Global networking and systems integration group Dimension Data`s earnings per share fell to $0.023 before amortisation, impairment and exceptional items in the year to 30 September, compared with $0.13 the previous year.
<B>Salient figures</B>
Dimension Data results for the year to 30 September 2002.
Previous year`s figures in parentheses:
Total turnover: $2.19b ($2.46b)
Operating profit before goodwill amortisation, impairment and exceptional items: $40.96m ($175.97m)
Total operating loss: $2.58b ($1.79b)
Loss for the year: $2.58b ($1.72b)
Basic EPS before goodwill amortisation and exceptional items: $0.023 ($0.13)
Current assets: $1.08b ($1.73b)
Cash at bank and in hand: $372.57m ($893.97m)
Net current assets: $342.66m ($443.09m)
Net cash inflow from operating activities: $28.95m ($186.34m)
Analysts had been expecting it to report earnings in the region of $0.0242.
Executive chairman Jeremy Ord says trading in all of Dimension Data`s regions remain extremely challenging in a period of deteriorating global economic conditions and increasing uncertainties.
"Constrained IT budgets, declining volumes, smaller deal sizes, lengthening lead times and postponement of significant spending decisions were all features of the period," he says.
"Across the board, customers were cautious about committing to new IT infrastructure spend. They remained focused on extracting returns on their IT investments, reducing the operational costs of existing infrastructure and were more inclined to invest in services and solutions."
We will continue to strengthen our position in and protect the contribution from our core enterprise infrastructure offerings where we will focus on efficiencies and on being more selective in terms of margins at which business is accepted.
Jeremy Ord, executive chairman, Dimension Data
He says while group revenue declined by 12% over the period, some stabilisation returned in the second half when revenues were only marginally down on the first half.
"Gross margins came under severe pressure over the year. Lower volumes, fewer large opportunities and the fiercely competitive trading environment resulted in pressure on technology pricing and billing rates, particularly in the second half of the year.
"This was exacerbated by low utilisation levels and excess overheads relative to the reduced level of activity.
Retrenchments
"The group-wide rationalisations largely in the second half of the year in response to the deteriorating market conditions were costly and further disrupted trading in some regions."
Ord says the group achieved significant cost reductions of 11%, largely through a 19% reduction in headcount.
Total turnover dropped from R$2.46 billion to $2.19 billion while the operating profit before goodwill amortisation, impairment and exceptional items fell from $175.97 million to $40.96 million.
Africa accounted for $292.87 million revenue versus $426.79 million previously. Asia achieved turnover of $404.91 million (2001: $546.2 million), Australia $364.61 million ($406.86 million), Europe $360.77 million ($360.34 million), UK $193.65 million ($243.58 million), US $503.75 million ($407.89 million). Associates added $66.77 million ($58.76 million) to turnover.
On an operating profit level, Africa accounted for $20.03 million ($65.63 million), Asia $16.96 million ($47.22 million), Australia $10.19 million ($16.6 million), Europe $18.69 million ($24.96 million), UK $8.64 million ($26.25 million), US negative $9.02 million ($12.19 million positive) and associated $4.46 million ($4.89 million). Other investments accounted for negative $24.53 million (negative $16.87 million).
Ord says that in the US, revenue growth was achieved in the network infrastructure and integration business. However, while the operational services business performed well, the overall contribution from services fell short of target.
The applications business was rationalised and steps have been taken to return the business to profitability, including high-level management changes, a 42% reduction in staff and rationalisation of lease expenses. "Scope remains to reduce costs further in 2003."
Ord says the focus now is on improving the group`s sales mix and profitability rather than aggressively growing turnover.
"We will continue to strengthen our position in and protect the contribution from our core enterprise infrastructure offerings where we will focus on efficiencies and on being more selective in terms of margins at which business is accepted.
"At the same time, with an increasingly value-add led sales approach, we will be targeting a greater contribution from higher margin solutions."
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