. We also notice an increase in the sophistication of our clients’ IT services requirements.
Increasingly, clients are selecting a
2005 was a very good year for Dimension Data. A year of solid
combination of in-sourced, out-sourced, or multi-sourced services.
operating performance with strong revenue growth (15.2%), during
This past year we completed our Global Service Operating Architecture
which Group operating profit(1) more than doubled to US$61.7 million.
(GSOA) “baseline” project which brings us closer to having a globally
The robust improvement in our results over the past few periods
consistent managed services infrastructure. The new GSOA platform
continued, and our earnings per share were 1.3 US cents for the
helps Dimension Data better address the needs of large enterprises,
year – a positive result at the bottom line for the first time in several
provide greater and more flexible service levels, and extract benefits of
reporting periods.
scale from our overall services offerings. We expect these IT services trends to continue and we will invest further in developing IT services
Our revenue growth has been driven by the successful execution of our
that give our clients flexible services across our lines of business.
strategy of expanding aggressively into our chosen market segments, reflected by our six lines of business. Our Networking Integration line
We are proud of the high quality client base that we have built up and
of business achieved significant growth – outside of Europe, 14%
of the IT improvements we have helped our clients to achieve. During
growth reflected market share gains in several territories. Our five
2005 we looked for ways to improve our client engagement model
Solutions lines of business grew on average by 41.9%, evidencing
and conducted our first global client survey to gain feedback on their
strong traction from our continued focus in these high growth market
perceptions, preferences and concerns. We created a client special
segments. Effective execution within most of our regions, in particular
interest group to obtain feedback on our Solutions and Services
the US, Asia and South Africa, was another highlight.
development plans and implemented programmes to gain more knowledge about our sales effectiveness. We will continue to work
The marked improvement in the Group operating profit(1) reflects a
with our clients to ensure we are injecting the “voice of the client” into
good flow-through of the operating leverage in the period. Revenue
all we do. Revenues from our top 15 global clients grew by some 36%
growth drove a 13.4% improvement in gross profit. This, together
year on year. While some of this growth is attributable to improved
with ongoing containment of our fixed costs, continues to drive the
sales effectiveness, it also reflects the competitive advantage of
Group’s improved profitability.
our global IT procurement, logistics, deployment, integration and
The proportion of overheads to
revenues declined significantly to 18.1% from 19.6% in 2004, which is
management services.
ahead of our internal target.
Note: (1) Before associates, goodwill amortisation, impairment and exceptional items
008
ANNUAL REPORT
2005
CHIEF EXECUTIVE OFFICER’S OPERATING REVIEW
Dimension Data helps clients make the best decisions about
Dimension Data has an exceptional complement of skilled and
technology solutions and vendor alternatives according to their unique
committed people, which remains its most important competitive
needs. Our long term relationships with a number of market leading
advantage. During the period we have continued to invest in growing
technology and communication vendors allow us to offer the most
this complement from 8,600 to some 9,100. This investment in new
appropriate solutions. During 2005 we received multiple industry
skills is focused on improving our domain expertise and execution
and partner awards that recognised our technology expertise,
capabilities within our lines of business in all our regions.
quality of delivery and client focus. These included the prestigious Cisco Global Partner of the Year award, Microsoft’s Global Security
Going into the new financial year we anticipate a continuation of
Sales and Marketing Partner of the Year award, as well as awards
the favourable demand environment that prevailed during 2005,
from Avaya, Checkpoint, Genesys, Hewlett Packard, Nortel, RSA,
particularly in our chosen Solutions lines of business. Dimension
Sun Microsystems, Trend Micro and others. Industry leading and
Data is recognised as a world leader in Network Integration, and has
emerging technology vendors continue to approach us to develop
a growing reputation in its Solutions lines of business. We believe
partnerships, and these relationships remain a key component of our
our value propositions are resonating with our clients, driven by our
success as a specialist IT infrastructure solutions provider.
domain expertise and our ability to integrate our offerings across our lines of business. This, together with our life cycle of Services
We continue to invest to expand our expertise in our Network
approach, gives us confidence that as we move into 2006 we will be
Integration and Solutions lines of business. This investment is fueling
able to compete effectively and we will once again strive to achieve
our growth, creating a unique competitive advantage for Dimension
double digit growth in revenues. We will be vigilant in ensuring that
Data and a firm foundation for further growth. We have also invested
our cost increases are contained below the growth in our revenues
in closer alignment of the development and execution of our Services
in order to be able to continue to deliver improved profitability and
and Solutions strategies, to accelerate the delivery of a full life cycle of
returns to shareholders.
services within each of our lines of business.
009
ANNUAL REPORT
2005
STATEMENT OF DIRECTORS’ RESPONSIBILITIES Services Operating Environments & Messaging
Data Centre & Storage Solutions
Network Integration
Security
Converged Communications
Services
Customer Interactive Solutions
What we offer… Dimension Data plans, builds, supports and manages IT infrastructure solutions to exceed client expectations. Our core competency is our skill in connecting businesses, their customers, partners and suppliers over local and wide area networks. We have developed this networking expertise over the past 20 years, helping some of the leading global brands to communicate and share information. Building on this knowledge base and strength, our business has expanded into several other technology competencies that have a critical reliance on the network. Our networking heritage differentiates us. Our unique skill set positions us well to help our clients integrate and support network-reliant technologies.
Other technology competencies of Dimension Data where we bring unique technical expertise and skills are incorporated in our Solutions lines of business: ▲ Converged Communications ▲ Customer Interactive Solutions – including contact centre technologies ▲ Data Centres and Storage ▲ Operating Environments and Messaging ▲ Security. As clients’ needs evolve and technology advances, previously disparate technologies are now expanding and overlapping. Several years ago, clients were only concerned about securing their communication network. Today clients are concerned about securing their overall IT infrastructure and corporate information. Not long ago, most companies ran separate voice and data networks. Today, technology has allowed companies to combine these two networks onto one converged communications network. We help our clients take advantage of these advances and changes in technology to improve their business performance.
010
ANNUAL REPORT
2005
CHIEF EXECUTIVE OFFICER’S OPERATING REVIEW
Overview of Results Group revenues grew by 15.2% to US$2,727.9 million, with a
The Group recorded a net interest expense and investment
7.7% increase in the Network Integration line of business and an
income of US$16.9 million for the year, compared to a net interest
excellent performance from our Solutions lines of business where
and investment income in 2004 of US$5.3 million. The swing
revenues increased by 41.9% on 2004. As a result, Solutions now
to a net interest expense of US$19.5 million is as a result of the
account for 28% of revenue, up from 23% in the prior year.
capitalisation of a property lease in November 2004.
Gross profit grew by 13.4%, reflecting a 0.3% reduction in gross
The Group’s effective tax rate at 43.1% of profit before tax(2) was
margin. The margin was impacted by strong growth in product
an improvement on the prior year.
revenues (15.8% on a like-for-like basis), at lower margin than services revenues, as well as an increase in revenues from our
Adjusted earnings (before goodwill and exceptional items) were
high volume multinational customers. Services margins improved
US$18.6 million, 63.0% up on 2004, and basic earnings per share
during the year.
of 1.3 US cents reflects a return to positive bottom line profitability.
Overheads grew by 6.4% and, as a proportion of revenue, improved to 18.1% from 19.6% in the prior period, evidencing significant operating leverage. Our results therefore reflect a 140% growth in operating profit(1) to US$61.7 million, and a doubling of the Group operating margin(1) to 2.3%.
Notes: (1) Before associates, goodwill amortisation, impairment and exceptional items (2) Before goodwill amortisation, impairment and exceptional items (3) After adjusting for the impact of currency movements, and excluding acquisitions and disposals not included in either the full current period or the full prior period.
011
ANNUAL REPORT
2005
Review of revenue and trading
2005 Group Turnover
Contribution
Change on
Change on
to revenue
2004
2004 Like for Like(3)
$’000
Lines of Business Network Integration
1,470,611
54%
7.7%
7.0%
Solutions
757,973
28%
41.9%
39.7%
Other
499,273
18%
6.7%
9.8%
2,727,857
100%
15.2%
15.0%
Total Revenue Streams Product
1,732,399
64%
18.5%
15.8%
Managed Services
663,125
24%
14.0%
15.1%
Professional Services
332,333
12%
2.5%
11.1%
2,727,857
100%
15.2%
15.0%
Total
In the analysis below, all references to percentage change in turnover, gross profit and operating profit(1), as well as gross profit margins, are after adjusting for the impact of currency movements, and exclude acquisitions and disposals not included in either the full current period or the full prior period. All changes are relative to 2004.
Lines of Business
The balance of our lines of business, referred to as Solutions, grew
The Group is focused on six global lines of business.
in aggregate by 39.7%. These lines of business, which are closely aligned to our core Network Integration business, focus on high
Network Integration, the Group’s most significant line of business,
growth markets where the Group, with its strong base of networking
grew by 7.0%. Apart from Europe, where revenues declined by
experience and skills, is well positioned to compete. The growth in
11.2%, the remaining five regions grew on average by a strong
Solutions revenue this year is the result of continuing good demand
13.3%, reflecting market share growth in several territories.
in these markets, focused execution, and the leverage afforded by
This growth was supported by healthy demand in our larger,
the Group’s established global presence.
multinational accounts.
012
ANNUAL REPORT
2005
CHIEF EXECUTIVE OFFICER’S OPERATING REVIEW
Security revenues grew by 40%, reflecting the Group’s expertise
Within the Solutions lines of business:
in consulting on the storage, classification and protection of As a result
information, and the implementation of leading security technology
of our Internet Protocol (IP) heritage and a growing reputation in
Solutions and Managed Services. Dimension Data was recognised
the IP telephony market, the Group is well positioned to benefit
with awards from its security partners during the year, including
from continuing growth in this market. During the year, the Group
Microsoft, Cisco, Checkpoint and RSA.
Converged Communications revenues grew by 97%.
was Cisco’s IP Telephony Partner of the Year in both EMEA and Asia PAC, and their second largest partner in the US.
The Group’s Network Integration, Converged Communications and Security capabilities were acknowledged this year when we
Customer Interactive Solutions (CIS) revenues grew by 41%.
received the Cisco Global Partner of the Year award in recognition
Migration to IP technology continues apace, and our experience
of outstanding performance, commitment to technical excellence
in IP telephony and contact centres positions us well to benefit
and customer focus. Dimension Data continues to differentiate
in the future. Furthermore, our ongoing investment in advanced
itself in the markets within which it operates through its technical
contact centre applications (such as workforce optimisation and
skills and service excellence.
self-service) differentiates the Group amongst clients who are looking to address contact centre operational and automation
The Group’s ‘Other’ businesses account for the remaining 18% of
requirements. A further differentiator for Dimension Data is our
revenues. These operations are complementary to our Network
international presence, due to the requirement for a consistent and
Integration and Solutions offerings in the territories within which
standardised service across international contact centres.
they operate, but are unique to those territories. Most significant are Internet Solutions in South Africa (an Internet service provider
Operating Environments and Messaging (OE&M), where we
with a dominant presence in the South African ISP market) and
manage and optimise our clients’ Microsoft environments, grew by
Express Data in Australia (an IT product distribution business).
48%. Our competitive positioning was enhanced by the acquisition
Both continued to perform well.
of two businesses focused on Microsoft-based solutions Euricom in Belgium and Bellerephon in Australia. The acquisitions
Client Wins by Line of Business
substantially improve our Microsoft skills in general and desktop deployment and presence management capabilities in particular.
In our different lines of business, examples of client wins during the period included:
During the year Dimension Data was recognised by Microsoft as a global Systems Integrator partner and achieved Microsoft Gold Partner status on five continents.
▲ Network Integration: An Australian financial services institution, a US$13.5
▲
Data Centres and Storage (DCS) revenues were somewhat disappointing at 7% growth. Lower sales in the US and Australia
▲
offset good growth in the recently established Asian and European lines of business. During the year we received awards from some
▲
of our key partners – EMC in Asia, Sun Microsystems in Australia and Hewlett Packard in South Africa. In Australia we supplemented
▲
our data centre and storage skills with a small acquisition. ▲
million Managed Services contract for a Cisco IP network and Nortel call centre technologies. Converged Communications: A global financial services company in the UK, a US$3.8 million contract incorporating consulting, design and deployment of IP telephony across 1,700 branches, supported by our Managed Services. Security: State Bank of India, a US$3.2 million Security Solution to provide Enterprise Antivirus solutions in all of the Bank’s 13,000 branches, incorporating a Managed Service offering with 24 x 7 monitoring. Operating Environments and Messaging: A multinational oil company, a US$7.5 million solution to manage and monitor employee remote access onto group IT platforms. Customer Interactive Solutions: A major cellular service provider in South Africa, a US$30.0 million contract involving an outsourced call centre service as well as managed support services for various in-house call centres. Data Centres and Storage: A major financial institution in Luxembourg, a US$3.1 million contract for the renewal of high-end storage infrastructure and a storage area network incorporating storage architecture from EMC.
Notes: (1) Before associates, goodwill amortisation, impairment and exceptional items (2) Before goodwill amortisation, impairment and exceptional items (3) After adjusting for the impact of currency movements, and excluding acquisitions and disposals not included in either the full current period or the full prior period.
013
ANNUAL REPORT
2005
Revenue Streams
Also falling under Managed Services, our outsourced call centre
The Group offers a full life cycle of Services to clients – including the
business (Merchants), had a very good year, with revenues up
planning, building, support and management of IT solutions. This
significantly, and Internet Solutions grew by 20.2%.
is reported as three streams of revenue: Product (the resale of nonproprietary product), Managed Services (of an annuity or recurring
The scaleable nature of the Managed Services business, together with
nature) and Professional Services (project-based engagements).
an ongoing focus on delivery efficiencies, resulted in an improvement in
Product comprised 64% of Group revenues and Services 36%;
the Managed Services gross margin.
with Managed Services and Professional Services 24% and 12% Professional services grew by 11.1%. Good growth in our deployment
respectively.
revenues (staging and installation of IT solutions) mirrored overall Product revenues grew by 15.8%.
This growth reflects good
performance in most of the territories within which the Group operates.
revenue growth, and we also saw the benefits of a greater presence of our IT engineers on site at customers.
In particular, Product revenues in our Solutions lines of business were well up on last year. Our top 15 global clients grew at a robust 36%. This reflects the benefits of the Group’s global presence, and our ability to deliver consistent
Client Wins by Revenue Stream Across our different revenue streams, examples of client wins for the period included:
procurement, deployment and integration solutions in multiple territories. In this regard, we continue to refine our global logistics and tracking systems to ensure a seamless offering to our clients. For example, we invested further in DD Direct, an automated quoting, configuration and ordering tool that provides a self-service option to clients, simplifying the procurement process.
▲ Product: Telewest in the UK, a substantial contract involving Cisco cable
modem terminal server upgrades. ▲ Managed Services: A global financial services group in the US, a three
year, US$22.5 million maintenance agreement that leverages the services relationship between Dimension Data and Cisco in the US. ▲ Professional Services: A large UK service provider, a US$5.0 million contract to design and deploy an MPLS network, including support for fault, performance and configuration tools.
Services grew by 13.7%. Within this, Managed Services revenues grew by 15.1%. Our initiatives to extend our Managed Services offerings into the Solutions lines of business continue to produce results. We saw during the course of the year an acceleration in the number of Requests for Pricing, particularly from the US, for global, cross-border services fulfilment, validating the establishment of our global footprint and offering a substantial opportunity for the Group to cross-sell Services into an established multinational customer base. Delivering these Services is facilitated by our six global support centres, the consolidation of which was completed in the first half of the year.
014
ANNUAL REPORT
2005
CHIEF EXECUTIVE OFFICER’S OPERATING REVIEW
Regions
Africa
Asia
Australia
Europe
United Kingdom
United States
Centre
Total
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
482,871
455,977
598,738
449,585
247,053
481,046
12,587
2,727,857
42,501
17,470
18,580
6,927
11,741
7,719
(43,246)
61,692
8.8%
3.8%
3.1%
1.5%
4.8%
1.6%
445,172
362,280
481,078
438,841
218,260
416,811
5,602
2,368,044
27,560
6,897
14,014
7,353
12,744
4,573
(47,475)
25,666
6.2%
1.9%
2.9%
1.7%
5.8%
1.1%
2005 Group turnover Group operating profit
(1)
Group operating margin(1)
2.3%
2004 Group turnover Group operating profit(1) Group operating margin
(1)
1.1%
In the analysis below, all references to percentage change in turnover, gross profit and operating profit(1), as well as gross profit margins, are after adjusting for the impact of currency movements, and exclude acquisitions and disposals not included in either the full current period or the full prior period. All changes are relative to 2004.
Note: (1) Before associates, goodwill amortisation, impairment and exceptional items
015
ANNUAL REPORT
2005
Africa
The Group made a further acquisition during the year of an effective
Africa’s revenue grew by 13.0% - Product by 7.0% and Services
50% interest in ROE, a leading Nigerian IT solutions and services
by 16.3%. Managed Services were up 18.3%, with good growth
company. This acquisition increases the Group’s geographical
in Internet Solutions, Merchants and in the core Managed Services
presence and execution capabilities in Africa.
operations.
Professional Services grew by 5.7% for the period.
Within the lines of business, Network Integration grew by 11.7% and
Asia
Solutions by 23.4%, with CIS, OE&M and Security all performing
Datacraft Asia reported a robust 25.9% growth in revenue to
strongly.
US$456.0 million and a 153% increase in operating profit to US$17.5 million. This performance was underpinned by healthy demand from
Overall gross margin improved to 29.9% from 29.5% in 2004. The
both enterprise and service provider customers, and success in the
higher than average gross margin in Africa is a consequence of the
Solutions lines of business, which more than doubled during the
historically higher proportion of Services in total revenue (66.4%), at
year and now account for a third of Asia’s revenue. The Converged
better gross margins. Gross profit grew by 14.5% for the year.
Communications, DCS and Security lines of business performed exceptionally well.
Overheads increased by 2.1% over the prior year. The capitalisation of the property lease during the period resulted in a reduction in the
Almost every country in the region improved its performance over the
operating lease charge of some US$13.7 million, and an increase in
prior year. The main exception was Japan, which registered a loss
the depreciation charge of US$1.9 million.
for the year as business, especially in the second half of the year, was impacted by challenging market conditions and soft margins.
Reported operating profit improved to US$42.5 million from US$27.6
However, this was more than offset by strong performances from
million in 2004, and the operating margin increased to 8.8% from
India, all the Asean countries and New Zealand. Elsewhere, Korea
6.2%.
also did well, returning to profitability, while China achieved good progress in reducing operating losses compared to the previous
The involvement of our Black Economic Empowerment (BEE)
year.
partners since the second half of 2004 continues to create opportunities within the South African public sector and sub-
The gross margin improved to 17.1% compared with 16.2% in the
Saharan Africa. The establishment of the BEE partnership has been
prior year, with a particularly pleasing increase in the Services gross
important in protecting our competitive position in South Africa and
margin.
we have been awarded a number of government, local government and parastatal contracts, including a significant public sector
Overheads were well contained, increasing by 16.7% and the
services organisation.
operating margin doubled to 3.8% from 1.9% in 2004.
In August 2005, we increased our interest in Internet Solutions by a further 20% to 80% (effective 77.91%).
The proposed
deregulation of the South African telecoms market is expected to create new opportunities to offer voice services to our customer base. Uncertainty remains as to the regulatory framework pending finalisation of the Convergence Bill.
016
ANNUAL REPORT
2005
CHIEF EXECUTIVE OFFICER’S OPERATING REVIEW
Australia
Continental Europe
Australia’s revenues grew by 15.5%. Express Data had a particularly
Continental Europe recorded 1.0% revenue growth in difficult
good year, and while a slight reduction in its product gross margin
market conditions. Network Integration revenues declined by 11.2%,
was experienced, improved operational efficiencies and leverage led
impacted by underperformances from Sweden and Spain in the first
to an increase in its operating margin. Network Integration revenues
half of the year, and by weak performances in Italy and Switzerland
grew by a pleasing 11.8% and Solutions revenues by 14.8%, with
in the second half. The Benelux countries continued to perform
good growth in CIS, Converged Communications, OE&M and
very well, and in particular the acquisition in the first half of the
Security. Product revenues (outside of Express Data) increased by
year of a Microsoft-based application services company, Euricom,
7.9% and Services revenues by 11.0%. Managed Services reflected
supplemented a strong performance from the Belgian operation.
robust revenue growth of 13.0% and Professional Services grew by
The German business, whose performance in the first half of the
9.0%, supported by a much improved performance from the training
year was sub-optimal, recorded a much improved second half.
business.
France continued to be profitable, although operating performance was flat on the prior year.
Australia’s gross margin declined slightly to 18.5% from 19.3%, due almost entirely to the increased contribution from Express Data.
Solutions revenues improved by 52.0%, driven by excellent performances within the CIS, Converged Communications and DCS
Overheads were well controlled, increasing by 7.4%.
lines of business. CIS was further assisted by the establishment of a Merchants outsourced call centre in the Netherlands, which
During the year, the Australian business acquired the assets of the
contributed to revenue growth and profitability.
Secure Data Group, which improved its competitiveness in the areas of storage, back-up, and server and database management.
The overall gross margin in Europe declined to 20.6% from 21.4%
This acquisition supported what would otherwise have been slower
in the prior year. While product margins improved slightly, reflecting
sales from the DCS line of business. Late in the year we acquired
growth in some of the higher margin Solutions areas, services
Bellerephon, a provider of Microsoft desktop deployment and
margins declined due to weak volumes in the core Network
infrastructure solutions. This acquisition will enable us to accelerate
Integration line of business.
the execution of our OE&M line of business strategy. Reported operating profit was US$6.9 million, compared to US$7.4 Reported operating profit increased by 32.6% to US$18.6 million
million in 2004.
from US$14.0 million in 2004, and the operating margin was higher at 3.1% compared to 2.9%.
Europe incurred US$4.4 million of retrenchment and restructuring expenses during the year, reflected as operating exceptional items. The main regions affected were Sweden, Germany, Italy and France. In September 2005, the Group announced the amalgamation of the UK and Continental Europe into one operating region, and the consolidation of the central management teams of the two regions. This will improve our ability to deliver multinational Solutions and Services, and leverage our execution capabilities across Europe.
017
ANNUAL REPORT
2005
United Kingdom
Gross margin improved to 14.7% from 14.1% in 2004.
Product
Revenues in the UK grew by 13.9%, robust Product revenue growth
margins were stable, and Services margins improved strongly,
of 25.1% being achieved mainly out of the UK’s large multinational
benefiting from an expanded range of Managed and Professional
and service provider client base. Contracts with these clients for
Services offerings and more effective utilisation of our technical
product procurement and installation tend to be high volume and
resource capacity.
attract lower than average product margins. As a result, product gross margins declined by 2.2%. Managed Services grew by 12.5%,
Reported operating profit increased to US$7.7 million from US$4.6
supported by stable demand for our managed network services,
million, with a widening of the operating margin to 1.6% from 1.1%
and an improved performance from Merchants, while Professional
in 2004.
Services revenues were broadly flat. The overall gross margin came down to 21.8% from 23.4% in 2004, better Managed Services margins reduced the impact of lower
Client Wins by Region Across the Group’s regions, examples of client wins during the period included:
Product and Professional Services margins. Gross profit grew by 5.9%. Network Integration revenues increased by 16.2%, and Solutions
▲ Africa: A large public sector organisation, a US$20.0 million, two year,
▲
by a pleasing 28.3%, with strong growth from Converged Communications, Security and CIS.
▲
Overheads increased by 10.3%, partly as a result of investments
▲
during the year in Solutions capacity and resources. Consequently, operating profit and operating margin declined to US$11.7 million and 4.8% from US$12.7 million and 5.8% in 2004. United States
▲ ▲
Converged Communications contract involving a communications infrastructure refresh, upgrades, maintenance and support at branches throughout South Africa. Asia: Hanarotelecom, a US$12.1 million, Network Integration contract involving the client’s core broadband network, data centre and network redundancy. Australia: A large mobile service provider, a three year, multi million dollar CIS contract for contact centre operational support and Cisco maintenance services. Continental Europe: A large French financial institution, a US$10.5 million, CIS contract involving a global solution based on Genesys for multi channel handling, Nice for quality monitoring and Scansoft for speech self-service. United Kingdom: A global financial institution, a US$6.3 million Network Integration and Professional Services contract. United States: A global healthcare company, a three year, US$8.9 million, Network Integration contract with on-line purchasing through DD Direct, worldwide logistics handled by Dimension Data Commerce Centre and global Managed Services.
The US recorded a highly satisfactory improvement on the prior year, with revenues up 22.6%. Product revenue grew by 20.0%, with
Centre
significant traction in the large enterprise and multinational customer
The US$43.2 million costs at the Centre comprise holding company
base. Services revenue growth of 36.4% reflects a growing attach
costs, investment in global Solutions and Services development
rate of Managed and Professional Services to product sales, the
(the benefits of which are reflected in the improved regional
region’s investment in sales and technical capacity, as well as the
performances) and share incentive costs. Excluding the expensing
increased presence of our engineers on site at our clients. Services
of the new share incentive schemes for the first time, the net expense
growth was further supported by the new Third Party Maintenance
was US$39.5 million, a significant reduction on the US$47.5 million
agreement to support Cisco devices in the region.
reported in 2004.
Network Integration grew by an impressive 20.3% and Solutions by 28.5%, with strong contributions from Converged Communications
Brett Dawson
and Security.
Chief Executive Officer
018
What our employees are saying about us... Our employees deliver each day on our promises to our clients. They are our most important asset and the critical link to our success. In 2005, we undertook our first global employee satisfaction survey to better understand our employees’ perspectives. Seventysix percent of employees completed the survey.
80% of respondents are satisfied or ver y satisfied with Dimension Data.
019
Employee quotes on what employees like best about working at Dimension Data: “The challenging creative environment that makes Dimension Data what it is….Leading the Pack….Best of the Best.” “The friendly culture which flows from the top right through the business.” “The personal growth and experience I have gained.”
84% of respondents have a clear understanding of expectations and their role.
“I came to Dimension Data because I had the opportunity to be part of a global group. I love that aspect of the job. I also admire Dimension Data for being good at their core focus and that they are willing to make adjustments to become more relevant in the industry.”
81% of respondents know how they contribute to the Group achieving its objectives.
“Working with high-calibre people on focused and meaningful projects.”
78% of respondents believe the Dimension Data values of Teamwork, Commitment, and Professional Excellence are meaningful and important.
During 2005, regional and executive management initiated specific action plans to address areas for improvement in employee satisfaction. Employee perspectives will be surveyed annually going forward to ensure we continue to keep these paramount.
ANNUAL REPORT
2005
CHIEF FINANCIAL OFFICER’S FINANCIAL REVIEW
Total overheads increased by 6.4% to US$494.3 million. After adjusting for the impact of the new share incentive schemes (US$3.8 million increase in overheads), and for the capitalisation of a property lease (US$11.7 million reduction in overheads), total overheads grew by 8.1%. This containment of overhead growth below the rate of growth of revenue and gross profit is evidence of the success of continuing efforts, in the regions and at the centre, to improve overhead efficiencies. Examples of initiatives include the ongoing consolidation of the Group’s back office accounting platforms, and DD Direct – an e-procurement application developed in-house to provide our sales force and clients with an automated, on-line sales quoting and ordering facility. We also reported a reduction in the cost at the Centre from US$47.5 million to US$39.5 million, adjusting for the share incentive costs.
Introduction
Group operating profit(1) improved to US$61.7 million from US$25.7
Dimension Data is listed on the London Stock Exchange and the JSE
million in 2004, an increase of 140%, and the Group operating margin(1)
Securities Exchange and is obliged to comply with UK reporting and
doubled from 1.1% in 2004 to 2.3%, continuing the recovery of the
corporate governance requirements.
Group’s profitability to more acceptable levels.
The accounting policies used in the preparation of the September 2005
Associate Companies
financial statements are consistent with those applied previously.
The Group’s share in operating profits from associate companies for the period was US$7.9 million (2004: US$7.3 million). Key contributors
Group Operating Profit
to these profits were Plessey (US$4.5 million), Paracon (US$1.6 million)
Group turnover, excluding associates, increased by 15.2% to
and Automate (US$1.3 million).
US$2,727.9 million for the year, from US$2,368.0 million in 2004. Including associates, total revenues grew by 13.8% to US$2,826.9
Plessey (49% holding), is an IT services company providing installation
million.
and support services to telecommunications service providers in several countries in Africa, including South Africa and Nigeria. Despite improved
Paracon (27% holding) is an IT services company specialising in IT
services margins, product margins were impacted by a change in the
resourcing and business solutions and is listed on the JSE Securities
mix of product sales with an increase in higher volume, lower margin
Exchange.
contracts. The higher growth in product sales (18.5%) compared
company providing dealer management software to the automotive
to services growth (9.9%), also reduced the average gross margin.
industry.
Gross margin declined from 20.7% to 20.4%.
Automate (45% holding) is a software development
Gross profit for the year increased by 13.4%.
Note: (1) Before associates, goodwill amortisation, impairment and exceptional items
020
ANNUAL REPORT
2005
CHIEF FINANCIAL OFFICER’S FINANCIAL REVIEW
Net Interest Payable and Investment Income
Exceptional Items
Investment income decreased to US$2.6 million from US$4.6 million
Operating exceptional gains totalled US$5.9 million. Included in this
in 2004, as a result of a reduced yield on a fixed asset investment in
amount were:
South Africa. The bulk of this investment was surrendered subsequent
▲
to year end (see Note 35).
The release of the prior year’s provision for an onerous operating lease and the establishment, upon capitalisation of the Campus property lease in South Africa, of an asset impairment charge.
Net interest payable for the year was US$19.5 million, compared to
This resulted in a net gain of US$5.5 million. The variance between
net interest income in 2004 of US$0.7 million. Interest receivable on
the onerous lease provision release, and the impairment of the
Group cash holdings was US$12.9 million, compared to US$10.9
property, arose mainly as a result of an improved occupancy
million in 2004. Interest payable was US$32.9 million, compared to
outlook in the Campus building at the end of the current financial
US$10.5 million in 2004. This interest payable includes: ▲
▲
▲
US$20.0 million in terms of the liability established pursuant to the
year. ▲
Retrenchment and restructuring costs of US$5.2 million,
capitalisation of the Campus property lease in November 2004.
predominantly in Continental Europe. These costs were incurred
US$6.2 million in terms of the Group’s US$100 million convertible
mainly in Germany, France, Sweden and Italy. In September, the
bonds.
Group announced the amalgamation of Continental Europe and
US$2.8 million in terms of the Group’s $28.2 million loan from
the UK into one operating region, and the consolidation of those
Sanlam, a South African bank. This loan was settled subsequent
management structures.
to year end (see Note 35). Non-operating exceptional items include US$2.4 million relating
Taxation
to the revision of certain assumptions pertaining to the yield on an
The Group taxation charge was US$22.7 million, compared to
endowment asset in the South African business. The bulk of this
US$19.6 million (before exceptional items) in 2004. The effective rate
endowment was surrendered subsequent to the year end.
of taxation before exceptional items and goodwill amortisation was 43.1%, compared to 51.0% in 2004. This reduction in the effective rate reflects the benefits of the improved profitability of the Group.
As profitability continues to improve,
particularly in those territories where profits are not sufficient to fully absorb Group overhead allocations, we expect this effective tax rate to continue to reduce.
021
ANNUAL REPORT
2005
Capitalisation of Leased Asset
Balance Sheet
On 16 November 2004, the Group acquired the rights to the bare
Equity shareholders’ interests at 30 September 2005 were US$414.4
dominium (freehold) over a leased property in Johannesburg for
million, compared to US$394.2 million last year. Net funds were
US$4.6 million. From that date the property lease has been accounted
US$138.2 million (2004: US$295.7 million), comprised of US$416.6
for as a finance lease.
million, (2004: US$425.0 million) of cash and short term investments and interest bearing debt of US$278.4 million (2004: US$129.5 million).
The balance sheet effects of the capitalisation were as follows: ▲
Increase in land and buildings of US$133.7 million and raising of
The reduction in net funds of US$157.5 million arose largely from the capitalisation of the property lease obligation during the year.
an equivalent long term liability. ▲
Impairment of the asset by US$15.8 million.
Subsequent to year end, the Group repaid an interest bearing loan
▲
Release of a provision for onerous operating lease of US$17.4
of US$28.2 million. The repayment was effected partly by way of the
million, and of a provision for unrecovered costs in respect of
part surrender of an investment fixed asset of US$18.5 million (see
vacant and third party space of US$3.8 million. The latter release
Note 35).
was made possible by an improved occupancy outlook for the property at the end of the current period. ▲
The net book value of the asset at 30 September 2005 amounted to US$118.8 million.
▲
The carrying value of the liability at 30 September 2005 amounted to US$142.8 million.
The profit and loss effects of the capitalisation during the year were as follows: ▲
At the operating profit level, operating lease payments for the period up to 16 November 2004 were US$1.8 million and a depreciation charge on buildings of US$1.9 million from 16 November 2004. The capitalisation resulted in a benefit at the operating profit level of US$11.7 million, relative to what the position would have been had the lease continued to be treated as operating.
▲
An interest expense of US$20.0 million from 16 November 2004.
▲
Rentals received from external tenants amounted to US$6.0 million.
022
ANNUAL REPORT
2005
CHIEF FINANCIAL OFFICER’S FINANCIAL REVIEW
Cash Flow
Liquidity Risk and Funding
Net cash inflow from operations, including the impact of the lease
Total cash and short term investments at 30 September 2005 was
capitalisation, was US$110.9 million compared to US$77.5 million in
US$416.6 million (2004: US$425.0 million).
2004. Depreciation and capital expenditure were US$44.4 million and US$59.7 million compared to US$42.5 million and US$32.9
Total interest bearing debt was US$278.4 million (2004: US$129.4
million in 2004 respectively, analysed by region as follows:
million), comprising: ▲
Depreciation $ million
Capital Expenditure
2005
2004
2005
2004
21.7
17.5
33.7
15.7
Asia
7.5
7.4
5.9
6.6
Australia
4.5
4.0
3.5
2.6
Europe
2.8
4.8
2.7
2.7
UK
5.4
6.0
11.7
2.8
US
2.5
2.8
2.2
2.5
44.4
42.5
59.7
32.9
Property lease obligation (US$142.8 million). This loan bears interest at 16.79% per annum and is repayable over the next 12 years. The current annual repayment is US$13.0 million, escalating at 11% per annum.
Africa
Total
▲
Convertible bonds (US$101.4 million). This bond is repayable in December 2009.
▲
A loan in South Africa (US$28.2 million). This loan was settled in October 2005, by way of part surrendering a fixed asset investment (US$18.5 million) and the balance with cash.
▲
Overdraft of US$6.0 million.
Net funds, being total cash and short term investments, net of total There was a net investment in working capital for the period of US$1.0 million, compared to a reduction of US$7.1 million in 2004. This was achieved despite the growth in Group turnover of 15.2%.
interest bearing debt, were US$138.2 million at the end of the year.
Interest Rate Risk Surplus cash is invested across the Group in flexible rate, short
Stock holdings remained in line with the previous year, while
to medium term deposits. As such, the Group is exposed to the
debtors increased by 16.4% to US$637.2 million, and trade debtors
effects of fluctuating deposit rates.
by US$52.6 million to US$474.2 million. Trade debtors days sales
interest cost in SA rand of 16.79% on its property lease obligation
outstanding reduced to 54 days from 55 days at 30 September
and a fixed interest rate in US dollars of 5.375% on the convertible
2004.
bonds. A further loan in South Africa, which bore interest at a
The Group incurs a fixed
flexible rate, was settled subsequent to year end. Creditors increased to US$785.6 million from US$670.2 million at 30 September 2004. Trade creditors days outstanding reduced to 44 days from 49 days at 30 September 2004. There was no change in our trading terms with our major suppliers. The reduction in creditors days was offset by an increase in deferred revenues and accruals.
023
ANNUAL REPORT
2005
Currency Risk
Accounting Standards - IFRS
The Group has operations in over 30 countries and receives
With effect from the year ending 30 September 2006, Dimension
revenues and incurs costs in numerous foreign currencies, the most
Data Holdings plc will prepare its consolidated financial statements
material of which are the South African rand, the Australian dollar,
under International Financial Reporting Standards (IFRS).
British Sterling and the Euro. It is not the Group’s policy to hedge
accordance with IFRS, adjustments to the 2004 closing retained
foreign currency earnings and as a consequence, movements in
earnings and restatements of the results for the first half of 2005
exchange rates can affect the Group’s results. When Dimension
and the year ended 30 September 2005 will be published when the
Data invoices in local currency and has a foreign currency exposure
Group reports its 31 March 2006 results in May 2006.
In
to suppliers, it generally uses forward exchange contracts to hedge its foreign exchange risk, or adjusts the price charged to clients to
The Group’s current view is that the major effects of moving from
take account of exchange rate fluctuations. In particular, many of
accounting under UK GAAP to IFRS will be in the following areas:
the products supplied by the Group are linked to the US dollar, and
▲
Effects of changes in foreign exchange rates (IAS 21)
the purchase of these products is often paid in US dollars.
▲
Accounting for financial instruments, including embedded derivatives and unrealised profits/losses for forward exchange
The following table reflects the average and year end exchange
contracts (IAS 32 and IAS 39)
rates against the US dollar of the SA rand, the Australian dollar,
▲
Goodwill acquired in business combinations (IFRS 3)
Sterling and the Euro:
▲
Share-based payments (IFRS 2)
▲
Leases (IAS 17)
▲
Accounting for venture capital investments (IAS 39)
▲
Employee benefits (IAS 19).
2005 Exchange Rates
2004
Average Year end Average Year end
South African Rand
6.515
6.390
6.406
6.406
Australian Dollar
1.312
1.313
1.401
1.395
Sterling
0.556
0.568
0.552
0.556
Euro
0.815
0.831
0.820
0.811
A programme is underway to ensure that the Group is ready to report under IFRS in 2006, and able to produce IFRS compliant information for comparative purposes from 30 September 2004. We will communicate the anticipated impact of the IFRS conversion more fully in January 2006.
Counterparty Risk A number of major international financial institutions are
Dave Sherriffs
counterparties to the foreign exchange contracts and deposits
Chief Financial Officer
transacted by the Group.
The Group continually monitors its
position and the credit rating of its counterparties and manages its credit exposure to any particular entity.
024
What our clients are saying about us... We take our clients’ perspectives on our performance very seriously.
“The employees we know are very committed.” – Client confidential
“I am very happy with the service and support that Dimension Data provide me with. They have been proactive in all areas of account management and have been responsive to urgent support needs when we have had them.” – a regional utility provider
“Based on previous experience and Dimension Data’s service portfolio, I feel that there are only a few comparable service providers worldwide.” – Client confidential
“Very pleased with support and services. Flexible service arrangements – very helpful in achieving objectives”. – a regional media and entertainment company “We highly value the technical assistance, competence and dialogue that we get from, and have with, Dimension Data. So far, we have no reasons to even look for other providers of technical consultation. Keep up the good work.” – a European municipality
025
“I have received excellent service from Dimension Data and I am extremely happy with their aftersales service. Always willing to go the extra mile.” – a leading global beverage company Global client perspectives and response patterns will be monitored annually to ensure our clients’ voices are guiding our decision making. In June 2005, clients were asked as part of our first Global Client Satisfaction Survey what comments they would like to make to the CEO of Dimension Data.
ANNUAL REPORT
2005
DIRECTORS’ REPORT
The Directors of Dimension Data present their annual report and audited financial statements for the year ended 30 September 2005. Principal activities
The Group continued its investment in the development and
Dimension Data Holdings plc is a specialist IT services and
implementation of its e-procurement facility for its clients. Clients
solutions provider helping clients plan, build, support and manage
have the ability to access Dimension Data offerings via their
their IT infrastructures. Dimension Data applies its expertise in
core e-procurement service or directly via the Internet. This is in
networking, security, operating environments, storage and contact
the process of being implemented in all regions and adoption by
centre technologies and its skills in consulting, integration and
regional and multinational clients is showing significant growth.
managed services to create customised client solutions to achieve improved business performance.
Acquisitions In December 2004 we acquired Euricom NV, a Microsoft-focused
The Directors’ Report should be read in conjunction with the
consultancy business in Belgium.
Chairman’s Statement, the Chief Executive Officer’s Operating Review and the Chief Financial Officer’s Financial Review, which
In May 2005 Dimension Data acquired a 51% stake in Dimension
provide information about the Group’s businesses, their financial
Data Ltd in Nigeria, which had acquired the assets of ROE Ltd, a
performance during the year and likely future developments.
Nigerian IT solutions and services company.
Results
In August 2005, we acquired a further 20% shareholding (total
For the year ended 30 September 2005, total turnover (including
effective interest now 77.91%) in Internet Solutions (Pty) Ltd from
associates) was US$2,826.9 million, compared with US$2,484.0
Nedcor Ltd.
million for the previous year. Total operating profit before goodwill amortisation, impairment and exceptional items was US$69.6
In September 2005 we acquired a 51% interest in Bellerephon
million, compared with US$33.0 million for the previous year. Basic
Group Pty Ltd, an Australian-based provider of Microsoft
earnings per share amounted to 1.3 US cents (2004: loss 2.8 US
management and infrastructure solutions.
cents). Further details of acquisitions are set out in Note 27. Dividends The Board considers it important to retain a strong positive cash
Disposals
position to provide a sense of stability to our customers and to
There were no material disposals during the year.
allow us to take advantage of opportunities that continue to present themselves across our Group. The Board is mindful of the ultimate objective of providing an acceptable cash return to shareholders and our dividend policy remains under review. Research and development Dimension Data continues to align its research and development investments with its core strategy of establishing world class expertise in its lines of business. Dimension Data also continues to invest in advanced service models where capacity benefits can be achieved. One such investment is the acquisition of Bellerephon, which establishes a desktop deployment offering that is being rolled out to all regions. The Group has continued its investment in achieving alignment across all regions, facilitating the leverage of intellectual property and adoption of best practices. 026
ANNUAL REPORT
2005
DIRECTORS’ REPORT
Directors The current Directors are listed on pages 46 and 47. Details of the members of the Board, who served throughout the year, except as listed, are given below: Name
Position
Appointed/Resigned
Jeremy Ord
Chairman
May 2000
Brett Dawson
Chief Executive Officer
March 2004
Stephen Joubert
Group Executive Global Solutions Groups
July 2000
Patrick Quarmby
Director: Corporate Finance
July 2000
David Sherriffs
Chief Financial Officer
June 2004
Gordon Waddell
Senior independent non-executive director
July 2000
Rupert Barclay
Independent non-executive director
June 2004
David Frankel
Non-executive director
November 2004 (resigned)
Wendy Lucas-Bull
Independent non-executive director
July 2005
Dillie Malherbe
Non-executive director
November 2003
Moss Ngoasheng
Independent non-executive director
September 2002
Rory Scott
Independent non-executive director
July 2000
Dorian Wharton-Hood
Independent non-executive director
July 2000
At the forthcoming Annual General Meeting, Stephen Joubert, Rory
Corporate Governance
Scott and Dillie Malherbe retire by rotation and offer themselves
A report on Corporate Governance and compliance with the
for re-election in accordance with the Articles of Association. The
Combined Code is set out on pages 29 to 32.
Chairman confirms that the directors up for re-election continue to be effective in their roles as directors of the Company. The
Employee involvement
Company’s Articles of Association provide that every director
The Dimension Data Group seeks to engage all employees in
appointed to the Board during the year shall automatically retire and
a shared commitment to the success of its business and keeps
seek election at the next general meeting following appointment.
them informed regarding the business environment and matters of
Accordingly, shareholders will be asked to elect Wendy Lucas-Bull
concern to them.
as a non-executive director. Dimension Data offers long term incentives and performanceBiographical details of those directors seeking re-election and
related bonus payments in order to encourage the participation of
election are set out on pages 46 and 47.
employees in the success of the Group. Details of the long term incentives appear in the Remuneration Report, and the outstanding
Directors’ memberships of Board Committees are set out in the
share options, Share Appreciation Rights and Long Term Incentive
Corporate Governance Report. Details of Directors’ service
Plan awards appear in Note 36 to the annual financial statements
contracts and remuneration are set out in the Remuneration
on pages 93 and 94. An Extraordinary General Meeting (EGM)
Report. Details of the Directors’ interests in any Group company
was held on 2 December 2004, where approval for the Long Term
can also be found in the Remuneration Report.
Incentive Plan and Share Appreciation Rights Scheme was given.
027
ANNUAL REPORT
2005
Ethics
Post balance sheet event
The Group embraces the highest standards in its business activities.
There were no post balance sheet events, other than disclosed in
The Group operates in accordance with an ethical code that is
Note 35.
distributed to employees via the corporate intranet. A copy of the code is available on the Group’s website www.dimensiondata.com.
Going concern
The Group is not political.
It does not make contributions to
After making due enquiry, the Directors consider that, as at the
political parties or allow its assets and services to be used in any
date of the approval of the financial statements, the Group has
way that favours any particular political grouping, other than in the
adequate resources to continue to operate for the foreseeable
provision of its normal products and services, under its usual terms
future. For this reason, they continue to adopt the going concern
and conditions of sale.
basis in preparing their financial statements.
Authorised share capital
Corporate responsibility
The authorised share capital of the Company is made up of £50,000,
Dimension Data’s position on the environment and on charitable
divided into 50,000 deferred shares of £1 each, and US$30 million,
donations is detailed in the Corporate Social Responsibility Report
divided into 3 billion ordinary shares of 1 US cent each.
set out on pages 35 to 37. Donations and grants made during the year totalled US$167,000 (2004: US$42,000). The Company made
The holders of the deferred shares have no right to receive notice of
no political donations in the year under review (2004: nil).
any general meeting of the Company, nor the right to attend, speak or vote at such general meetings. The deferred shares have no
Auditors
rights to dividends and on a return of assets in a winding-up, entitle
Resolutions to reappoint Deloitte & Touche LLP as the Group’s
the holder to the repayment of the amounts paid on the deferred
auditors and authorising the Directors to determine their
shares after repayment of the capital paid up on the ordinary
remuneration will be proposed at the forthcoming Annual General
shares plus the payment of US$10 million per ordinary share.
Meeting.
Issued share capital
Company Secretary
As at 30 September 2005, the Company’s issued share capital
The UK Company Secretary is Mrs JM Duck and the South African
was 50,000 deferred shares of £1 each and 1,345,050,505 ordinary
Company Secretary is Mrs ML Taylor (details on page 97).
shares of 1 US cent each. Annual General Meeting Details of interests of 3% or more in the issued ordinary share
The notice convening the Annual General Meeting, together with
capital of the Company are shown in Shareholder Information on
the proxy form and notes explaining the various resolutions, will be
page 50.
mailed to shareholders in due course.
Creditor payment policy
By Order of the Board
Dimension Data Holdings plc is a holding company and, as such,
Mrs JM Duck
had no trade creditors at the year end. It is therefore not applicable
Secretary
to provide statistics for the Company as required by the Companies
15 November 2005
Act. Group operating companies have no fixed payment policies but agree in advance the best possible terms with their suppliers and the Group is committed to honouring those terms.
028
ANNUAL REPORT
2005
CORPORATE GOVERNANCE REPORT
This report contains a summary of how the Board has complied with the principles set out in the Combined Code. Throughout the year ended 30 September 2005 the Company has
The non-executive directors have met independently without
been in compliance with the Code provisions set out in Section 1
executives present three times during the year, and in addition
of the 2003 FRC Combined Code on Corporate Governance with
communicate telephonically and electronically on a regular basis.
the exception that: Board training and evaluation Dillie Malherbe was appointed as a member of the Remuneration
During the period under review, the individual performance of the
Committee on 15 September 2004 and is not considered to be
executive directors has been evaluated by using the performance
independent, solely due to his executive role at VenFin Ltd. As
management and performance review system that has been
at 30 September 2005 VenFin Ltd held 6.99% of the Company’s
implemented throughout the Group. It is intended that further
share capital and a subsidiary of VenFin Ltd currently holds the
evaluations on Board performance as a whole shall be conducted
Convertible Bonds as detailed in Note 22 to the financial statements
on an annual basis.
on page 80. Dillie has extensive experience in the field of executive remuneration. The Board considered all the implications of his role
Board operation
at VenFin Ltd and concluded that this would not compromise the
The Board is responsible to the shareholders for the conduct of the
independence of his input to the Remuneration Committee. The
business of the Group, and decides upon Group strategy. It also
Board also considers that the valuable input to the Remuneration
reviews operational performance, approves the Group’s business
Committee that Dillie provides justifies his appointment.
plans, approves the interim and annual financial statements, determines the Group’s authority levels, treasury policies and risk
The Chief Executive Officer’s Operating Review and the Chief
management policies, ensures adequate funding, and approves
Financial Officer’s Financial Review contain detailed reviews
major investments and the remuneration of the non-executive
of the Group’s performance and financial position. The Board
directors. A defined schedule of matters reserved for decision by
considers these reports, along with the Chairman’s Statement and
the Board and those delegated to management is maintained.
the Directors’ Report, to reflect, with reasonable accuracy, the Group’s position and prospects. The Directors’ responsibility for
Financial reporting is routinely performed according to a strict
the financial statements is described on page 49.
schedule. The non-executive directors are provided with sufficient information to enable them to reach independent conclusions
Board of Directors
on the matters brought to their attention at board meetings. In
A table setting out members of the Board during the period can be
addition to the board meetings, detailed briefings are given to the
found on page 32.
non-executive directors by board and non-board members, giving non-executives an opportunity to question operational executives
Biographical details for the current directors can be found on
directly.
pages 46 and 47. The Board ensures that each director is provided with appropriate The Board currently comprises the Chairman, four executive
and timely information in order to exercise his judgement. All the
directors, and seven non-executive directors. The Board considers
directors have the facility to take independent professional advice
all its present non-executive directors, with the exception of Dillie
at the Company’s expense, following a formal procedure that
Malherbe, to be independent. Gordon Waddell holds the position
has been approved by the Board. They also have access to the
of senior independent non-executive director.
services and advice of the Company Secretaries in the UK and South Africa.
The Board has met five times during the past year. A table indicating attendance by directors at Board and Committee meetings is given at the end of this report.
029
ANNUAL REPORT
The Board has appointed four committees to which it has
Remuneration Committee
delegated responsibilities to allow it to control the activities of
Rory Scott (Chairman)
the Group effectively. Each of these committees operates within
Dillie Malherbe
defined terms of reference. Copies of the terms of reference for the
Gordon Waddell
2005
Audit, Nomination and Remuneration Committees are available on the Company’s website www.dimensiondata.com
The Remuneration Committee is comprised of two independent non-executive directors and one non-executive director.
Dillie
Executive Committee
Malherbe was appointed to the Committee on 15 September
The Executive Committee has responsibility for the day-to-day
2004, as explained on page 29. The Remuneration Committee met
running of the business and the execution of the Group’s strategy.
three times in the past year. It operates within defined terms of
The Executive Committee is chaired by Brett Dawson, and the
reference, and recommends to the Board the remuneration policies
other executive directors are also members. Additional members
for the Group’s directors and senior executives, having considered
of the Executive Committee are detailed on page 48. There is a
relevant market norms and independent advice where appropriate.
clear division of responsibilities between the Executive Committee
No director is involved in determining his own remuneration.
and the Board. The Executive Committee meets fortnightly.
During the year, the Committee made grants under the Long Term Incentive Plan and the Share Appreciation Rights Scheme.
Audit Committee Rory Scott (Chairman)
The report of the Remuneration Committee is contained on pages
Rupert Barclay
38 to 45.
Gordon Waddell Derek Irish
Nomination Committee Jeremy Ord (Chairman)
The Audit Committee is comprised of three independent non-
Gordon Waddell
executive directors and Derek Irish, a chartered accountant and
Dorian Wharton-Hood
a senior partner in an independent accounting practice. The Committee met four times during the year. The Group’s external
The Committee meets as necessary, and has met once during the
and internal auditors attend the meetings and have direct access
year under review. The Nomination Committee is responsible for
to the Committee to report the results of work directed by the
reviewing the composition of the Board and identifies and makes
Committee as well as any matters of concern. The Chief Financial
recommendations to the Board regarding the appointment of new
Officer attends the meetings at the request of the Committee.
directors. It also satisfies itself that appropriate succession plans are in place for the Board and senior management of the Group,
The report of the Audit Committee is contained on page 33.
and reviews the performance of non-executive directors to ensure that they have devoted sufficient time to their duties. As noted previously, the Nomination Committee continued to carry out a search for further independent non-executive directors. The Nomination Committee recommended the appointment of Wendy Lucas-Bull as an independent non-executive director, a respected member of the South African business community with substantial experience in the financial and consulting industries.
030
ANNUAL REPORT
2005
CORPORATE GOVERNANCE REPORT
Communication with shareholders
The internal audit function is a structured Internal Control review
The Group is committed to honest, open and regular communication
process based on risk assessment. The system of Internal Control
to all stakeholders on both financial and non-financial matters.
is designed to manage rather than eliminate risks to which the Group is exposed, and provides reasonable rather than absolute
The Group reports formally to shareholders when half and full year
assurance against material misstatement or loss.
results are announced and issued to the relevant stock exchanges, shareholders and media. Executive and senior management also
The Audit Committee regularly reviews the work plan and key
give presentations to institutional investors, analysts and the media
findings of the internal and external audit process and monitors
over the results period.
developments to ensure that areas of weakness are addressed. Responsibility for implementing controls and improvements lies
Regular stakeholder meetings are held to update the market on
with management on a business unit or regional level throughout
the Group’s strategies, operations and performance. Executive
the Group. The Audit Committee has delegated the responsibility
and senior management attend these meetings on a regular basis.
for review of the Group Risk Register and Internal Audit findings
All briefings and meetings are conducted in line with the Group’s
to the Group Risk Committee. This committee provides an
written guidelines to ensure control over price-sensitive information
advisory function to the Board and Audit Committee on all matters
and equality of disclosure. In addition, directors are kept informed
concerning risk and internal control.
of the views of all stakeholders through briefings from the investor relations team and the Chief Executive Officer.
The processes above have been in place for the year under review up to the date of approval of the annual report and accounts. The
Shareholders are invited to attend the Annual General Meeting and
Audit Committee and the Board are satisfied that the system of
to pose questions to the Board. All executive and non-executive
Internal Control is in line and has been in accord with the guidance
directors are expected to attend this meeting.
under Turnbull.
Financial and other information about the Group is contained on its
Financial reporting
website, www.dimensiondata.com. A copy of the Group’s annual
A comprehensive budgeting process takes place annually
report is sent to stakeholders and is posted on the website.
throughout the Group, culminating in regional budgets that are reviewed and approved by the Board. The Chief Financial Officer
Risk Management and Internal Control
is responsible for determining financial policy within the Group
Ultimate responsibility for the Risk Management within the Group
and the Chief Executive Officer is responsible for executing these
lies with the Board. This responsibility includes regular review of the
financial policies and ensuring compliance with Group strategy.
effectiveness of the Risk Management and Internal Control systems
The Chief Executive Officer is also responsible for establishing
and functions. The Risk Management function, run by the Group
the integrity of forecast data upon which executive decisions are
Risk Manager, includes an Enterprise wide Risk Management (ERM)
based.
programme and the internal audit function. The ERM provides assurance to the Board on all matters concerning Enterprise Risk,
Each Group operation reports its activity, turnover, actual
including strategic, operational, financial and compliance risks.
results, cash position and forecasts monthly to the Board. The
The programme is structured in a way that focuses on the risks
Executive Committee considers these against agreed quarterly
relevant to Dimension Data’s business objectives.
and annual forecasts and the annual budget, and reports to the Board quarterly. In addition, the Chief Financial Officer distributes monthly management accounts to non-executive directors serving on the Board.
031
ANNUAL REPORT
2005
Key controls over business unit risks include reviews against
Controls over central functions
performance indicators and exception reporting. Business units’
Treasury and Corporate Finance are controlled centrally. Treasury
senior management are responsible for identifying, evaluating and
policies are recorded in writing and reviewed regularly.
managing business risks. There are channels of communication available to report significant risks to the Board if necessary.
Authority and review The Group has clearly defined levels of authority for the subsidiary
Quality and integrity of personnel
boards and their directors in making financial and operational
The Group is committed to aligning its employees with its interests
decisions including major investments, capital expenditure and
and values. It has a published ethical code to which employees are
contractual engagements with customers and suppliers. The
expected to adhere, and transgressions are strictly dealt with. The
Group’s internal audit function monitors compliance with these
Directors’ Report, the Report on Employees and the Corporate
authority levels.
Social Responsibility Report contain information regarding the Group’s commitment to employees and ethical practices. IT systems Consolidating of the Group’s IT systems continues with a focus on globalisation of common systems. This benefits our customers through improved consistency of service, and our internal processes by enhanced knowledge sharing. The security of data held on IT systems is reviewed regularly and remains a priority, as does the continuous improvement of disaster recovery systems.
Attendance at meetings during the period under review Name
Board (5)
Audit (4)
Remuneration (3)
Nomination (1)
JJ Ord
5
n/a
n/a
1
BW Dawson
5
n/a
n/a
n/a
SM Joubert
4
n/a
n/a
n/a
PK Quarmby
5
n/a
n/a
n/a
DB Sherriffs
5
n/a
n/a
n/a
RGML Barclay
5
4
n/a
n/a
W Lucas-Bull1
0
n/a
n/a
n/a
J Malherbe
5
n/a
3
n/a
MM Ngoasheng
3
n/a
n/a
n/a
RM Scott
5
4
3
n/a
GH Waddell
5
4
3
1
PD Wharton-Hood
4
n/a
n/a
1
n/a
3
n/a
n/a
D Irish 1 Appointed to the Board 1 July 2005.
032
ANNUAL REPORT
2005
AUDIT COMMITTEE REPORT
The Audit Committee presents a report on its activities during the period. The Audit Committee
External audit
The members of the Audit Committee for the period under review
The Committee reviews performance of the external auditors and
were as follows:
the level of audit service provided and has recommended the continued apointment of the auditors for the financial year. In the
Rory Scott (Chairman)
period under review the Committee has reviewed the scope of the
Rupert Barclay
interim review and year end audit including the Group materiality
Gordon Waddell
level. Auditor independence is discussed and confirmed at each
Derek Irish
meeting. Approval must be obtained from the Committee at the end of the financial year for audit, tax services and procedures
The Audit Committee is comprised of independent non-executives
agreed upon in respect of audit certificates. Within the terms of
and Derek Irish who is a senior partner in an independent
reference the Committee has agreed that non-audit services during
accounting practice. The Committee met four times during the
the financial year exceeding US$50,000 on an individual basis or
period under review, once without management and auditors
US$250,000 in total must be approved by the Committee.
present. A table showing attendance at committee meetings is available on page 32. Of the current committee members, three
Details of the split between audit and non-audit work can be
are qualified chartered accountants. Biographical details for all
found in Note 5 of the annual financial statements. The Committee
directors can be found on pages 46 and 47.
considers that the approvals required for audit and non-audit services, together with the other controls in place within the Group,
The Board of Directors has approved written terms of reference for
are sufficient to ensure the objectivity and independence of the
the Audit Committee. These terms of reference are available on the
external auditors. Non-audit work during the period has comprised
Company’s website www.dimensiondata.com
taxation and various audit certificates.
The main duties and activities of the Committee in the period under
The Committee has met with the external auditors three times
review can be summarised as follows:
during the period under review.
Internal control
Financial statements
The Committee, together with the Group Risk Committee, has
The Committee has reviewed the financial statements for the
reviewed the effectiveness of the Group’s internal controls, which
period, and has considered matters such as the consistency
include financial, operational and compliance controls, and
of accounting policies, decisions requiring a major element of
procedures for identification, assessment and reporting of risks,
judgement, compliance with accounting standards, the going
and has reported to the Board on the outcome of this review. The
concern assumption and the statement on internal control
terms of reference for the Group Risk Committee, which reports
systems.
to the Audit Committee, are available on the Company’s website www.dimensiondata.com
Other matters A revised ethical code and whistleblowing policy has been
Internal audit
implemented. This policy is intended to assist individuals who
During the period under review PricewaterhouseCoopers has
believe they have discovered serious malpractice or impropriety
continued to act as internal auditors for the Group. The Committee
to take the appropriate action. A copy of the ethical code and
confirms their programme of work and reviews their reports. The
whistleblowing policy is available on the Company’s website.
head of the internal audit function has direct access to both the Chairman of the Audit Committee and the Chairman of the Board. The Committee has met with the internal auditors twice during the period under review and the Chairman of the Committee has met privately with them on two further occasions. 033
ANNUAL REPORT
2005
EMPLOYEES
One of the cornerstones of our strategy of becoming a world leader
It is Group policy to adhere to local labour standards and globally
in the provision of specialist IT infrastructure solutions has been to
accepted human rights practices. Freedom of association is also
attract, engage, develop and retain the right people. To this end,
Group policy on a global basis, with works councils existing in
key projects have included:
some countries, where appropriate to local law and practice.
▲
▲
A global employee survey - the Group conducted a global employee survey during March 2005 to ascertain the opinions
Group companies aim to maintain health and safety policies
of Dimension Data employees. The results of the survey
in accordance with best practice and adhere to the regulatory
provided us with valuable input for areas of improvement. This
requirements of the regions in which they operate. Local labour
survey will be conducted on an annual basis.
standards are adhered to, with most employees working 40 hour
Attracting Talent - a focus for the period has been on
weeks unless contractually agreed otherwise because of the nature
recruitment training. In addition, certain regions are moving
of their employment.
to a centralised recruitment model with dedicated in-house
▲
recruitment specialists.
The Group’s policy is that all employees are entitled to equal
Retaining Talent and Driving High Performance Reward and
opportunities. Disabled persons applying for employment are
Performance Management - during the year we continued to
given fair consideration. Employees who become disabled whilst
execute our strategy through the Performance Management
employed will be retrained wherever possible so that they can
Process. This process ensures alignment of all employees and
remain employed within the Group.
ensures that they receive ongoing constructive performance feedback. The bonus scheme is also linked to the Performance
Details of the average number of employees are contained in Note
Management Process, in terms of performance both at the
6 to the annual financial statements on page 67.
business and individual level, therefore linking reward with performance. ▲
Career Development - increased focus has been given to career development with the integration of a Personal Development Plan in the Performance Management Process.
▲
Training and DDU - training at Dimension Data focuses on the development of key competencies in line with the business strategy, ensuring that we have the right skills to support our vision. Focus this year has been on the areas of business and leadership, sales and technical delivery skills.
Our primary
delivery mechanism is our corporate university (DDU) which makes it possible for employees to engage in learning in a continuous and self directed way. ▲
Group Induction e-learning Programme - during the course of 2005 we designed a Group induction programme aimed at introducing new employees to Dimension Data.
034
ANNUAL REPORT
2005
CORPORATE SOCIAL RESPONSIBILITY REPORT
Corporate Social Investment At Dimension Data, Community Social Investment (CSI) is an important business priority and integral to the achievement of our overall business strategy. We are committed to being a responsible corporate citizen by
Heads, Hearts and Hands Dimension Data’s Corporate Social Responsibility Initiative in Australia The Heads, Hearts and Hands (HHH) programme was initiated following input from employees in Australia, who selected children, education and the environment as the three key focus areas for local Corporate Social Responsibility programmes. HHH has multiple opportunities for participation for all employees including: volunteering, workplace giving, a community advisor programme, and an environmental module.
utilising our existing assets and core competencies, as well as enabling our employees to volunteer their time and skills through a structured and managed CSI process. This provides mutually beneficial results, with employees being given the opportunity to uphold and demonstrate the Group values, as well as providing personal development and enrichment; the community gaining upliftment and advancement through Dimension Data’s investments
Employees in all Australian states are able to volunteer their time and skills for a number of regional activities that range from Fun Runs for a variety of causes and participation in Planet Ark’s Tree Day. In New South Wales, as just one example, employees are volunteering their time to create a children’s learning room at the Marian Centre (a refuge providing care, safety and support for women and children escaping domestic violence), complete with computers, a book collection, a lounge area and other facilities. Volunteers from Dimension Data are participating in the refurbishment with redecorating, painting, connecting equipment, and ongoing involvement by providing training and educational sessions for the children.
and support; and thus, sustained success for Dimension Data. Through local partnerships with communities by way of donations, sponsorships, employee involvement and support, we seek to assist communities and individuals, with a focus on projects relating to skills development and education, community reconstruction projects, conservation and disability. Employee involvement Throughout the 2005 fiscal year, employees across the Group volunteered their time and skills for a number of initiatives. Just a few of these activities are: ▲
Teaching at Dimension Data’s Saturday School in South Africa
▲
Improving the environment at Diepsloot Combined Schools in South Africa
▲
Refurbishing the children’s learning block at the Marian Centre in Australia
▲
Revitalising the St James Recreation Centre in New York
▲
Participation in Moon Walk for Breast Cancer in the United Kingdom.
035
Workplace giving provides employees with an opportunity to donate to the non-profit organisations of their choice, with Dimension Data matching 50% of all donations to the non-profit organisations of our employees’ choice. A mentoring and advisory programme (Community Advisor Programme – (CAP) through a partnership with Social Ventures Australia (SVA), has linked senior and emerging leaders within Dimension Data with social entrepreneurs from a variety of emerging non-profit organisations including Youthworx, School Aid and Kids with Promise. The programme focuses on combining career and community experiences to achieve personal and professional potential – sharing technology, expertise and human resources. On the environmental front, in both New South Wales and Victoria, Dimension Data employees participated in Australia’s biggest community tree planting event run by Planet Ark. Dimension Data is working with OZ GREEN, a nonprofit organisation dedicated to addressing critical water issues by enabling informed and active community participation. Dimension Data employees are being trained in practical and sustainable ways of living and working and rethinking ways in which activities at work and home can be done to help the environment.
ANNUAL REPORT
Donations and sponsorships Dimension Data provides funding and sponsorship for a number of initiatives throughout the world in line with our commitment to projects relating to community reconstruction, disability and skills development and education: ▲
Sponsorship of the National Paralympic Committee of South Africa
▲
Donation to UNICEF for the Tsunami Relief Fund – all seven Dimension Data regions, with funds raised by employees matched by Dimension Data
▲
Donation to Red Cross and Salvation Army in support of the Hurricane Katrina Relief Fund
▲
Workplace giving in Australia – Dimension Data matches 50% of all employee donations
▲
Monetary support to Starfish in the United Kingdom
▲
Give-as-you-earn schemes adopted in the United Kingdom enabling employees to donate directly to their charity of choice via payroll
▲
2005
Saturday School in South Africa The Dimension Data Saturday School was opened in 1995 to introduce youngsters from disadvantaged backgrounds to computers and to help them improve their school grades. Run from Dimension Data South Africa’s head office in Johannesburg, the Saturday School provides an environment in which Grade 11 and 12 learners are exposed to a broad academic and corporate background. Initially focusing on computer skills, the School now offers tutoring in Mathematics, Science, Biology, English, Computer Studies and Guidance. Each year, 40 students from schools in Alexandra, Diepsloot and Tembisa are selected on the basis of academic and leadership potential. Students are taught by volunteers, many of them Dimension Data employees who give their free time and expertise in helping learners to prepare for tertiary education and the working environment. The programme follows the national curriculum and aims to improve students’ Grade 12 results. Dimension Data is also mindful of the holistic development of each individual, offering life skill components such as job shadowing and career guidance. Now celebrating its ten year anniversary, the Saturday School has accomplished a 100 percent pass rate every year. Dimension Data has recently expanded the Saturday School programme, and now accommodates Grade 10 learners as well, with an additional 20 places on offer. The project now reaches eight schools in Tembisa, two in Diepsloot and one in Alexandra.
Donation to All Women’s Action Society in Malaysia.
036
ANNUAL REPORT
2005
CORPORATE SOCIAL RESPONSIBILITY REPORT
Support Dimension Data supports a number or organisations, forums and educational facilities that contribute significantly to improving the communities and the environment. Some initiatives include: ▲
CIDA City Campus in South Africa – sponsorship of the COO’s annual salary
▲
Member of the National Business Initiative and supporter of The Nations Trust
▲
Support of the Toys for Tots initiative at Christmas in North America
▲
Community Advisor Programme in partnership with Social Ventures Australia in Australia
▲
Support of Australia’s biggest community tree planting event run by Planet Ark
▲
Participating in Kiwanis Treasure Hunt in Malaysia, providing gifts for children with Downs Syndrome.
Environment Dimension Data is mindful of its duty to contribute via responsible actions to a clean environment.
To ensure this, the Group’s
environmental policy insists that where possible the statutory environmental requirements of each country in which the Group operates are exceeded. In addition to recycling initiatives with regards to paper, boxes, toner cartridges and the environmentally safe disposal of computer equipment, Dimension Data has also introduced the following initiatives, to name a few: ▲
Electricity and water conservation programmes at The Campus, South Africa
▲
On-site, self-run refuse re-cycling at The Campus, South Africa
▲
‘Living Green’ programme for Dimension Data employees run by OZ GREEN
▲
Energy saving “intelligent building system” implemented at Waterfront Business Park in the United Kingdom.
037
Supporting Local Initiatives in North America Dimension Data in North America is committed to helping the local communities where the Group has offices and specifically targets initiatives that support women and children. Each year, Dimension Data employees support the Toys for Tots community initiative during the holiday season. Employees in Dimension Data’s Boston office held a food drive for Thanksgiving, whilst in New York employees worked with City Year to revitalise the St James Recreation Centre in New York. Employees were also active in raising funds for the victims of Hurricane Katrina that were matched by Dimension Data and generously made donations to the global initiative regarding the Tsunami Relief Initiative. Dimension Data in North America has recently formed a Corporate Social Responsibility committee and is expanding their community involvement initiatives for the coming year.
ANNUAL REPORT
2005
REMUNERATION REPORT
The Remuneration Committee presents its Remuneration Report, which was approved by the Board of Directors on 15 November 2005. Introduction
The remuneration of non-executive directors is a matter for
This report has been prepared in accordance with the Directors’
the executive members of the Board. No director or manager is
Remuneration Report Regulations 2002. The report also meets the
involved in any decisions as to his or her own remuneration.
relevant requirements of the Listing Rules of the Financial Services Authority and describes how the Board has applied the Principles of
The Chairman, the Chief Executive Officer and the Group Executive
Good Governance relating to directors’ remuneration. As required
Human Resources provide information on current remuneration
by the Regulations, a resolution to approve the report will be
and performance of directors and senior management, and are
proposed at the Annual General Meeting of the Company, at which
available to the Committee to answer any questions that may arise.
the financial statements will be approved. The Regulations require
The Chief Financial Officer has been involved in the design of
the auditors to report to the Company’s members on certain parts
the new long term incentive schemes to assist the Remuneration
of the Directors’ Remuneration Report and to state whether in their
Committee in ensuring the affordability of the schemes to the
opinion those parts of the report have been properly prepared in
Group.
accordance with the Companies Act 1985 (as amended by the Regulations). The report has therefore been divided into separate
The Company Secretary’s office provides assistance and advice
sections for audited and unaudited information.
to the Remuneration Committee with respect to governance, the operation of the long term incentive schemes and regulatory
Unaudited Information
compliance and has utilised Routledge Modise Moss Morris and
The Remuneration Committee
Linklaters to provide legal services.
The Remuneration Committee members for the period under review were as follows:
Statement of policy on directors’ remuneration The Committee aims to provide remuneration packages that meet
Rory Scott (Chairman)
the needs of a global IT services business. A business of this nature
Dillie Malherbe
depends on the attraction, retention and motivation of high calibre
Gordon Waddell
executives who can be entrusted with growing and enhancing the value of the Group.
All the members of the Remuneration Committee are considered by the Company to be independent non-executives, with the
In formulating the policy for the year ending 30 September
exception of Dillie Malherbe. The Board’s explanation for Dillie
2006 and subsequent years, the Remuneration Committee has
Malherbe’s appointment to the Committee is set out in the
considered the following principles:
Corporate Governance Report. All the members of the Committee
▲
are free from conflicts of interest in considering matters relating to remuneration of executives. The Committee met three times during the period under review. A table showing attendance at committee
All remuneration arrangements will be designed to support the Group’s business strategy in line with best practice standards.
▲
Setting levels of total reward that will be competitive within the relevant market and location.
meetings is available on page 32.
A copy of the full terms of reference for the Committee is available on the Company’s website www.dimensiondata.com
038
ANNUAL REPORT
2005
REMUNERATION REPORT
▲
At an on-target level, the proportion of executive remuneration
Long term incentives
that is performance linked will be not less than 45% of total
At an Extraordinary General Meeting held on 2 December 2004,
remuneration, including awards under any long term incentive
shareholders approved the Long Term Incentive Plan and Share
schemes (being the Share Appreciation Rights Scheme
Appreciation Rights Scheme. During the financial year 2005
(SARS) and the Long Term Incentive Plan (LTIP) valued at ‘fair
awards under the LTIP and SARS were made to executive directors
value’. Market and non-market conditions will be taken into
as detailed on page 42.
consideration when determining such a value. ▲
▲
The fair value of combined grants under the SARS and LTIP
Details of options granted under the share option scheme are given
shall not exceed one times base pay per individual.
on page 43.
Performance conditions attaching to the long term incentive schemes shall be challenging. LTIP conditions shall normally
Pensions and other benefits
relate to performance against a peer group of companies,
Pensions and other benefits such as life insurance benefits for
while SARS conditions shall normally relate to the normalised
executive directors reflect the practice in the countries in which
earnings per share of the Group.
they are primarily resident. The executive directors each receive life insurance benefits, disability insurance benefits and medical
The policy relating to each component of remuneration for the
cover. The cost to the Group is shown in the table on page 41.
directors is summarised below:
Contributions are also made for the executive directors in the Group’s provident fund, which is a defined contribution pension
Base salary
scheme, in the amounts as set out on page 41.
The base salary of the executive directors is subject to annual review and is set with reference to external market data relating
Non-executive directors’ fees
to similar companies based in South Africa and the UK and taking
The executive directors determine the remuneration of the non-
into account the primary location of the directors concerned.
executive directors annually. The fees were reviewed but not
Consideration is given to the size, market sector, business
increased in the year. Consideration is given to fees payable to
complexity and international reach of the comparator companies.
non-executive directors for comparable companies. Additional fees are paid to committee members and chairmen of Board
Annual bonus plan
committees to take account of the additional work involved. Non-
Each of the executive directors is entitled to participate in an
executive directors are not eligible to participate in the Company’s
annual bonus scheme. The Remuneration Committee believes that
long term incentive schemes.
the annual bonus scheme should be aligned with the interests of the Company’s shareholders and consequently for the financial year 2006, the performance criteria are earnings per share, total operating profit and other applicable business metrics such as the Group Solutions and Services gross margin and Datacraft Asia operating profit together with an amount relating to the achievement of personal key performance indicators (KPIs). In addition, the upper limit for the annual bonus plan for directors is 100% of their basic salary unless there is an overachievement on performance targets set, at which time the Remuneration Committee may consider and award a discretionary bonus. 039
ANNUAL REPORT
2005
Service contracts All executive directors have identical service contracts. All executive directors’ contracts are rolling contracts, and contain a three month notice period. On termination, except by reason of cause, illness, death, injury or retirement, the executive director will be entitled to payments equal to 12 months’ base salary plus a pro-rata portion of bonus (if all conditions and performance criteria applicable to the bonus have been proportionately achieved, as determined by the Remuneration Committee). Both such amounts will be payable in equal amounts over the 12 months subsequent to termination. This is subject to the director’s obligation to mitigate such costs by seeking alternative employment and the Company being entitled to deduct, from the amounts payable, all remuneration and fees received pursuant to such alternative employment.
Jeremy Ord Brett Dawson David Sherriffs
Effective Date
Unexpired
of Contract
Term
1 January 2003
Indefinite
1 March 2004
Indefinite
1 March 2004
Indefinite
Stephen Joubert
1 January 2003
Indefinite
Patrick Quarmby
1 January 2003
Indefinite
All of the non-executive directors have letters of appointment which contain a one month notice provision and are of three year duration. There are no compensation provisions for early termination of non-executive director appointments.
External appointments Executive directors are permitted to accept external appointments, subject to Board approval. These appointments are detailed in the Board of Directors and Executives information on page 46. Patrick Quarmby has been permitted to retain fees paid to him in respect of his appointment to Unitrans Limited.
040
ANNUAL REPORT
2005
REMUNERATION REPORT
Audited Information Directors’ Remuneration Provident/
RGML Barclay BW Dawson SM Joubert
Life
Disability
Directors’
Basic
2005
2004
Fees
Salary
Pension insurance insurance Fund
benefit
benefit
Medical Aid
Bonus
Total
Total
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
49
-
-
-
-
-
-
49
14
-
585
22
7
3
7
691
1,315
690
-
369
11
5
2
8
305
700
553
W Lucas-Bull
11
-
-
-
-
-
-
11
-
J Malherbe
49
-
-
-
-
-
-
49
44
MM Ngoasheng
45
-
-
-
-
-
-
45
12
JJ Ord
-
592
45
9
4
8
518
1,176
1,451
PK Quarmby
-
362
13
6
4
9
259
653
653
RM Scott DB Sherriffs
75
-
-
-
-
-
-
75
96
-
268
10
3
2
7
215
505
172
GH Waddell
56
-
-
-
-
-
-
56
64
PD Wharton-Hood
56
-
-
-
-
-
-
56
70
341
2,176
101
30
15
39
1,988
4,690
3,819
For the financial year 2005, the Remuneration Committee has received assessments of the performance of each executive director relative to their achievement against KPIs and against business targets as follows: ▲
earnings per share and total operating profit for Jeremy Ord, Brett Dawson and David Sherriffs;
▲
earnings per share, total operating profit and Datacraft Asia operating profit and tax for Patrick Quarmby; and
▲
total operating profit and Solutions gross margin for Stephen Joubert.
Following these assessments, the directors will receive the bonus amount of US$2.0 million, as set out under Directors’ Remuneration (2004 Bonus: US$1,495,000).
041
ANNUAL REPORT
2005
Long Term Incentives
Long Term Incentive Plan (LTIP)
Number of awards
JJ Ord
Date LTIP
Opening Balance
Closing Balance
offered
30 September 2004
30 September 2005
Expiry Date
Performance Conditions met
15/02/2005
-
600,000
15/02/2008
Subject to Performance Condition
BW Dawson
15/02/2005
-
600,000
15/02/2008
Subject to Performance Condition
SM Joubert
15/02/2005
-
400,000
15/02/2008
Subject to Performance Condition
PK Quarmby
15/02/2005
-
300,000
15/02/2008
Subject to Performance Condition
DB Sherriffs
15/02/2005
-
400,000
15/02/2008
Subject to Performance Condition
Share Appreciation Rights Scheme (SARS) Number of awards Date SARS
Opening Balance
Closing Balance Grant Price
offered
30 September 2004
30 September 2005
JJ Ord
15/02/2005
-
BW Dawson
15/02/2005
-
SM Joubert
15/02/2005
PK Quarmby
15/02/2005
DB Sherriffs
15/02/2005
(Sterling)
Expiry Date
Performance Conditions met
600,000
0.39 15/02/2011
Subject to Performance Condition
600,000
0.39 15/02/2011
Subject to Performance Condition
-
400,000
0.39 15/02/2011
Subject to Performance Condition
-
300,000
0.39 15/02/2011
Subject to Performance Condition
-
400,000
0.39 15/02/2011
Subject to Performance Condition
Awards under the LTIP and the SARS were made to executive directors as detailed above.
The performance criterion for the LTIP is Total Shareholder Return (TSR) over a three year period compared to the TSR of a Peer Group. Vesting will commence if the TSR ranks at the median TSR of the Peer Group, when 30% of the LTIP awards may vest. Vesting will progress linearly, as the rank of the TSR increases, until 100% vesting when the TSR has upper quartile ranking.
The performance criterion for the SARS is cumulative normalised earnings per share over a three year performance period. Vesting will commence at a threshold level, and progress linearly until full vesting occurs at a target level.
042
ANNUAL REPORT
2005
REMUNERATION REPORT
Sterling options
JJ Ord BW Dawson
SM Joubert PK Quarmby DB Sherriffs
Opening Balance
Closing Balance
Date Option
30 September
30 September
Grant Price
offered
2004
2005
(Sterling)
Expiry Date
21/11/2002
1,700,000
1,700,000
0.25
21/11/2012
Yes
11/12/2003
750,000
750,000
0.37
11/12/2013
Yes
28/09/2001
300,000
300,000
0.70
28/09/2011
Yes
03/10/2001
100,000
100,000
0.70
03/10/2011
Yes
21/11/2002
200,000
200,000
0.25
21/11/2012
Yes
Performance Conditions met
01/04/2003
500,000
500,000
0.16
01/04/2013
Yes
20/08/2003
1,000,000
1,000,000
0.26
20/08/2013
Yes
18/11/2003
900,000
900,000
0.36
18/11/2013
Yes
03/08/2004
1,200,000
1,200,000
0.28
03/08/2014
Yes
21/11/2002
700,000
700,000
0.25
21/11/2012
Yes
11/12/2003
300,000
300,000
0.37
11/12/2013
Yes
21/11/2002
700,000
700,000
0.25
21/11/2012
Yes
11/12/2003
300,000
300,000
0.37
11/12/2013
Yes
18/11/2003
700,000
700,000
0.36
18/11/2013
Yes
SA rand options
JJ Ord
BW Dawson
SM Joubert
PK Quarmby
043
Opening Balance
Closing Balance
Date Option
30 September
30 September
Grant Price
offered
2004
2005
(SA rand)
Expiry Date
Conditions met
01/10/1998
1,625,000
1,625,000
22.00
01/10/2008
Yes
17/05/1999
1,360,000
1,360,000
24.00
17/05/2009
Yes
01/10/1999
2,222,222
2,222,222
24.30
01/10/2009
Yes
Performance
03/05/2000
45,350
45,350
43.50
03/05/2010
Yes
20/07/2001
70,000
70,000
15.25
20/07/2011
Yes
01/10/2001
83,509
83,509
9.35
01/10/2011
Yes
01/10/1998
811,363
811,363
22.00
01/10/2008
Yes
17/05/1999
625,000
625,000
24.00
17/05/2009
Yes
01/10/1999
662,551
662,551
24.30
01/10/2009
Yes
01/10/1998
604,545
604,545
22.00
01/10/2008
Yes
17/05/1999
725,000
725,000
24.00
17/05/2009
Yes
01/10/1999
766,255
766,255
24.30
01/10/2009
Yes
ANNUAL REPORT
2005
The Company’s share price at 30 September 2005 was 37.50 UK pence and 425 SA cents. The high and low market prices of the Company’s shares during the year are reflected below. Further details of share prices are shown on page 52.
UK pence
SA cents
High
43.00
485
Low
28.25
319
Total 2005
Total 2004
Directors’ interests in ordinary shares
Name
Non-Beneficial
Beneficial
BW Dawson
-
1,532
1,532
1,532
SM Joubert
-
163,155
163,155
163,155
JJ Ord
-
10,281,858
10,281,858
10,281,858
PK Quarmby
-
394,625
394,625
394,625
481,830
-
481,830
481,830
7,581
75,000
82,581
82,581
-
150,000
150,000
118,188
RM Scott G Waddell PD Wharton-Hood
Directors’ shareholdings are unchanged as at 15 November 2005. Other than the shareholdings listed above, the Directors hold no interests in other Group companies.
044
ANNUAL REPORT
2005
REMUNERATION REPORT
Long term performance In line with the Directors’ Remuneration Report Regulations 2002 the graph below shows Dimension Data’s total shareholder return from 1 October 2000 to 30 September 2005, together with a comparator index.
Total shareholder return
100
80
60
40
20
0 Sep 2000
Sep 2001
Sep 2002
Dimension Data Holdings
Sep 2003
Sep 2004
Sep 2005
FTSE Software and Computer Services Index
This graph shows the value, at 30 September 2005, of £100 invested in Dimension Data Holdings plc on 30 September 2000 compared with the value of £100 invested in the FTSE Software and Computer Services Index. The other values plotted are the values at intervening financial year ends.
This index was chosen as the Company has been a constituent since listing and is considered appropriate.
By order of the Board RM Scott Chairman of the Remuneration Committeee 15 November 2005
045
ANNUAL REPORT
2005
BOARD OF DIRECTORS AND EXECUTIVES
Directors Jeremy John Ord (48)
Patrick Keith Quarmby (51)
Chairman
Director: Corporate Finance
Jeremy Ord was appointed as Chairman of Dimension Data
Patrick Quarmby was appointed to the Board of Dimension Data
Holdings plc at the time of its listing in London and Johannesburg
Holdings plc at the time of its listing in London and Johannesburg
in 2000. He held the combined role of Chairman and Chief
in 2000. Prior to that appointment he served on the Board of
Executive Officer until 1 March 2004, when Brett Dawson was
Dimension Data Holdings Ltd from 1996. Previously he worked as
appointed as Chief Executive Officer. Jeremy previously served as
a tax partner at Ernst & Young South Africa and was a director of
Executive Chairman of Dimension Data Holdings Ltd from 1987, as
Standard Bank in London and Hong Kong. He was appointed as
the Group’s Managing Director and in other senior positions since
Chairman of Datacraft Asia in July 2002. He graduated from the
the Group’s 1983 inception.
University of Cape Town and is a Chartered Accountant (SA). He is a non-executive director of Unitrans Ltd.
Brett William Dawson (41) Chief Executive Officer
David Brian Sherriffs (42)
Brett Dawson was appointed as Chief Executive Officer of the
Chief Financial Officer
Group and to the Board of Dimension Data Holdings plc on 1
David Sherriffs was appointed as Chief Financial Officer on 1
March 2004. Prior to this appointment he had served as Dimension
March 2004, and was appointed to the Board of Dimension Data
Data’s Chief Operating Officer from 2002. He joined the Group in
Holdings plc on 9 June 2004. He joined the Group in 1997 as a
1997 as Financial Director of the Group’s joint venture, OmniLink.
member of the finance team, primarily involved in corporate finance
He was instrumental in growing the business, which exceeded all
activities. In 2000, David was appointed Vice President of Business
business plan objectives and claimed a dominant market share in
Development for Europe and relocated to Germany. From 2003,
the South African market. Following the merger of OmniLink and
David served as Group Executive Operations and was responsible
Internet Solutions, Brett was appointed CEO of Internet Solutions.
for business case assessments relating to strategic projects. Prior
In September 2001 he relocated to take on the role of CFO of
to joining the Dimension Data Group, David served in various
Dimension Data North America, where he focused on integrating
financial, corporate finance and strategy roles for Anglo American
acquisitions in that territory. Prior to joining Dimension Data, Brett
plc, including Executive Assistant to the chairman. David is a
was responsible for corporate strategy and planning at National
Chartered Accountant (SA) and received his MPhil in Management
Brands Ltd and held corporate finance positions at Anglovaal Ltd
Studies at the University of Oxford.
and KPMG. He graduated from the University of the Witwatersrand and is a Chartered Accountant (SA). Stephen Michael Joubert (47) Group Executive Global Solutions Groups Stephen Joubert was appointed to the Board of Dimension Data Holdings plc at the time of its listing in London and Johannesburg in 2000. Prior to that appointment he served as a director of Dimension Data Holdings Ltd from 1998. He joined the Group in 1996 as Group Financial Director in Network Services. Before that, he was a partner at PricewaterhouseCoopers for a number of years. He graduated from the University of the Witwatersrand and is a Chartered Accountant (SA).
046
ANNUAL REPORT
2005
BOARD OF DIRECTORS AND EXECUTIVES
Non-Executive Directors Gordon Herbert Waddell (68)
Moses Modidima (Moss) Ngoasheng (48)
Senior independent non-executive director
Independent non-executive director
Gordon Waddell was appointed to the Board of Dimension Data
Moss Ngoasheng was appointed to the Board in September
Holdings plc as a non-executive director at the time of its listing
2002. He also serves as a non-executive director on the board of
in London and Johannesburg in 2000. Mr Waddell is the non-
Dimension Data (South Africa) (Pty) Ltd. He is executive chairman of
executive chairman of Mersey Docks and Harbour Company.
investment company Safika Holdings (Pty) Ltd, and was previously
He was appointed senior non-executive director in September
economic advisor to South African President Thabo Mbeki. He also
2002 and is a member of the Audit Committee, Remuneration
serves as a non-executive director of The Industrial Development
Committee and Nomination Committee. Mr Waddell graduated
Corporation and New Africa Capital Ltd. Moss graduated from the
from Cambridge University with a Bachelor of Arts degree and has
University of South Africa and has an MPhil from Sussex University.
an MBA from Stanford University.
Safika Holdings (Pty) Ltd, amongst its other activities, has formed a minority part of the consortium involved in the BEE transaction
Rupert George Maxwell Lothian Barclay (48)
with Dimension Data (South Africa). The Company has reviewed
Independent non-executive director
this involvement, and considers that Moss should continue to be
Rupert Barclay joined the Board of Dimension Data Holdings plc
considered as fully independent.
as an independent non-executive director with effect from 9 June 2004. Rupert is a partner of Cairneagle Associates LLP and is a
Roderick (Rory) Michael Scott (46)
non-executive director of Lowland Investment Company plc. He
Independent non-executive director
has previously served in an executive capacity as CFO of Lombard
Rory Scott was appointed to the Board of Dimension Data Holdings
Risk Management plc, Director of Group Strategy Development at
plc as a non-executive director at the time of its listing in London and
Reuters plc and Director of Group Strategy at Allied Domecq plc.
Johannesburg in 2000. He had previously served as a non-executive
Rupert was appointed to the Audit Committee on 15 September
director on the Board of Dimension Data Holdings Ltd, and before
2004. He is a graduate of Cambridge University, has an MBA from
that served as the Group Financial Director from 1987 to 1991. He is
INSEAD and is a Chartered Accountant.
presently Managing Director of the Scottish Knitwear Group SA (Pty) Ltd. He is a Chartered Accountant (SA) and serves as chairman of the
Wendy Lucas-Bull (52)
Audit and Remuneration Committees. Given the length of time that
Independent non-executive director
has elapsed since his service as an executive director, the Company
Wendy Lucas-Bull joined the Board of Dimension Data Holdings
considers him to be fully independent.
plc as an independent non-executive director with effect from 1 July 2005. Wendy is currently a member of the Aveng Limited
Peter Dorian (Dorian) Wharton-Hood (66)
Board, the Eskom Holdings Limited Board and she chairs the
Independent non-executive director
Eskom Finance Committee. She graduated from the University of
Dorian Wharton-Hood was appointed to the Board of Dimension
the Witwatersrand with a Bachelor of Science degree.
Data Holdings plc as a non-executive director at the time of its listing in London and Johannesburg in 2000. He previously served
Josua (Dillie) Malherbe (49)
as a non-executive director of Dimension Data Holdings Ltd from
Independent non-executive director
1998. He was vice-chairman of Liberty Life for eight years. He was
Dillie Malherbe was appointed to the Board of Dimension
chairman of the Life Office’s Association of SA on three occasions
Data Holdings plc in November 2003 and as a member of the
and president of the Insurance Institute of SA. He was also a
Remuneration Committee on 15 September 2004. He is the Chief
member of the Council of the SA Foundation and a director of
Executive Officer of VenFin Ltd. He also serves on the board of
Business Against Crime. In 1998 he was chairman of the Governing
Vodacom Group (Pty) Ltd, GenuOne Incorporated and MidiTV (Pty)
Body of Business SA of which he is now a trustee. He is a member
Ltd (e-tv). He graduated from the Universities of Stellenbosch and
of the Nomination Committee and the Treasury Committee.
Cape Town and is a Chartered Accountant (SA).
He graduated from Stellenbosch University with a Bachelor of Commerce degree.
047
ANNUAL REPORT
2005
Executive Committee Group Operations Brett Dawson
Chief Executive Officer
Dave Sherriffs
Chief Financial Officer
Patrick Quarmby
Director: Corporate Finance
(Chairman of the Executive Committee)
Regional CEOs Russell Bolan
CEO UK and Europe
Bob Cagnazzi
CEO US
Allan Cawood
CEO Africa
Steve Nola
CEO Australia
Bill Padfield
CEO Asia
Functional Heads Alan Burgess
Chief Information Officer
Marilyn Chaplin
Group Executive Human Resources
Adam Craker
Group Executive Sales
Connie de Lange
Group Executive Marketing
Steve Joubert
Group Executive Global Solutions Groups
Scott Petty
Group Executive Services
Ettienne Reinecke
Chief Technology Officer
Bruce Watson
Group Executive Cisco Alliance
048
ANNUAL REPORT
2005
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
United Kingdom company law requires the Directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company and the Group as at the end of the financial year, and of the profit or loss of the Group for that period. In preparing those financial statements, the Directors are required to: ▲
select suitable accounting policies and then apply them consistently;
▲
make judgements and estimates that are reasonable and prudent; and
▲
state whether applicable accounting standards have been followed.
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements comply with the Companies Act 1985. They are also responsible for the system of internal control and for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
049
ANNUAL REPORT
2005
SHAREHOLDER INFORMATION
Shareholders’ diary
Dividend policy
Financial year end
30 September
As stated in the Directors’ Report, the Directors currently anticipate
Profit announcement
November 2005
that all the available cash generated by the Group’s business will be
Annual Report
Published December 2005
invested in the continued growth of the Group, and will not declare
Interim profit announcement
May 2006
a dividend for the financial year ended 30 September 2005.
Corporate website This report and other information on the Group’s activities and financial information are available on the website at www.dimensiondata.com
Analysis of ordinary shareholders at 30 September 2005 Size of shareholding
1 - 1,000
Number of shareholders
Number of shares
Percentage of issued capital
14,227
4,702,721
0.35
1,001 - 5,000
6,299
15,959,752
1.19
5,001 - 10,000
1,559
12,086,480
0.90
10,001 - 25,000
1,027
16,522,621
1.23
25,001 - 50,000
405
14,486,362
1.07
50,001 - 100,000
226
16,953,307
1.26
100,001 - 250,000
174
28,145,896
2.09
250,001 - 500,000
123
44,467,911
3.31
500,001 - 1,000,000
81
56,364,601
4.19
188
1,135,360,854
84.41
24,309
1,345,050,505
100.00%
Over 1,000,001 Total
Substantial Interests As at 30 September 2005 the Company has been notified, in accordance with sections 198 and 208 of the Companies Act 1985, of the following interests in 3% or more of the issued ordinary share capital of the Company: Shareholder
Number of shares
Percentage of issued capital
UBS Global Asset Management
115,738,754
8.60
Sanlam Investment Managers
113,635,080
8.45
Old Mutual Asset Managers
94,681,128
7.04
VenFin Ltd
93,970,485
6.99
Allan Gray Investment Council
69,221,753
5.15
SG Asset Management
63,592,625
4.73
Morley Fund Management
51,897,029
3.86
Bernstein Investment Research Management (UK)
50,179,427
3.73
Legal and General Investment Management Ltd
44,813,731
3.33 050
ANNUAL REPORT
2005
FIVE-YEAR REVIEW
Financial Summary For the year ended 30 September 2005
2004
2003
2002
2001
$’000
$’000
$’000
$’000
$’000
2,727,857
2,368,044
2,014,795
2,120,562
2,123,282
Turnover - Continuing operations - Acquisitions Group turnover - Associates Total turnover
-
-
-
-
278,221
2,727,857
2,368,044
2,014,795
2,120,562
2,401,503
99,052
115,990
85,464
66,769
58,755
2,826,909
2,484,034
2,100,259
2,187,331
2,460,258
(14,886)
40,962
170,011
Operating profit/(loss) before goodwill amortisation, impairment and exceptional items - Continuing operations - Acquisitions Group operating profit/(loss)
61,692
25,666
-
-
-
-
5,959
61,692
25,666
(14,886)
40,962
175,970
7,921
7,343
5,874
4,464
4,889
69,613
33,009
(9,012)
45,426
180,859
18,643
11,434
(36,356)
30,100
163,804
1.4
0.9
(2.7)
2.3
13.0
1,343,895
1,342,286
1,341,618
1,299,075
1,255,235
416,596
425,039
385,691
415,352
920,080
- Share of operating profit in associates Total Earnings/(loss) attributable to shareholders before goodwill amortisation, impairment and exceptional items Basic earnings/(loss) per share before goodwill amortisation and exceptional items (US cents) Weighted average number of ordinary shares (’000) Cash on hand (including short term investments)
051
ANNUAL REPORT
2005
Share price statistics
2005
2004
2003
2002
2001
- Closing
425
361
301
280
930
- High
485
633
311
1 665
6 950
- Low
319
295
298
252
794
1,345,051
1,342,437
1,341,992
1,299,477
1,298,812
- Closing
37.50
31.25
26
16
70
- High
43.00
48.75
27
118
663
JSE Securities Exchange (SA cents per share)
Number of shares in issue (’000) London Stock Exchange (UK pence per share)
- Low
28.25
24.75
24.25
13.75
67
1,345,051
1,342,437
1,341,992
1,299,477
1,298,812
5,716
4,846
4,039
3,639
12,079
(£ m)
504
420
349
208
909
($ m)
888
755
582
324
1,335
Number of shares in issue (’000) Market capitalisation at year end JSE Securities Exchange (R m)
London Stock Exchange
052
