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www.dimensiondata.com
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
HIGHLIGHTS
A N N U A L R E P O R T 2 0 0 5
0 0 1
> 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
0 0 2
+15% +13% +6% +140% +56%
30%
20%
10%
0%
Revenue Overheads Operating
Profit(1)
Adjusted
EPS(2)
Gross
Profit
Cash
from Ops
+43%
2005 2004
$’000 $’000
Group turnover 2,727,857 2,368,044
Associates turnover 99,052 115,990
Total turnover 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
Basic earnings/(loss) per ordinary share 1.3 (2.8)
Adjusted earnings per ordinary share(2) 1.4 0.9
FINANCIAL SUMMARY
A N N U A L R E P O R T 2 0 0 5
% change 2005 vs 2004
0 0 3
chairman’s statement
chief executive officer’s operating review
chief financial officer’s financial review
directors’ report
corporate governance report
audit committee report
employees
corporate social responsibility report
remuneration report
board of directors and executives
statement of directors’ responsibilities
shareholder information
five-year review
independent auditors’ report
annual financial statements
contacts and corporate information
006
008
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026
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033
034
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038
046
049
050
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097
CONTENTS
A N N U A L R E P O R T 2 0 0 5
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.
0 0 5
A N N U A L R E P O R T 2 0 0 5
CHAIRMAN’S STATEMENT
0 0 6
I am pleased to report on a year of significant progress for
Dimension Data.
During the year, Dimension Data gained market share in many of
the key markets in which it operates and strengthened its global
Solutions offerings. This was reflected in much improved operating
returns.
Demand for our IT infrastructure Solutions and Services remained
healthy, driven by positive market momentum in most sectors
within which the Group is positioned, and strong reception for our
Solutions offerings. Impressive growth in revenues led to Group
operating profit(1) of US$62 million, more than double the prior year.
Credit goes to the management and staff of Dimension Data who
have delivered this strongly improved operating performance and
continue to put in place the building blocks for future growth.
A critical ingredient in our success remains our ability to attract
and retain high quality people. To this end, we engaged this year
in our first Group-wide employee survey to canvass the opinions of
our employees. Feedback from employees was very positive, and
employee morale in the Group continues to improve. The survey
identified several important areas for improvement; for example,
career development and training remain key priorities. In December
we also revised our employee share incentive programme, by way
of implementing a Share Appreciation Rights Scheme and a Long
Term Incentive Plan.
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
investments of US$417 million. We consider it important to retain
a strong positive cash position to provide a sense of stability to our
customers, and to 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 is under review.
We are pleased to have appointed Wendy Lucas-Bull to our Board
of Directors, as an independent non-executive director. Wendy is a
respected member of the South African business community with a
wealth of experience in the financial and consulting industries. The
Board currently comprises the Chairman, four executive directors
and seven non-executive directors, of whom six are independent.
I would like to thank all of our employees around the world for
their dedication and hard work during the year. They are the
key ingredient to our continued success. As we move into the
new financial year, I believe that our business is in an improved
competitive position to benefit from what we expect to be stable
demand conditions in most of our key markets and territories.
We will continue to apply our resources, energy and capital to
differentiate us from our competitors, win market share, provide
excellent service to our clients and deliver improved returns to our
shareholders.
Jeremy Ord
ChairmanNote:
(1) Before associates, goodwill amortisation, impairment and exceptional items
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.
0 0 7
A N N U A L R E P O R T 2 0 0 5
0 0 8
2005 was a very good year for Dimension Data. A year of solid
operating performance with strong revenue growth (15.2%), during
which Group operating profit(1) more than doubled to US$61.7 million.
The robust improvement in our results over the past few periods
continued, and our earnings per share were 1.3 US cents for the
year – a positive result at the bottom line for the first time in several
reporting periods.
Our revenue growth has been driven by the successful execution of our
strategy of expanding aggressively into our chosen market segments,
reflected by our six lines of business. Our Networking Integration line
of business achieved significant growth – outside of Europe, 14%
growth reflected market share gains in several territories. Our five
Solutions lines of business grew on average by 41.9%, evidencing
strong traction from our continued focus in these high growth market
segments. Effective execution within most of our regions, in particular
the US, Asia and South Africa, was another highlight.
The marked improvement in the Group operating profit(1) reflects a
good flow-through of the operating leverage in the period. Revenue
growth drove a 13.4% improvement in gross profit. This, together
with ongoing containment of our fixed costs, continues to drive the
Group’s improved profitability. The proportion of overheads to
revenues declined significantly to 18.1% from 19.6% in 2004, which is
ahead of our internal target.
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
combination of in-sourced, out-sourced, or multi-sourced services.
This past year we completed our Global Service Operating Architecture
(GSOA) “baseline” project which brings us closer to having a globally
consistent managed services infrastructure. The new GSOA platform
helps Dimension Data better address the needs of large enterprises,
provide greater and more flexible service levels, and extract benefits of
scale from our overall services offerings. We expect these IT services
trends to continue and we will invest further in developing IT services
that give our clients flexible services across our lines of business.
We are proud of the high quality client base that we have built up and
of the IT improvements we have helped our clients to achieve. During
2005 we looked for ways to improve our client engagement model
and conducted our first global client survey to gain feedback on their
perceptions, preferences and concerns. We created a client special
interest group to obtain feedback on our Solutions and Services
development plans and implemented programmes to gain more
knowledge about our sales effectiveness. We will continue to work
with our clients to ensure we are injecting the “voice of the client” into
all we do. Revenues from our top 15 global clients grew by some 36%
year on year. While some of this growth is attributable to improved
sales effectiveness, it also reflects the competitive advantage of
our global IT procurement, logistics, deployment, integration and
management services.
Note:
(1) Before associates, goodwill amortisation, impairment and exceptional items
CHIEF EXECUTIVE OFFICER’S OPERATING REVIEW
A N N U A L R E P O R T 2 0 0 5
CHIEF EXECUTIVE OFFICER’S OPERATING REVIEW
0 0 9
Dimension Data helps clients make the best decisions about
technology solutions and vendor alternatives according to their unique
needs. Our long term relationships with a number of market leading
technology and communication vendors allow us to offer the most
appropriate solutions. During 2005 we received multiple industry
and partner awards that recognised our technology expertise,
quality of delivery and client focus. These included the prestigious
Cisco Global Partner of the Year award, Microsoft’s Global Security
Sales and Marketing Partner of the Year award, as well as awards
from Avaya, Checkpoint, Genesys, Hewlett Packard, Nortel, RSA,
Sun Microsystems, Trend Micro and others. Industry leading and
emerging technology vendors continue to approach us to develop
partnerships, and these relationships remain a key component of our
success as a specialist IT infrastructure solutions provider.
We continue to invest to expand our expertise in our Network
Integration and Solutions lines of business. This investment is fueling
our growth, creating a unique competitive advantage for Dimension
Data and a firm foundation for further growth. We have also invested
in closer alignment of the development and execution of our Services
and Solutions strategies, to accelerate the delivery of a full life cycle of
services within each of our lines of business.
Dimension Data has an exceptional complement of skilled and
committed people, which remains its most important competitive
advantage. During the period we have continued to invest in growing
this complement from 8,600 to some 9,100. This investment in new
skills is focused on improving our domain expertise and execution
capabilities within our lines of business in all our regions.
Going into the new financial year we anticipate a continuation of
the favourable demand environment that prevailed during 2005,
particularly in our chosen Solutions lines of business. Dimension
Data is recognised as a world leader in Network Integration, and has
a growing reputation in its Solutions lines of business. We believe
our value propositions are resonating with our clients, driven by our
domain expertise and our ability to integrate our offerings across
our lines of business. This, together with our life cycle of Services
approach, gives us confidence that as we move into 2006 we will be
able to compete effectively and we will once again strive to achieve
double digit growth in revenues. We will be vigilant in ensuring that
our cost increases are contained below the growth in our revenues
in order to be able to continue to deliver improved profitability and
returns to shareholders.
A N N U A L R E P O R T 2 0 0 5
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
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.
What we offer…
Services
Services
Operating Environments & Messaging
Network Integration
Security
Data Centre & Storage Solutions
Converged Communications
Customer Interactive Solutions
0 1 0
A N N U A L R E P O R T 2 0 0 5
CHIEF EXECUTIVE OFFICER’S OPERATING REVIEW
0 1 1
Overview of Results Group revenues grew by 15.2% to US$2,727.9 million, with a
7.7% increase in the Network Integration line of business and an
excellent performance from our Solutions lines of business where
revenues increased by 41.9% on 2004. As a result, Solutions now
account for 28% of revenue, up from 23% in the prior year.
Gross profit grew by 13.4%, reflecting a 0.3% reduction in gross
margin. The margin was impacted by strong growth in product
revenues (15.8% on a like-for-like basis), at lower margin than
services revenues, as well as an increase in revenues from our
high volume multinational customers. Services margins improved
during the year.
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%.
The Group recorded a net interest expense and investment
income of US$16.9 million for the year, compared to a net interest
and investment income in 2004 of US$5.3 million. The swing
to a net interest expense of US$19.5 million is as a result of the
capitalisation of a property lease in November 2004.
The Group’s effective tax rate at 43.1% of profit before tax(2) was
an improvement on the prior year.
Adjusted earnings (before goodwill and exceptional items) were
US$18.6 million, 63.0% up on 2004, and basic earnings per share
of 1.3 US cents reflects a return to positive bottom line profitability.
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.
A N N U A L R E P O R T 2 0 0 5
A N N U A L R E P O R T 2 0 0 5
0 1 2
2005
Contribution
to revenue
Change on
2004
Change on
2004
Group Turnover $’000 Like for Like(3)
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%
Total 2,727,857 100% 15.2% 15.0%
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%
Total 2,727,857 100% 15.2% 15.0%
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.
Review of revenue and trading
Lines of Business
The Group is focused on six global lines of business.
Network Integration, the Group’s most significant line of business,
grew by 7.0%. Apart from Europe, where revenues declined by
11.2%, the remaining five regions grew on average by a strong
13.3%, reflecting market share growth in several territories.
This growth was supported by healthy demand in our larger,
multinational accounts.
The balance of our lines of business, referred to as Solutions, grew
in aggregate by 39.7%. These lines of business, which are closely
aligned to our core Network Integration business, focus on high
growth markets where the Group, with its strong base of networking
experience and skills, is well positioned to compete. The growth in
Solutions revenue this year is the result of continuing good demand
in these markets, focused execution, and the leverage afforded by
the Group’s established global presence.
A N N U A L R E P O R T 2 0 0 5
CHIEF EXECUTIVE OFFICER’S OPERATING REVIEW
0 1 3
Client Wins by Line of Business
In our different lines of business, examples of client wins during the period
included:
▲ Network Integration: An Australian financial services institution, a US$13.5
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.
Within the Solutions lines of business:
Converged Communications revenues grew by 97%. As a result
of our Internet Protocol (IP) heritage and a growing reputation in
the IP telephony market, the Group is well positioned to benefit
from continuing growth in this market. During the year, the Group
was Cisco’s IP Telephony Partner of the Year in both EMEA and
Asia PAC, and their second largest partner in the US.
Customer Interactive Solutions (CIS) revenues grew by 41%.
Migration to IP technology continues apace, and our experience
in IP telephony and contact centres positions us well to benefit
in the future. Furthermore, our ongoing investment in advanced
contact centre applications (such as workforce optimisation and
self-service) differentiates the Group amongst clients who are
looking to address contact centre operational and automation
requirements. A further differentiator for Dimension Data is our
international presence, due to the requirement for a consistent and
standardised service across international contact centres.
Operating Environments and Messaging (OE&M), where we
manage and optimise our clients’ Microsoft environments, grew by
48%. Our competitive positioning was enhanced by the acquisition
of two businesses focused on Microsoft-based solutions -
Euricom in Belgium and Bellerephon in Australia. The acquisitions
substantially improve our Microsoft skills in general and desktop
deployment and presence management capabilities in particular.
During the year Dimension Data was recognised by Microsoft as
a global Systems Integrator partner and achieved Microsoft Gold
Partner status on five continents.
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.
Security revenues grew by 40%, reflecting the Group’s expertise
in consulting on the storage, classification and protection of
information, and the implementation of leading security technology
Solutions and Managed Services. Dimension Data was recognised
with awards from its security partners during the year, including
Microsoft, Cisco, Checkpoint and RSA.
The Group’s Network Integration, Converged Communications
and Security capabilities were acknowledged this year when we
received the Cisco Global Partner of the Year award in recognition
of outstanding performance, commitment to technical excellence
and customer focus. Dimension Data continues to differentiate
itself in the markets within which it operates through its technical
skills and service excellence.
The Group’s ‘Other’ businesses account for the remaining 18% of
revenues. These operations are complementary to our Network
Integration and Solutions offerings in the territories within which
they operate, but are unique to those territories. Most significant
are Internet Solutions in South Africa (an Internet service provider
with a dominant presence in the South African ISP market) and
Express Data in Australia (an IT product distribution business).
Both continued to perform well.
A N N U A L R E P O R T 2 0 0 5
0 1 4
Revenue Streams
The Group offers a full life cycle of Services to clients – including the
planning, building, support and management of IT solutions. This
is reported as three streams of revenue: Product (the resale of non-
proprietary product), Managed Services (of an annuity or recurring
nature) and Professional Services (project-based engagements).
Product comprised 64% of Group revenues and Services 36%;
with Managed Services and Professional Services 24% and 12%
respectively.
Product revenues grew by 15.8%. This growth reflects good
performance in most of the territories within which the Group operates.
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
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.
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.
Also falling under Managed Services, our outsourced call centre
business (Merchants), had a very good year, with revenues up
significantly, and Internet Solutions grew by 20.2%.
The scaleable nature of the Managed Services business, together with
an ongoing focus on delivery efficiencies, resulted in an improvement in
the Managed Services gross margin.
Professional services grew by 11.1%. Good growth in our deployment
revenues (staging and installation of IT solutions) mirrored overall
revenue growth, and we also saw the benefits of a greater presence of
our IT engineers on site at customers.
Client Wins by Revenue Stream
Across our different revenue streams, examples of client wins for the period
included:
▲ 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 con-
tract to design and deploy an MPLS network, including support for fault,
performance and configuration tools.
A N N U A L R E P O R T 2 0 0 5
CHIEF EXECUTIVE OFFICER’S OPERATING REVIEW
0 1 5
Africa Asia Australia EuropeUnited
KingdomUnited States Centre Total
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
2005
Group turnover 482,871 455,977 598,738 449,585 247,053 481,046 12,587 2,727,857
Group operating profit(1) 42,501 17,470 18,580 6,927 11,741 7,719 (43,246) 61,692
Group operating margin(1) 8.8% 3.8% 3.1% 1.5% 4.8% 1.6% 2.3%
2004
Group turnover 445,172 362,280 481,078 438,841 218,260 416,811 5,602 2,368,044
Group operating profit(1) 27,560 6,897 14,014 7,353 12,744 4,573 (47,475) 25,666
Group operating margin(1) 6.2% 1.9% 2.9% 1.7% 5.8% 1.1% 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.
Regions
Note:
(1) Before associates, goodwill amortisation, impairment and exceptional items
A N N U A L R E P O R T 2 0 0 5
0 1 6
Africa
Africa’s revenue grew by 13.0% - Product by 7.0% and Services
by 16.3%. Managed Services were up 18.3%, with good growth
in Internet Solutions, Merchants and in the core Managed Services
operations. Professional Services grew by 5.7% for the period.
Within the lines of business, Network Integration grew by 11.7% and
Solutions by 23.4%, with CIS, OE&M and Security all performing
strongly.
Overall gross margin improved to 29.9% from 29.5% in 2004. The
higher than average gross margin in Africa is a consequence of the
historically higher proportion of Services in total revenue (66.4%), at
better gross margins. Gross profit grew by 14.5% for the year.
Overheads increased by 2.1% over the prior year. The capitalisation
of the property lease during the period resulted in a reduction in the
operating lease charge of some US$13.7 million, and an increase in
the depreciation charge of US$1.9 million.
Reported operating profit improved to US$42.5 million from US$27.6
million in 2004, and the operating margin increased to 8.8% from
6.2%.
The involvement of our Black Economic Empowerment (BEE)
partners since the second half of 2004 continues to create
opportunities within the South African public sector and sub-
Saharan Africa. The establishment of the BEE partnership has been
important in protecting our competitive position in South Africa and
we have been awarded a number of government, local government
and parastatal contracts, including a significant public sector
services organisation.
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.
The Group made a further acquisition during the year of an effective
50% interest in ROE, a leading Nigerian IT solutions and services
company. This acquisition increases the Group’s geographical
presence and execution capabilities in Africa.
Asia
Datacraft Asia reported a robust 25.9% growth in revenue to
US$456.0 million and a 153% increase in operating profit to US$17.5
million. This performance was underpinned by healthy demand from
both enterprise and service provider customers, and success in the
Solutions lines of business, which more than doubled during the
year and now account for a third of Asia’s revenue. The Converged
Communications, DCS and Security lines of business performed
exceptionally well.
Almost every country in the region improved its performance over the
prior year. The main exception was Japan, which registered a loss
for the year as business, especially in the second half of the year,
was impacted by challenging market conditions and soft margins.
However, this was more than offset by strong performances from
India, all the Asean countries and New Zealand. Elsewhere, Korea
also did well, returning to profitability, while China achieved good
progress in reducing operating losses compared to the previous
year.
The gross margin improved to 17.1% compared with 16.2% in the
prior year, with a particularly pleasing increase in the Services gross
margin.
Overheads were well contained, increasing by 16.7% and the
operating margin doubled to 3.8% from 1.9% in 2004.
A N N U A L R E P O R T 2 0 0 5
CHIEF EXECUTIVE OFFICER’S OPERATING REVIEW
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Australia
Australia’s revenues grew by 15.5%. Express Data had a particularly
good year, and while a slight reduction in its product gross margin
was experienced, improved operational efficiencies and leverage led
to an increase in its operating margin. Network Integration revenues
grew by a pleasing 11.8% and Solutions revenues by 14.8%, with
good growth in CIS, Converged Communications, OE&M and
Security. Product revenues (outside of Express Data) increased by
7.9% and Services revenues by 11.0%. Managed Services reflected
robust revenue growth of 13.0% and Professional Services grew by
9.0%, supported by a much improved performance from the training
business.
Australia’s gross margin declined slightly to 18.5% from 19.3%, due
almost entirely to the increased contribution from Express Data.
Overheads were well controlled, increasing by 7.4%.
During the year, the Australian business acquired the assets of the
Secure Data Group, which improved its competitiveness in the
areas of storage, back-up, and server and database management.
This acquisition supported what would otherwise have been slower
sales from the DCS line of business. Late in the year we acquired
Bellerephon, a provider of Microsoft desktop deployment and
infrastructure solutions. This acquisition will enable us to accelerate
the execution of our OE&M line of business strategy.
Reported operating profit increased by 32.6% to US$18.6 million
from US$14.0 million in 2004, and the operating margin was higher
at 3.1% compared to 2.9%.
Continental Europe
Continental Europe recorded 1.0% revenue growth in difficult
market conditions. Network Integration revenues declined by 11.2%,
impacted by underperformances from Sweden and Spain in the first
half of the year, and by weak performances in Italy and Switzerland
in the second half. The Benelux countries continued to perform
very well, and in particular the acquisition in the first half of the
year of a Microsoft-based application services company, Euricom,
supplemented a strong performance from the Belgian operation.
The German business, whose performance in the first half of the
year was sub-optimal, recorded a much improved second half.
France continued to be profitable, although operating performance
was flat on the prior year.
Solutions revenues improved by 52.0%, driven by excellent
performances within the CIS, Converged Communications and DCS
lines of business. CIS was further assisted by the establishment
of a Merchants outsourced call centre in the Netherlands, which
contributed to revenue growth and profitability.
The overall gross margin in Europe declined to 20.6% from 21.4%
in the prior year. While product margins improved slightly, reflecting
growth in some of the higher margin Solutions areas, services
margins declined due to weak volumes in the core Network
Integration line of business.
Reported operating profit was US$6.9 million, compared to US$7.4
million in 2004.
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.
A N N U A L R E P O R T 2 0 0 5
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Gross margin improved to 14.7% from 14.1% in 2004. Product
margins were stable, and Services margins improved strongly,
benefiting from an expanded range of Managed and Professional
Services offerings and more effective utilisation of our technical
resource capacity.
Reported operating profit increased to US$7.7 million from US$4.6
million, with a widening of the operating margin to 1.6% from 1.1%
in 2004.
Centre
The US$43.2 million costs at the Centre comprise holding company
costs, investment in global Solutions and Services development
(the benefits of which are reflected in the improved regional
performances) and share incentive costs. Excluding the expensing
of the new share incentive schemes for the first time, the net expense
was US$39.5 million, a significant reduction on the US$47.5 million
reported in 2004.
Brett Dawson
Chief Executive Officer
Client Wins by Region
Across the Group’s regions, examples of client wins during the period in-
cluded:
▲ Africa: A large public sector organisation, a US$20.0 million, two year,
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 mainte-
nance services.
▲ Continental Europe: A large French financial institution, a US$10.5 mil-
lion, 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.
United Kingdom
Revenues in the UK grew by 13.9%, robust Product revenue growth
of 25.1% being achieved mainly out of the UK’s large multinational
and service provider client base. Contracts with these clients for
product procurement and installation tend to be high volume and
attract lower than average product margins. As a result, product
gross margins declined by 2.2%. Managed Services grew by 12.5%,
supported by stable demand for our managed network services,
and an improved performance from Merchants, while Professional
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
Product and Professional Services margins. Gross profit grew by
5.9%.
Network Integration revenues increased by 16.2%, and Solutions
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
The US recorded a highly satisfactory improvement on the prior
year, with revenues up 22.6%. Product revenue grew by 20.0%, with
significant traction in the large enterprise and multinational customer
base. Services revenue growth of 36.4% reflects a growing attach
rate of Managed and Professional Services to product sales, the
region’s investment in sales and technical capacity, as well as the
increased presence of our engineers on site at our clients. Services
growth was further supported by the new Third Party Maintenance
agreement to support Cisco devices in the region.
Network Integration grew by an impressive 20.3% and Solutions by
28.5%, with strong contributions from Converged Communications
and Security.
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. Seventy-
six percent of employees completed the survey.
8 0 % o f r e s p o n d e n t s a r e s a t i s f i e d o r v e r y satisf ied with Dimension Data.
84% of respondents have a clear understanding of
expectations and their role.
81% of respondents know how they contribute to the
Group achieving its objectives.
78% of respondents believe the Dimension Data
values of Teamwork, Commitment, and Professional
Excellence are meaningful and important.
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.”
“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.”
“Working with high-calibre people on focused and
meaningful projects.”
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.
What our employees are saying about us...
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A N N U A L R E P O R T 2 0 0 5
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IntroductionDimension Data is listed on the London Stock Exchange and the JSE
Securities Exchange and is obliged to comply with UK reporting and
corporate governance requirements.
The accounting policies used in the preparation of the September 2005
financial statements are consistent with those applied previously.
Group Operating ProfitGroup turnover, excluding associates, increased by 15.2% to
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
million.
Gross margin declined from 20.7% to 20.4%. Despite improved
services margins, product margins were impacted by a change in the
mix of product sales with an increase in higher volume, lower margin
contracts. The higher growth in product sales (18.5%) compared
to services growth (9.9%), also reduced the average gross margin.
Gross profit for the year increased by 13.4%.
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.
Group operating profit(1) improved to US$61.7 million from US$25.7
million in 2004, an increase of 140%, and the Group operating margin(1)
doubled from 1.1% in 2004 to 2.3%, continuing the recovery of the
Group’s profitability to more acceptable levels.
Associate CompaniesThe Group’s share in operating profits from associate companies for
the period was US$7.9 million (2004: US$7.3 million). Key contributors
to these profits were Plessey (US$4.5 million), Paracon (US$1.6 million)
and Automate (US$1.3 million).
Plessey (49% holding), is an IT services company providing installation
and support services to telecommunications service providers
in several countries in Africa, including South Africa and Nigeria.
Paracon (27% holding) is an IT services company specialising in IT
resourcing and business solutions and is listed on the JSE Securities
Exchange. Automate (45% holding) is a software development
company providing dealer management software to the automotive
industry.
Note:
(1) Before associates, goodwill amortisation, impairment and exceptional items
CHIEF FINANCIAL OFFICER’S FINANCIAL REVIEW
A N N U A L R E P O R T 2 0 0 5
CHIEF FINANCIAL OFFICER’S FINANCIAL REVIEW
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Net Interest Payable and Investment IncomeInvestment income decreased to US$2.6 million from US$4.6 million
in 2004, as a result of a reduced yield on a fixed asset investment in
South Africa. The bulk of this investment was surrendered subsequent
to year end (see Note 35).
Net interest payable for the year was US$19.5 million, compared to
net interest income in 2004 of US$0.7 million. Interest receivable on
Group cash holdings was US$12.9 million, compared to US$10.9
million in 2004. Interest payable was US$32.9 million, compared to
US$10.5 million in 2004. This interest payable includes:
▲ US$20.0 million in terms of the liability established pursuant to the
capitalisation of the Campus property lease in November 2004.
▲ US$6.2 million in terms of the Group’s US$100 million convertible
bonds.
▲ US$2.8 million in terms of the Group’s $28.2 million loan from
Sanlam, a South African bank. This loan was settled subsequent
to year end (see Note 35).
TaxationThe Group taxation charge was US$22.7 million, compared to
US$19.6 million (before exceptional items) in 2004. The effective rate
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.
Exceptional ItemsOperating exceptional gains totalled US$5.9 million. Included in this
amount were:
▲ 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.
This resulted in a net gain of US$5.5 million. The variance between
the onerous lease provision release, and the impairment of the
property, arose mainly as a result of an improved occupancy
outlook in the Campus building at the end of the current financial
year.
▲ Retrenchment and restructuring costs of US$5.2 million,
predominantly in Continental Europe. These costs were incurred
mainly in Germany, France, Sweden and Italy. In September, the
Group announced the amalgamation of Continental Europe and
the UK into one operating region, and the consolidation of those
management structures.
Non-operating exceptional items include US$2.4 million relating
to the revision of certain assumptions pertaining to the yield on an
endowment asset in the South African business. The bulk of this
endowment was surrendered subsequent to the year end.
A N N U A L R E P O R T 2 0 0 5
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Balance SheetEquity shareholders’ interests at 30 September 2005 were US$414.4
million, compared to US$394.2 million last year. Net funds were
US$138.2 million (2004: US$295.7 million), comprised of US$416.6
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 reduction in net funds of US$157.5 million arose largely from the
capitalisation of the property lease obligation during the year.
Subsequent to year end, the Group repaid an interest bearing loan
of US$28.2 million. The repayment was effected partly by way of the
part surrender of an investment fixed asset of US$18.5 million (see
Note 35).
Capitalisation of Leased AssetOn 16 November 2004, the Group acquired the rights to the bare
dominium (freehold) over a leased property in Johannesburg for
US$4.6 million. From that date the property lease has been accounted
for as a finance lease.
The balance sheet effects of the capitalisation were as follows:
▲ Increase in land and buildings of US$133.7 million and raising of
an equivalent long term liability.
▲ Impairment of the asset by US$15.8 million.
▲ Release of a provision for onerous operating lease of US$17.4
million, and of a provision for unrecovered costs in respect of
vacant and third party space of US$3.8 million. The latter release
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.
A N N U A L R E P O R T 2 0 0 5
CHIEF FINANCIAL OFFICER’S FINANCIAL REVIEW
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Depreciation Capital Expenditure
$ million 2005 2004 2005 2004
Africa 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
Total 44.4 42.5 59.7 32.9
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%.
Stock holdings remained in line with the previous year, while
debtors increased by 16.4% to US$637.2 million, and trade debtors
by US$52.6 million to US$474.2 million. Trade debtors days sales
outstanding reduced to 54 days from 55 days at 30 September
2004.
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.
Liquidity Risk and FundingTotal cash and short term investments at 30 September 2005 was
US$416.6 million (2004: US$425.0 million).
Total interest bearing debt was US$278.4 million (2004: US$129.4
million), comprising:
▲ 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.
▲ 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
interest bearing debt, were US$138.2 million at the end of the year.
Interest Rate RiskSurplus cash is invested across the Group in flexible rate, short
to medium term deposits. As such, the Group is exposed to the
effects of fluctuating deposit rates. The Group incurs a fixed
interest cost in SA rand of 16.79% on its property lease obligation
and a fixed interest rate in US dollars of 5.375% on the convertible
bonds. A further loan in South Africa, which bore interest at a
flexible rate, was settled subsequent to year end.
Cash FlowNet cash inflow from operations, including the impact of the lease
capitalisation, was US$110.9 million compared to US$77.5 million in
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
million in 2004 respectively, analysed by region as follows:
A N N U A L R E P O R T 2 0 0 5
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Counterparty Risk
A number of major international financial institutions are
counterparties to the foreign exchange contracts and deposits
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.
2005 2004
Exchange Rates 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
Currency RiskThe Group has operations in over 30 countries and receives
revenues and incurs costs in numerous foreign currencies, the most
material of which are the South African rand, the Australian dollar,
British Sterling and the Euro. It is not the Group’s policy to hedge
foreign currency earnings and as a consequence, movements in
exchange rates can affect the Group’s results. When Dimension
Data invoices in local currency and has a foreign currency exposure
to suppliers, it generally uses forward exchange contracts to hedge
its foreign exchange risk, or adjusts the price charged to clients to
take account of exchange rate fluctuations. In particular, many of
the products supplied by the Group are linked to the US dollar, and
the purchase of these products is often paid in US dollars.
The following table reflects the average and year end exchange
rates against the US dollar of the SA rand, the Australian dollar,
Sterling and the Euro:
Accounting Standards - IFRSWith effect from the year ending 30 September 2006, Dimension
Data Holdings plc will prepare its consolidated financial statements
under International Financial Reporting Standards (IFRS). In
accordance with IFRS, adjustments to the 2004 closing retained
earnings and restatements of the results for the first half of 2005
and the year ended 30 September 2005 will be published when the
Group reports its 31 March 2006 results in May 2006.
The Group’s current view is that the major effects of moving from
accounting under UK GAAP to IFRS will be in the following areas:
▲ Effects of changes in foreign exchange rates (IAS 21)
▲ Accounting for financial instruments, including embedded
derivatives and unrealised profits/losses for forward exchange
contracts (IAS 32 and IAS 39)
▲ Goodwill acquired in business combinations (IFRS 3)
▲ Share-based payments (IFRS 2)
▲ Leases (IAS 17)
▲ Accounting for venture capital investments (IAS 39)
▲ Employee benefits (IAS 19).
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.
Dave Sherriffs
Chief Financial Officer
What our clients are saying about us...We take our clients’ perspectives on our performance
very seriously.
“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
“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
“The employees we know are very committed.” –
Client confidential
“Based on previous experience and Dimension
Data’s service portfolio, I feel that there are only a few
comparable service providers worldwide.” – Client
confidential
“I have received excellent service from Dimension Data and I am extremely happy with their after-sales 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.
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A N N U A L R E P O R T 2 0 0 5
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The Directors of Dimension Data present their annual report and audited financial statements for the year ended 30 September 2005.
Principal activities
Dimension Data Holdings plc is a specialist IT services and
solutions provider helping clients plan, build, support and manage
their IT infrastructures. Dimension Data applies its expertise in
networking, security, operating environments, storage and contact
centre technologies and its skills in consulting, integration and
managed services to create customised client solutions to achieve
improved business performance.
The Directors’ Report should be read in conjunction with the
Chairman’s Statement, the Chief Executive Officer’s Operating
Review and the Chief Financial Officer’s Financial Review, which
provide information about the Group’s businesses, their financial
performance during the year and likely future developments.
Results
For the year ended 30 September 2005, total turnover (including
associates) was US$2,826.9 million, compared with US$2,484.0
million for the previous year. Total operating profit before goodwill
amortisation, impairment and exceptional items was US$69.6
million, compared with US$33.0 million for the previous year. Basic
earnings per share amounted to 1.3 US cents (2004: loss 2.8 US
cents).
Dividends
The Board considers it important to retain a strong positive cash
position to provide a sense of stability to our customers and to
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.
The Group continued its investment in the development and
implementation of its e-procurement facility for its clients. Clients
have the ability to access Dimension Data offerings via their
core e-procurement service or directly via the Internet. This is in
the process of being implemented in all regions and adoption by
regional and multinational clients is showing significant growth.
Acquisitions
In December 2004 we acquired Euricom NV, a Microsoft-focused
consultancy business in Belgium.
In May 2005 Dimension Data acquired a 51% stake in Dimension
Data Ltd in Nigeria, which had acquired the assets of ROE Ltd, a
Nigerian IT solutions and services company.
In August 2005, we acquired a further 20% shareholding (total
effective interest now 77.91%) in Internet Solutions (Pty) Ltd from
Nedcor Ltd.
In September 2005 we acquired a 51% interest in Bellerephon
Group Pty Ltd, an Australian-based provider of Microsoft
management and infrastructure solutions.
Further details of acquisitions are set out in Note 27.
Disposals
There were no material disposals during the year.
DIRECTORS’ REPORT
A N N U A L R E P O R T 2 0 0 5
DIRECTORS’ REPORT
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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
Scott and Dillie Malherbe retire by rotation and offer themselves
for re-election in accordance with the Articles of Association. The
Chairman confirms that the directors up for re-election continue
to be effective in their roles as directors of the Company. The
Company’s Articles of Association provide that every director
appointed to the Board during the year shall automatically retire and
seek election at the next general meeting following appointment.
Accordingly, shareholders will be asked to elect Wendy Lucas-Bull
as a non-executive director.
Biographical details of those directors seeking re-election and
election are set out on pages 46 and 47.
Directors’ memberships of Board Committees are set out in the
Corporate Governance Report. Details of Directors’ service
contracts and remuneration are set out in the Remuneration
Report. Details of the Directors’ interests in any Group company
can also be found in the Remuneration Report.
Corporate Governance
A report on Corporate Governance and compliance with the
Combined Code is set out on pages 29 to 32.
Employee involvement
The Dimension Data Group seeks to engage all employees in
a shared commitment to the success of its business and keeps
them informed regarding the business environment and matters of
concern to them.
Dimension Data offers long term incentives and performance-
related bonus payments in order to encourage the participation of
employees in the success of the Group. Details of the long term
incentives appear in the Remuneration Report, and the outstanding
share options, Share Appreciation Rights and Long Term Incentive
Plan awards appear in Note 36 to the annual financial statements
on pages 93 and 94. An Extraordinary General Meeting (EGM)
was held on 2 December 2004, where approval for the Long Term
Incentive Plan and Share Appreciation Rights Scheme was given.
A N N U A L R E P O R T 2 0 0 5
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Ethics
The Group embraces the highest standards in its business activities.
The Group operates in accordance with an ethical code that is
distributed to employees via the corporate intranet. A copy of the
code is available on the Group’s website www.dimensiondata.com.
The Group is not political. It does not make contributions to
political parties or allow its assets and services to be used in any
way that favours any particular political grouping, other than in the
provision of its normal products and services, under its usual terms
and conditions of sale.
Authorised share capital
The authorised share capital of the Company is made up of £50,000,
divided into 50,000 deferred shares of £1 each, and US$30 million,
divided into 3 billion ordinary shares of 1 US cent each.
The holders of the deferred shares have no right to receive notice of
any general meeting of the Company, nor the right to attend, speak
or vote at such general meetings. The deferred shares have no
rights to dividends and on a return of assets in a winding-up, entitle
the holder to the repayment of the amounts paid on the deferred
shares after repayment of the capital paid up on the ordinary
shares plus the payment of US$10 million per ordinary share.
Issued share capital
As at 30 September 2005, the Company’s issued share capital
was 50,000 deferred shares of £1 each and 1,345,050,505 ordinary
shares of 1 US cent each.
Details of interests of 3% or more in the issued ordinary share
capital of the Company are shown in Shareholder Information on
page 50.
Creditor payment policy
Dimension Data Holdings plc is a holding company and, as such,
had no trade creditors at the year end. It is therefore not applicable
to provide statistics for the Company as required by the Companies
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.
Post balance sheet event
There were no post balance sheet events, other than disclosed in
Note 35.
Going concern
After making due enquiry, the Directors consider that, as at the
date of the approval of the financial statements, the Group has
adequate resources to continue to operate for the foreseeable
future. For this reason, they continue to adopt the going concern
basis in preparing their financial statements.
Corporate responsibility
Dimension Data’s position on the environment and on charitable
donations is detailed in the Corporate Social Responsibility Report
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
no political donations in the year under review (2004: nil).
Auditors
Resolutions to reappoint Deloitte & Touche LLP as the Group’s
auditors and authorising the Directors to determine their
remuneration will be proposed at the forthcoming Annual General
Meeting.
Company Secretary
The UK Company Secretary is Mrs JM Duck and the South African
Company Secretary is Mrs ML Taylor (details on page 97).
Annual General Meeting
The notice convening the Annual General Meeting, together with
the proxy form and notes explaining the various resolutions, will be
mailed to shareholders in due course.
By Order of the Board
Mrs JM Duck
Secretary
15 November 2005
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CORPORATE GOVERNANCE REPORT
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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
been in compliance with the Code provisions set out in Section 1
of the 2003 FRC Combined Code on Corporate Governance with
the exception that:
Dillie Malherbe was appointed as a member of the Remuneration
Committee on 15 September 2004 and is not considered to be
independent, solely due to his executive role at VenFin Ltd. As
at 30 September 2005 VenFin Ltd held 6.99% of the Company’s
share capital and a subsidiary of VenFin Ltd currently holds the
Convertible Bonds as detailed in Note 22 to the financial statements
on page 80. Dillie has extensive experience in the field of executive
remuneration. The Board considered all the implications of his role
at VenFin Ltd and concluded that this would not compromise the
independence of his input to the Remuneration Committee. The
Board also considers that the valuable input to the Remuneration
Committee that Dillie provides justifies his appointment.
The Chief Executive Officer’s Operating Review and the Chief
Financial Officer’s Financial Review contain detailed reviews
of the Group’s performance and financial position. The Board
considers these reports, along with the Chairman’s Statement and
the Directors’ Report, to reflect, with reasonable accuracy, the
Group’s position and prospects. The Directors’ responsibility for
the financial statements is described on page 49.
Board of Directors
A table setting out members of the Board during the period can be
found on page 32.
Biographical details for the current directors can be found on
pages 46 and 47.
The Board currently comprises the Chairman, four executive
directors, and seven non-executive directors. The Board considers
all its present non-executive directors, with the exception of Dillie
Malherbe, to be independent. Gordon Waddell holds the position
of senior independent non-executive director.
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.
The non-executive directors have met independently without
executives present three times during the year, and in addition
communicate telephonically and electronically on a regular basis.
Board training and evaluation
During the period under review, the individual performance of the
executive directors has been evaluated by using the performance
management and performance review system that has been
implemented throughout the Group. It is intended that further
evaluations on Board performance as a whole shall be conducted
on an annual basis.
Board operation
The Board is responsible to the shareholders for the conduct of the
business of the Group, and decides upon Group strategy. It also
reviews operational performance, approves the Group’s business
plans, approves the interim and annual financial statements,
determines the Group’s authority levels, treasury policies and risk
management policies, ensures adequate funding, and approves
major investments and the remuneration of the non-executive
directors. A defined schedule of matters reserved for decision by
the Board and those delegated to management is maintained.
Financial reporting is routinely performed according to a strict
schedule. The non-executive directors are provided with sufficient
information to enable them to reach independent conclusions
on the matters brought to their attention at board meetings. In
addition to the board meetings, detailed briefings are given to the
non-executive directors by board and non-board members, giving
non-executives an opportunity to question operational executives
directly.
The Board ensures that each director is provided with appropriate
and timely information in order to exercise his judgement. All the
directors have the facility to take independent professional advice
at the Company’s expense, following a formal procedure that
has been approved by the Board. They also have access to the
services and advice of the Company Secretaries in the UK and
South Africa.
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The Board has appointed four committees to which it has
delegated responsibilities to allow it to control the activities of
the Group effectively. Each of these committees operates within
defined terms of reference. Copies of the terms of reference for the
Audit, Nomination and Remuneration Committees are available on
the Company’s website www.dimensiondata.com
Executive Committee
The Executive Committee has responsibility for the day-to-day
running of the business and the execution of the Group’s strategy.
The Executive Committee is chaired by Brett Dawson, and the
other executive directors are also members. Additional members
of the Executive Committee are detailed on page 48. There is a
clear division of responsibilities between the Executive Committee
and the Board. The Executive Committee meets fortnightly.
Audit Committee
Rory Scott (Chairman)
Rupert Barclay
Gordon Waddell
Derek Irish
The Audit Committee is comprised of three independent non-
executive directors and Derek Irish, a chartered accountant and
a senior partner in an independent accounting practice. The
Committee met four times during the year. The Group’s external
and internal auditors attend the meetings and have direct access
to the Committee to report the results of work directed by the
Committee as well as any matters of concern. The Chief Financial
Officer attends the meetings at the request of the Committee.
The report of the Audit Committee is contained on page 33.
Remuneration Committee
Rory Scott (Chairman)
Dillie Malherbe
Gordon Waddell
The Remuneration Committee is comprised of two independent
non-executive directors and one non-executive director. Dillie
Malherbe was appointed to the Committee on 15 September
2004, as explained on page 29. The Remuneration Committee met
three times in the past year. It operates within defined terms of
reference, and recommends to the Board the remuneration policies
for the Group’s directors and senior executives, having considered
relevant market norms and independent advice where appropriate.
No director is involved in determining his own remuneration.
During the year, the Committee made grants under the Long Term
Incentive Plan and the Share Appreciation Rights Scheme.
The report of the Remuneration Committee is contained on pages
38 to 45.
Nomination Committee
Jeremy Ord (Chairman)
Gordon Waddell
Dorian Wharton-Hood
The Committee meets as necessary, and has met once during the
year under review. The Nomination Committee is responsible for
reviewing the composition of the Board and identifies and makes
recommendations to the Board regarding the appointment of new
directors. It also satisfies itself that appropriate succession plans
are in place for the Board and senior management of the Group,
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.
A N N U A L R E P O R T 2 0 0 5
CORPORATE GOVERNANCE REPORT
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Communication with shareholders
The Group is committed to honest, open and regular communication
to all stakeholders on both financial and non-financial matters.
The Group reports formally to shareholders when half and full year
results are announced and issued to the relevant stock exchanges,
shareholders and media. Executive and senior management also
give presentations to institutional investors, analysts and the media
over the results period.
Regular stakeholder meetings are held to update the market on
the Group’s strategies, operations and performance. Executive
and senior management attend these meetings on a regular basis.
All briefings and meetings are conducted in line with the Group’s
written guidelines to ensure control over price-sensitive information
and equality of disclosure. In addition, directors are kept informed
of the views of all stakeholders through briefings from the investor
relations team and the Chief Executive Officer.
Shareholders are invited to attend the Annual General Meeting and
to pose questions to the Board. All executive and non-executive
directors are expected to attend this meeting.
Financial and other information about the Group is contained on its
website, www.dimensiondata.com. A copy of the Group’s annual
report is sent to stakeholders and is posted on the website.
Risk Management and Internal Control
Ultimate responsibility for the Risk Management within the Group
lies with the Board. This responsibility includes regular review of the
effectiveness of the Risk Management and Internal Control systems
and functions. The Risk Management function, run by the Group
Risk Manager, includes an Enterprise wide Risk Management (ERM)
programme and the internal audit function. The ERM provides
assurance to the Board on all matters concerning Enterprise Risk,
including strategic, operational, financial and compliance risks.
The programme is structured in a way that focuses on the risks
relevant to Dimension Data’s business objectives.
The internal audit function is a structured Internal Control review
process based on risk assessment. The system of Internal Control
is designed to manage rather than eliminate risks to which the
Group is exposed, and provides reasonable rather than absolute
assurance against material misstatement or loss.
The Audit Committee regularly reviews the work plan and key
findings of the internal and external audit process and monitors
developments to ensure that areas of weakness are addressed.
Responsibility for implementing controls and improvements lies
with management on a business unit or regional level throughout
the Group. The Audit Committee has delegated the responsibility
for review of the Group Risk Register and Internal Audit findings
to the Group Risk Committee. This committee provides an
advisory function to the Board and Audit Committee on all matters
concerning risk and internal control.
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
Audit Committee and the Board are satisfied that the system of
Internal Control is in line and has been in accord with the guidance
under Turnbull.
Financial reporting
A comprehensive budgeting process takes place annually
throughout the Group, culminating in regional budgets that are
reviewed and approved by the Board. The Chief Financial Officer
is responsible for determining financial policy within the Group
and the Chief Executive Officer is responsible for executing these
financial policies and ensuring compliance with Group strategy.
The Chief Executive Officer is also responsible for establishing
the integrity of forecast data upon which executive decisions are
based.
Each Group operation reports its activity, turnover, actual
results, cash position and forecasts monthly to the Board. The
Executive Committee considers these against agreed quarterly
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.
A N N U A L R E P O R T 2 0 0 5
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Key controls over business unit risks include reviews against
performance indicators and exception reporting. Business units’
senior management are responsible for identifying, evaluating and
managing business risks. There are channels of communication
available to report significant risks to the Board if necessary.
Quality and integrity of personnel
The Group is committed to aligning its employees with its interests
and values. It has a published ethical code to which employees are
expected to adhere, and transgressions are strictly dealt with. The
Directors’ Report, the Report on Employees and the Corporate
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.
Controls over central functions
Treasury and Corporate Finance are controlled centrally. Treasury
policies are recorded in writing and reviewed regularly.
Authority and review
The Group has clearly defined levels of authority for the subsidiary
boards and their directors in making financial and operational
decisions including major investments, capital expenditure and
contractual engagements with customers and suppliers. The
Group’s internal audit function monitors compliance with these
authority levels.
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
D Irish n/a 3 n/a n/a
1 Appointed to the Board 1 July 2005.
A N N U A L R E P O R T 2 0 0 5
AUDIT COMMITTEE REPORT
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The Audit Committee presents a report on its activities during the period.
The Audit Committee
The members of the Audit Committee for the period under review
were as follows:
Rory Scott (Chairman)
Rupert Barclay
Gordon Waddell
Derek Irish
The Audit Committee is comprised of independent non-executives
and Derek Irish who is a senior partner in an independent
accounting practice. The Committee met four times during the
period under review, once without management and auditors
present. A table showing attendance at committee meetings is
available on page 32. Of the current committee members, three
are qualified chartered accountants. Biographical details for all
directors can be found on pages 46 and 47.
The Board of Directors has approved written terms of reference for
the Audit Committee. These terms of reference are available on the
Company’s website www.dimensiondata.com
The main duties and activities of the Committee in the period under
review can be summarised as follows:
Internal control
The Committee, together with the Group Risk Committee, has
reviewed the effectiveness of the Group’s internal controls, which
include financial, operational and compliance controls, and
procedures for identification, assessment and reporting of risks,
and has reported to the Board on the outcome of this review. The
terms of reference for the Group Risk Committee, which reports
to the Audit Committee, are available on the Company’s website
www.dimensiondata.com
Internal audit
During the period under review PricewaterhouseCoopers has
continued to act as internal auditors for the Group. The Committee
confirms their programme of work and reviews their reports. The
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.
External audit
The Committee reviews performance of the external auditors and
the level of audit service provided and has recommended the
continued apointment of the auditors for the financial year. In the
period under review the Committee has reviewed the scope of the
interim review and year end audit including the Group materiality
level. Auditor independence is discussed and confirmed at each
meeting. Approval must be obtained from the Committee at the
end of the financial year for audit, tax services and procedures
agreed upon in respect of audit certificates. Within the terms of
reference the Committee has agreed that non-audit services during
the financial year exceeding US$50,000 on an individual basis or
US$250,000 in total must be approved by the Committee.
Details of the split between audit and non-audit work can be
found in Note 5 of the annual financial statements. The Committee
considers that the approvals required for audit and non-audit
services, together with the other controls in place within the Group,
are sufficient to ensure the objectivity and independence of the
external auditors. Non-audit work during the period has comprised
taxation and various audit certificates.
The Committee has met with the external auditors three times
during the period under review.
Financial statements
The Committee has reviewed the financial statements for the
period, and has considered matters such as the consistency
of accounting policies, decisions requiring a major element of
judgement, compliance with accounting standards, the going
concern assumption and the statement on internal control
systems.
Other matters
A revised ethical code and whistleblowing policy has been
implemented. This policy is intended to assist individuals who
believe they have discovered serious malpractice or impropriety
to take the appropriate action. A copy of the ethical code and
whistleblowing policy is available on the Company’s website.
A N N U A L R E P O R T 2 0 0 5
EMPLOYEES
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One of the cornerstones of our strategy of becoming a world leader
in the provision of specialist IT infrastructure solutions has been to
attract, engage, develop and retain the right people. To this end,
key projects have included:
▲ A global employee survey - the Group conducted a global
employee survey during March 2005 to ascertain the opinions
of Dimension Data employees. The results of the survey
provided us with valuable input for areas of improvement. This
survey will be conducted on an annual basis.
▲ Attracting Talent - a focus for the period has been on
recruitment training. In addition, certain regions are moving
to a centralised recruitment model with dedicated in-house
recruitment specialists.
▲ Retaining Talent and Driving High Performance Reward and
Performance Management - during the year we continued to
execute our strategy through the Performance Management
Process. This process ensures alignment of all employees and
ensures that they receive ongoing constructive performance
feedback. The bonus scheme is also linked to the Performance
Management Process, in terms of performance both at the
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.
It is Group policy to adhere to local labour standards and globally
accepted human rights practices. Freedom of association is also
Group policy on a global basis, with works councils existing in
some countries, where appropriate to local law and practice.
Group companies aim to maintain health and safety policies
in accordance with best practice and adhere to the regulatory
requirements of the regions in which they operate. Local labour
standards are adhered to, with most employees working 40 hour
weeks unless contractually agreed otherwise because of the nature
of their employment.
The Group’s policy is that all employees are entitled to equal
opportunities. Disabled persons applying for employment are
given fair consideration. Employees who become disabled whilst
employed will be retrained wherever possible so that they can
remain employed within the Group.
Details of the average number of employees are contained in Note
6 to the annual financial statements on page 67.
A N N U A L R E P O R T 2 0 0 5
CORPORATE SOCIAL RESPONSIBILITY REPORT
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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.
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.
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 non-
profit 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 re-
thinking ways in which activities at work and home can be done to help the
environment.
Corporate Social InvestmentAt 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
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
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.
A N N U A L R E P O R T 2 0 0 5
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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
▲ Donation to All Women’s Action Society in Malaysia.
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.
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CORPORATE SOCIAL RESPONSIBILITY REPORT
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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.
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.
A N N U A L R E P O R T 2 0 0 5
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The Remuneration Committee presents its Remuneration Report, which was approved by the Board of Directors on 15 November 2005.
Introduction
This report has been prepared in accordance with the Directors’
Remuneration Report Regulations 2002. The report also meets the
relevant requirements of the Listing Rules of the Financial Services
Authority and describes how the Board has applied the Principles of
Good Governance relating to directors’ remuneration. As required
by the Regulations, a resolution to approve the report will be
proposed at the Annual General Meeting of the Company, at which
the financial statements will be approved. The Regulations require
the auditors to report to the Company’s members on certain parts
of the Directors’ Remuneration Report and to state whether in their
opinion those parts of the report have been properly prepared in
accordance with the Companies Act 1985 (as amended by the
Regulations). The report has therefore been divided into separate
sections for audited and unaudited information.
Unaudited Information
The Remuneration Committee
The Remuneration Committee members for the period under
review were as follows:
Rory Scott (Chairman)
Dillie Malherbe
Gordon Waddell
All the members of the Remuneration Committee are considered
by the Company to be independent non-executives, with the
exception of Dillie Malherbe. The Board’s explanation for Dillie
Malherbe’s appointment to the Committee is set out in the
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
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
The remuneration of non-executive directors is a matter for
the executive members of the Board. No director or manager is
involved in any decisions as to his or her own remuneration.
The Chairman, the Chief Executive Officer and the Group Executive
Human Resources provide information on current remuneration
and performance of directors and senior management, and are
available to the Committee to answer any questions that may arise.
The Chief Financial Officer has been involved in the design of
the new long term incentive schemes to assist the Remuneration
Committee in ensuring the affordability of the schemes to the
Group.
The Company Secretary’s office provides assistance and advice
to the Remuneration Committee with respect to governance,
the operation of the long term incentive schemes and regulatory
compliance and has utilised Routledge Modise Moss Morris and
Linklaters to provide legal services.
Statement of policy on directors’ remuneration
The Committee aims to provide remuneration packages that meet
the needs of a global IT services business. A business of this nature
depends on the attraction, retention and motivation of high calibre
executives who can be entrusted with growing and enhancing the
value of the Group.
In formulating the policy for the year ending 30 September
2006 and subsequent years, the Remuneration Committee has
considered the following principles:
▲ 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.
REMUNERATION REPORT
A N N U A L R E P O R T 2 0 0 5
REMUNERATION REPORT
0 3 9
▲ At an on-target level, the proportion of executive remuneration
that is performance linked will be not less than 45% of total
remuneration, including awards under any long term incentive
schemes (being the Share Appreciation Rights Scheme
(SARS) and the Long Term Incentive Plan (LTIP) valued at ‘fair
value’. Market and non-market conditions will be taken into
consideration when determining such a value.
▲ The fair value of combined grants under the SARS and LTIP
shall not exceed one times base pay per individual.
▲ Performance conditions attaching to the long term incentive
schemes shall be challenging. LTIP conditions shall normally
relate to performance against a peer group of companies,
while SARS conditions shall normally relate to the normalised
earnings per share of the Group.
The policy relating to each component of remuneration for the
directors is summarised below:
Base salary
The base salary of the executive directors is subject to annual
review and is set with reference to external market data relating
to similar companies based in South Africa and the UK and taking
into account the primary location of the directors concerned.
Consideration is given to the size, market sector, business
complexity and international reach of the comparator companies.
Annual bonus plan
Each of the executive directors is entitled to participate in an
annual bonus scheme. The Remuneration Committee believes that
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.
Long term incentives
At an Extraordinary General Meeting held on 2 December 2004,
shareholders approved the Long Term Incentive Plan and Share
Appreciation Rights Scheme. During the financial year 2005
awards under the LTIP and SARS were made to executive directors
as detailed on page 42.
Details of options granted under the share option scheme are given
on page 43.
Pensions and other benefits
Pensions and other benefits such as life insurance benefits for
executive directors reflect the practice in the countries in which
they are primarily resident. The executive directors each receive
life insurance benefits, disability insurance benefits and medical
cover. The cost to the Group is shown in the table on page 41.
Contributions are also made for the executive directors in the
Group’s provident fund, which is a defined contribution pension
scheme, in the amounts as set out on page 41.
Non-executive directors’ fees
The executive directors determine the remuneration of the non-
executive directors annually. The fees were reviewed but not
increased in the year. Consideration is given to fees payable to
non-executive directors for comparable companies. Additional
fees are paid to committee members and chairmen of Board
committees to take account of the additional work involved. Non-
executive directors are not eligible to participate in the Company’s
long term incentive schemes.
A N N U A L R E P O R T 2 0 0 5
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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.
Effective Date
of Contract
Unexpired
Term
Jeremy Ord 1 January 2003 Indefinite
Brett Dawson 1 March 2004 Indefinite
David Sherriffs 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.
A N N U A L R E P O R T 2 0 0 5
REMUNERATION REPORT
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Audited Information
Directors’
Fees
Basic
Salary
Provident/
Pension
Fund
Life
insurance
benefit
Disability
insurance
benefit
Medical
Aid Bonus
2005
Total
2004
Total
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
RGML Barclay 49 - - - - - - 49 14
BW Dawson - 585 22 7 3 7 691 1,315 690
SM Joubert - 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 75 - - - - - - 75 96
DB Sherriffs - 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
Directors’ Remuneration
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).
A N N U A L R E P O R T 2 0 0 5
0 4 2
Number of awards
Date SARS
offered
Opening Balance
30 September 2004
Closing Balance
30 September 2005
Grant Price
(Sterling)
Expiry
Date Performance Conditions met
JJ Ord 15/02/2005 - 600,000 0.39 15/02/2011 Subject to Performance Condition
BW Dawson 15/02/2005 - 600,000 0.39 15/02/2011 Subject to Performance Condition
SM Joubert 15/02/2005 - 400,000 0.39 15/02/2011 Subject to Performance Condition
PK Quarmby 15/02/2005 - 300,000 0.39 15/02/2011 Subject to Performance Condition
DB Sherriffs 15/02/2005 - 400,000 0.39 15/02/2011 Subject to Performance Condition
Share Appreciation Rights Scheme (SARS)
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.
Number of awards
Date LTIP
offered
Opening Balance
30 September 2004
Closing Balance
30 September 2005 Expiry Date Performance Conditions met
JJ Ord 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
Long Term Incentive Plan (LTIP)
Long Term Incentives
A N N U A L R E P O R T 2 0 0 5
REMUNERATION REPORT
0 4 3
Sterling options
Date Option
offered
Opening Balance
30 September
2004
Closing Balance
30 September
2005
Grant Price
(Sterling) Expiry Date
Performance
Conditions met
JJ Ord 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
BW Dawson 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
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
SM Joubert 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
PK Quarmby 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
DB Sherriffs 18/11/2003 700,000 700,000 0.36 18/11/2013 Yes
Date Option
offered
Opening Balance
30 September
2004
Closing Balance
30 September
2005
Grant Price
(SA rand) Expiry Date
Performance
Conditions met
JJ Ord 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
BW Dawson 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
SM Joubert 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
PK Quarmby 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
SA rand options
A N N U A L R E P O R T 2 0 0 5
0 4 4
Name Non-Beneficial Beneficial Total 2005 Total 2004
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
RM Scott 481,830 - 481,830 481,830
G Waddell 7,581 75,000 82,581 82,581
PD Wharton-Hood - 150,000 150,000 118,188
Directors’ shareholdings are unchanged as at 15 November 2005.
Other than the shareholdings listed above, the Directors hold no interests in other Group companies.
Directors’ interests in ordinary shares
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
A N N U A L R E P O R T 2 0 0 5
REMUNERATION REPORT
0 4 5
0
20
40
60
80
100
FTSE Software and Computer Services IndexDimension Data Holdings
Sep 2005Sep 2004Sep 2003Sep 2002Sep 2001Sep 2000
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
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
A N N U A L R E P O R T 2 0 0 5
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Directors
Jeremy John Ord (48)
Chairman
Jeremy Ord was appointed as Chairman of Dimension Data
Holdings plc at the time of its listing in London and Johannesburg
in 2000. He held the combined role of Chairman and Chief
Executive Officer until 1 March 2004, when Brett Dawson was
appointed as Chief Executive Officer. Jeremy previously served as
Executive Chairman of Dimension Data Holdings Ltd from 1987, as
the Group’s Managing Director and in other senior positions since
the Group’s 1983 inception.
Brett William Dawson (41)
Chief Executive Officer
Brett Dawson was appointed as Chief Executive Officer of the
Group and to the Board of Dimension Data Holdings plc on 1
March 2004. Prior to this appointment he had served as Dimension
Data’s Chief Operating Officer from 2002. He joined the Group in
1997 as Financial Director of the Group’s joint venture, OmniLink.
He was instrumental in growing the business, which exceeded all
business plan objectives and claimed a dominant market share in
the South African market. Following the merger of OmniLink and
Internet Solutions, Brett was appointed CEO of Internet Solutions.
In September 2001 he relocated to take on the role of CFO of
Dimension Data North America, where he focused on integrating
acquisitions in that territory. Prior to joining Dimension Data, Brett
was responsible for corporate strategy and planning at National
Brands Ltd and held corporate finance positions at Anglovaal Ltd
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).
Patrick Keith Quarmby (51)
Director: Corporate Finance
Patrick Quarmby 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 on the Board of
Dimension Data Holdings Ltd from 1996. Previously he worked as
a tax partner at Ernst & Young South Africa and was a director of
Standard Bank in London and Hong Kong. He was appointed as
Chairman of Datacraft Asia in July 2002. He graduated from the
University of Cape Town and is a Chartered Accountant (SA). He is
a non-executive director of Unitrans Ltd.
David Brian Sherriffs (42)
Chief Financial Officer
David Sherriffs was appointed as Chief Financial Officer on 1
March 2004, and was appointed to the Board of Dimension Data
Holdings plc on 9 June 2004. He joined the Group in 1997 as a
member of the finance team, primarily involved in corporate finance
activities. In 2000, David was appointed Vice President of Business
Development for Europe and relocated to Germany. From 2003,
David served as Group Executive Operations and was responsible
for business case assessments relating to strategic projects. Prior
to joining the Dimension Data Group, David served in various
financial, corporate finance and strategy roles for Anglo American
plc, including Executive Assistant to the chairman. David is a
Chartered Accountant (SA) and received his MPhil in Management
Studies at the University of Oxford.
BOARD OF DIRECTORS AND EXECUTIVES
A N N U A L R E P O R T 2 0 0 5
BOARD OF DIRECTORS AND EXECUTIVES
0 4 7
Non-Executive Directors
Gordon Herbert Waddell (68)
Senior independent non-executive director
Gordon Waddell was appointed to the Board of Dimension Data
Holdings plc as a non-executive director at the time of its listing
in London and Johannesburg in 2000. Mr Waddell is the non-
executive chairman of Mersey Docks and Harbour Company.
He was appointed senior non-executive director in September
2002 and is a member of the Audit Committee, Remuneration
Committee and Nomination Committee. Mr Waddell graduated
from Cambridge University with a Bachelor of Arts degree and has
an MBA from Stanford University.
Rupert George Maxwell Lothian Barclay (48)
Independent non-executive director
Rupert Barclay joined the Board of Dimension Data Holdings plc
as an independent non-executive director with effect from 9 June
2004. Rupert is a partner of Cairneagle Associates LLP and is a
non-executive director of Lowland Investment Company plc. He
has previously served in an executive capacity as CFO of Lombard
Risk Management plc, Director of Group Strategy Development at
Reuters plc and Director of Group Strategy at Allied Domecq plc.
Rupert was appointed to the Audit Committee on 15 September
2004. He is a graduate of Cambridge University, has an MBA from
INSEAD and is a Chartered Accountant.
Wendy Lucas-Bull (52)
Independent non-executive director
Wendy Lucas-Bull joined the Board of Dimension Data Holdings
plc as an independent non-executive director with effect from
1 July 2005. Wendy is currently a member of the Aveng Limited
Board, the Eskom Holdings Limited Board and she chairs the
Eskom Finance Committee. She graduated from the University of
the Witwatersrand with a Bachelor of Science degree.
Josua (Dillie) Malherbe (49)
Independent non-executive director
Dillie Malherbe was appointed to the Board of Dimension
Data Holdings plc in November 2003 and as a member of the
Remuneration Committee on 15 September 2004. He is the Chief
Executive Officer of VenFin Ltd. He also serves on the board of
Vodacom Group (Pty) Ltd, GenuOne Incorporated and MidiTV (Pty)
Ltd (e-tv). He graduated from the Universities of Stellenbosch and
Cape Town and is a Chartered Accountant (SA).
Moses Modidima (Moss) Ngoasheng (48)
Independent non-executive director
Moss Ngoasheng was appointed to the Board in September
2002. He also serves as a non-executive director on the board of
Dimension Data (South Africa) (Pty) Ltd. He is executive chairman of
investment company Safika Holdings (Pty) Ltd, and was previously
economic advisor to South African President Thabo Mbeki. He also
serves as a non-executive director of The Industrial Development
Corporation and New Africa Capital Ltd. Moss graduated from the
University of South Africa and has an MPhil from Sussex University.
Safika Holdings (Pty) Ltd, amongst its other activities, has formed
a minority part of the consortium involved in the BEE transaction
with Dimension Data (South Africa). The Company has reviewed
this involvement, and considers that Moss should continue to be
considered as fully independent.
Roderick (Rory) Michael Scott (46)
Independent non-executive director
Rory Scott was appointed to the Board of Dimension Data Holdings
plc as a non-executive director at the time of its listing in London and
Johannesburg in 2000. He had previously served as a non-executive
director on the Board of Dimension Data Holdings Ltd, and before
that served as the Group Financial Director from 1987 to 1991. He is
presently Managing Director of the Scottish Knitwear Group SA (Pty)
Ltd. He is a Chartered Accountant (SA) and serves as chairman of the
Audit and Remuneration Committees. Given the length of time that
has elapsed since his service as an executive director, the Company
considers him to be fully independent.
Peter Dorian (Dorian) Wharton-Hood (66)
Independent non-executive director
Dorian Wharton-Hood was appointed to the Board of Dimension
Data Holdings plc as a non-executive director at the time of its
listing in London and Johannesburg in 2000. He previously served
as a non-executive director of Dimension Data Holdings Ltd from
1998. He was vice-chairman of Liberty Life for eight years. He was
chairman of the Life Office’s Association of SA on three occasions
and president of the Insurance Institute of SA. He was also a
member of the Council of the SA Foundation and a director of
Business Against Crime. In 1998 he was chairman of the Governing
Body of Business SA of which he is now a trustee. He is a member
of the Nomination Committee and the Treasury Committee.
He graduated from Stellenbosch University with a Bachelor of
Commerce degree.
A N N U A L R E P O R T 2 0 0 5
0 4 8
Group Operations
Brett Dawson Chief Executive Officer
(Chairman of the Executive Committee)
Dave Sherriffs Chief Financial Officer
Patrick Quarmby Director: Corporate Finance
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
Executive Committee
A N N U A L R E P O R T 2 0 0 5
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
0 4 9
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.
A N N U A L R E P O R T 2 0 0 5
SHAREHOLDER INFORMATION
0 5 0
Size of shareholding Number of shareholders
Number of shares
Percentage of issued capital
1 - 1,000 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
Over 1,000,001 188 1,135,360,854 84.41
Total 24,309 1,345,050,505 100.00%
Shareholders’ diary
Financial year end 30 September
Profit announcement November 2005
Annual Report Published December 2005
Interim profit announcement May 2006
Dividend policy
As stated in the Directors’ Report, the Directors currently anticipate
that all the available cash generated by the Group’s business will be
invested in the continued growth of the Group, and will not declare
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
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
Substantial Interests
A N N U A L R E P O R T 2 0 0 5
FIVE-YEAR REVIEW
0 5 1
For the year ended 30 September
2005 2004 2003 2002 2001
$’000 $’000 $’000 $’000 $’000
Turnover
- Continuing operations 2,727,857 2,368,044 2,014,795 2,120,562 2,123,282
- Acquisitions - - - - 278,221
Group turnover 2,727,857 2,368,044 2,014,795 2,120,562 2,401,503
- Associates 99,052 115,990 85,464 66,769 58,755
Total turnover 2,826,909 2,484,034 2,100,259 2,187,331 2,460,258
Operating profit/(loss) before goodwill amortisation, impairment and exceptional items
- Continuing operations 61,692 25,666 (14,886) 40,962 170,011
- Acquisitions - - - - 5,959
Group operating profit/(loss) 61,692 25,666 (14,886) 40,962 175,970
- Share of operating profit
in associates 7,921 7,343 5,874 4,464 4,889
Total 69,613 33,009 (9,012) 45,426 180,859
Earnings/(loss) attributable to shareholders before
goodwill amortisation, impairment and exceptional
items 18,643 11,434 (36,356) 30,100 163,804
Basic earnings/(loss) per share before goodwill
amortisation and exceptional items
(US cents) 1.4 0.9 (2.7) 2.3 13.0
Weighted average number of ordinary shares (’000) 1,343,895 1,342,286 1,341,618 1,299,075 1,255,235
Cash on hand (including short term investments) 416,596 425,039 385,691 415,352 920,080
Financial Summary
A N N U A L R E P O R T 2 0 0 5
0 5 2
2005 2004 2003 2002 2001
JSE Securities Exchange
(SA cents per share)
- Closing 425 361 301 280 930
- High 485 633 311 1 665 6 950
- Low 319 295 298 252 794
Number of shares in issue (’000) 1,345,051 1,342,437 1,341,992 1,299,477 1,298,812
London Stock Exchange
(UK pence per share)
- Closing 37.50 31.25 26 16 70
- High 43.00 48.75 27 118 663
- Low 28.25 24.75 24.25 13.75 67
Number of shares in issue (’000) 1,345,051 1,342,437 1,341,992 1,299,477 1,298,812
Market capitalisation at year end
JSE Securities Exchange (R m) 5,716 4,846 4,039 3,639 12,079
London Stock Exchange (£ m) 504 420 349 208 909
($ m) 888 755 582 324 1,335
Share price statistics
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