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The Group’s performance over the past financial year has been excellent, with strong revenue growth of 19.5%. We have maintained our gross margin and driven operating profit(1) growth of 39.1% to an operating margin of 4.0% - a position that puts us firmly on track to achieve our medium term goal of 5% for the Group. The benefits have manifested themselves in significant EPS growth of 28.3%. In addition to our improved financial results, our cash generation during the period was excellent, driven by disciplined working capital management.
Our strong financial results are testament to the ongoing success of the Group’s strategy, as evident in the outstanding rate of Services growth, which hit 19.5% this year. This now reflects a compound annual growth rate of 22% over the past three years and is a significant and resounding achievement for the Group.
We achieved growth across all of our businesses. In our largest business, the Systems Integration (SI) business, which accounts for 77.1% of revenues and operates in 47 countries around the world under the Dimension Data and Datacraft brands, we grew by 18.8%, evidencing a growing market share and strengthening competitive position. The performance was underscored by the achievement of a number of significant awards.
Within our regional businesses, Internet Solutions and Plessey, both of which address the growing telecommunications sectors in Africa, achieved strong growth. In Express Data, our Australian distribution business, the rate of growth was more muted.
Strong geographic performances in all regions reflect the improving robustness of our business model. Accelerated revenue growth was evident in all regions, but the emerging markets of Asia and Middle East and Africa led the Group with outstanding revenue growth of 23.9% and 27.1%, respectively. Operating profit improved across all geographies, with an exceptional improvement of 108.5% in Europe. Australia and Middle East and Africa posted particularly healthy improvements in their operating margins.
The Group has enjoyed robust growth over the past few years and even in the current market conditions there are still a number of key areas within which clients are willing, and continuing, to invest. We continue to see our clients’ sourcing strategies evolve and believe that the present market conditions will prove particularly conducive to the benefits of Multisourcing, whereby clients can outsource specific elements of their IT environment to ‘best-of-breed’ IT service providers while retaining other IT functions in-house. Over the past few years, we have been investing in positioning ourselves for these opportunities and, during the period, we have started to see signs of early wins across several geographies and are optimistic of future growth opportunities.
The Group has enjoyed robust growth over the past few years and even in the current market conditions there are still a number of key areas within which clients are willing, and continuing, to invest.
We continue to see our clients’ sourcing strategies evolve and believe that the present market conditions will prove particularly conducive to the benefits of Multisourcing, whereby clients can outsource specific elements of their IT environment to ‘best-of-breed’ IT service providers while retaining other IT functions in-house.
Deploying technology which can drive cost reduction opportunities for our clients is currently a real opportunity for Dimension Data. During FY2008 we have developed and introduced a number of services that play to this focus, including ITSM, performance optimisation, virtualisation and power and cooling assessment services, all of which are gaining market traction. Likewise, data centre consolidation, technology refresh projects, security consolidation and server and storage virtualisation remain strong drivers in the move towards cost and capacity optimisation and the focus of significant market interest. In addition, many of these cost saving technologies require network re-architecture and optimisation; a fast and long-lasting return on investment makes them a priority investment for many clients. Over and above network investment being a pre-requisite for a myriad of cost saving technologies, the network itself remains an integral, mission critical component for the majority of enterprises.
Security is proving to be equally insulated from budgetary caution; businesses simply cannot afford to have security breaches, data leaks and compliance failures. Companies may now be forced to make breaches public and explain their redress, a costly exercise in both monetary and reputational terms. Compliance can actually prove to be a business pre-requisite, particularly in the retail industry, and will often unlock IT spend with considerable speed. Security is the fastest growing line of business year on year within Dimension Data and we envisage continued market opportunities going forward.
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