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In the review below, growth rates are in relation to FY2007 and, unless otherwise indicated, are calculated before eliminating intercompany revenue, are adjusted for the disposal of the Swedish operations in the prior year and, except in the case of Datacraft Asia, are adjusted for the impact of currency movements (i.e. are constant currency growth rates).
Income statement summary
Revenue for the year was $4,511 million, an increase of 16.9%. Revenue from Asia and Middle East and Africa, and overall Services growth, were exceptional. Across the businesses, trading was particularly strong in Systems Integration (trading as Datacraft in Asia and as Dimension Data elsewhere), in Internet Solutions and in Plessey, with revenue growth of 18.8%, 30.1% and 17.3% respectively.
Gross profit for the period was $973.3 million, up 17.0%, reflecting a 0.2% improvement in gross margin to 21.6%. Both Product and Services margins were firmer, while an improved Services to Product mix also contributed to the growth. Overheads grew by 13.3%, well below revenue, to $791.1 million. Of this, variable overheads (including bonuses and sales commission) were up by 18.9% to $143.3 million while fixed overheads grew by 10.8% to $647.8 million.
Operating profit was strongly up on last year to $182.2 million - a year on year increase of 39.1% - and operating margin improved from 3.5% to 4.0%. The share of results from associates increased to $7.1 million from $5.7 million, while net interest costs reduced to $13.5 million, $1.4 million less than the prior period.
Property revaluation and other gains and losses include a gain on revaluation of the investment portion of the Campus property asset of $8.5 million (2007: $22.2 million). The Group tax charge was $48.0 million, an effective tax rate on profit before tax of 25.9% (2007: 25.9%), excluding exceptional items. The Group continued to benefit in certain jurisdictions from significant assessed losses carried forward.
Earnings per share were 7.7 cents per share, an increase of 28.3%. The only exceptional item reported during the period was a $4.1 million gain on disposal of Automate, a software development company providing solutions to the automotive industry, to Britehouse, a Group associate.
Trading and operations
Group Businesses
Systems Integration (Dimension Data and Datacraft)
The Systems Integration business, operating in 47 countries on five different continents, incorporates six lines of business: Network Integration, Converged Communications, Security, Customer Interactive Solutions (CIS), Data Centre and Storage (DCS) and Microsoft Solutions.
The Systems Integration business, operating in 47 countries on five different continents, incorporates six lines of business, being Network Integration, Converged Communications, Security, Customer Interactive Solutions, Data Centre and Storage and Microsoft Solution.
Across these lines of business, we have developed a full lifecycle of services. Network Integration (which accounts for 59.2% of total Systems Integration revenues) grew by 20.4%, another year of increasing market share for the Group. The network today plays an essential role in enabling business to operate and compete, and our vision of the network becoming the platform for all forms of communication is being realised. We saw growth from infrastructure refresh opportunities, and from projects that support clients’ business objectives around cost reduction, operational efficiency and improved customer service. Strong demand for unified communications (including voice and video solutions) resulted in upgrades in the core connectivity fabric. Similarly, an increasingly mobile workforce’s expectations for ‘anywhere accessibility’ drove investment in wireless networks. We also saw growth in virtual private networks, network security, performance optimisation and operational services.
The demand for unified communications also supported our Converged Communications business, which grew by 22.4%. This business includes the Group’s IP telephony and visual communications solutions. Strong growth in video conferencing was driven by environmental concerns as well as ongoing pressure on travel costs. Opportunities in this business stem from our leadership in global IP networking and solid relationships with key unified communications partners, including Cisco, Tandberg and Microsoft.
