DiData maps out road to growth

Johannesburg, 16 Nov 2006

Dimension Data expects waves of growth in the next few years as the world moves towards IT's Holy Grail of unified communications.

CEO Brett Dawson, speaking at the company's annual results presentation yesterday, said the company saw future growth from two key network-oriented areas.

The first was the evolution of the network into a converged platform, based on the Internet Protocol standard. The second is the 'tectonic' shift towards consumers becoming converged clients as all devices increasingly become driven by mobility.

Dawson noted the company would develop a services strategy for full lifecycles, allowing it to target the key growth areas it identified.

To achieve its aim of becoming an IT infrastructure technology partner, Dawson said the company will expand its services to offer planning and will operate more in the managed space of networking.

It also seeks to expand geographically and is likely to do so through small, targeted acquisitions. Dawson said the company was looking at a few select countries, but would not reveal further details. However, the outsourcing firm considers Africa an exciting area.

Turnaround

The company believes growing its revenue and maintaining its gross margin will aid it in achieving bottom line margin growth. Its previous target for the 2007 financial year was a margin of 3.6%.

Dawson said he was not changing the firm's guidance on this, but added that in the next three to five years, it hoped to hit a margin of 5%. Yesterday, it reported a margin of 2.8%.

An analyst commented that if the company hit a margin of 5%, its local share price should go up to R8. Shortly after the presentation, London- and Johannesburg-listed DiData's shares were trading down 0.18% at R5.54.

The company yesterday reported revenue of $3.067 billion, up 16% year-on-year from $2.646 billion. It also reported operating profit up 50% from $56.7 million to $85 million. CFO Dave Sherrifs said cost containment had contributed to this.

The company said pre-tax profit was $69.7 million, up 66% from $41.9 million. Earnings per share moved up 150%, from 0.8 US cents to two US cents. The company also declared its inaugural dividend of one US cent.

Three years ago, it was running at a $15 million loss. Chairman Jeremy Ord said it had been a productive year with "very good growth" in Africa and good results from Australia, Asia and the US.

The only disappointment, he said, was Europe, which the company has taken steps to remedy.