Support Build Plan - Dimension Data

operational review
22 DIMENSION DATA
United Kingdom
$'000 FY2003 FY2002
Turnover 205,918 193,652
Operating profit before goodwill amortisation, impairment and exceptional items 11,010 8,644
Operating margin 5.3% 4.5%
Net operating assets 39,303 111,291
The UK business made excellent progress
in a troubled integrator market in
transitioning to a more focused and
profitable business model. Demand for IT
services remained under pressure during
the period under review, and whilst US
dollar revenues increased by 6% year on
year, in constant currency terms they
declined by 2%.
The performance of the UK business
benefited from changes implemented in
the prior period. A new CEO and
management team improved focus and
succeeded in growing Managed and
Professional Services revenue by 24%
year on year. Dimension Data’s market
position and delivery capabilities were
enhanced following a realignment of the
skills base towards skills able to sell and
deliver solutions. Good progress was
made in building long term relationships
with blue chip customers, and experience
gained in winning and delivering on global
accounts proved invaluable in tendering
for further global contracts.
Significant progress was made in reducing
overheads, which came down by 21% in
constant currency terms over the year.
This resulted in a sharp improvement in
profitability over the prior year and
operating margins reaching 6.9% in the
second half of the year.
The UK’s market offerings were extended
over the year to include Content
Management, Voice Activated Solutions,
Storage and IPCC. We won new business
from a large UK mobile operator in the
Content Management and Voice Activated
Solutions space and won a US$7 million
Cisco product, services and IPCC solution
contract with Streamdoor. Improved
delivery capabilities resulted in better
profitability in the Advanced Infrastructure
business where building service solution
contracts were won from Lime Street
Development, Warwick University and
Swiss Re.
The Merchants Group, the UK’s managed
call centre business, was restructured
during the period under review and
continues to provide global outsourcing
solutions through call centres in Scotland,
Ireland, England and South Africa.
Significant success was achieved in
onshore, nearshore and offshore solutions
and several large contracts, including
deals with Unilever and Edexcel, that will
benefit 2004 revenues were awarded late
in the year.
Entering the new financial year there is
evidence of an increasing propensity for
customers to plan new projects but as yet,
this is not translating into orders. Whilst
we are not anticipating a strong pick up in
demand, geographic expansion into
Northern England and Scotland is
expected to drive revenue growth in 2004.
We also see opportunities in targeting
medium-sized enterprise customers and in
winning government business. Vendor
relationships are strong and opportunities
are emerging to target customers in joint
engagements. The investment made in
enhancing offerings in the areas of
Storage, Security, IPC/IPT and Call Centre
Integration is also expected to bear fruit.