Our strategy has not been deflected: we remain committed to delivering long-term, sustainable and above-average returns to shareholders.
The past financial year was testing for Datatec with a mix of weak market conditions, strong US Dollar and a number of one-off events impacting our performance.
Our strategy has not been deflected: we remain committed to delivering long-term, sustainable and above-average returns to shareholders through portfolio management and the development of our principal subsidiaries providing technology solutions and services to targeted customers in identified markets.
All activities of the Group and of its employees are guided by our Code of Conduct which enshrines the ten principles of the United Nations Global Compact and helps to direct the Group’s actions within our global context.
We are committed to being ethical and socially responsible corporate citizens. As such, excellence in governance is another fundamental contributor to the sustainability of our business. Our Board is acutely conscious of the need to strike a balance in its constitution between experience, continuity and generation while always ensuring a high level of independence.
Risk management remains a top priority for our Group. This is particularly important when operating on a truly international scale and in volatile markets. The current headwinds sweeping through emerging markets saw us implement additional measures to harmonise a set of procedures enabling managers throughout the Group’s divisions to identify, manage and mitigate risks faced by the business. This is firmly embedded in Datatec with the risk policy set by the Board enacted across the Group through a risk management framework.
The Group’s underlying business was stable in the financial year ended 29 February 2016 but the strength of the US Dollar, particularly against emerging market currencies such as the Brazilian Real, saw revenue growth in constant currency terms eliminated on translation to the US Dollar, which is our reporting currency. Revenues were flat year-on-year at US$6.5 billion with several non-recurring charges, including foreign exchange losses in Angola, WestconGroup’s BPO initiative and restructuring of Logicalis UK, impacting profitability and depressing earnings per share.
Scrip distribution with cash dividend alternative
We have maintained the level of our annual distribution at the same level in US Dollar terms for the fourth year running.
We continue to structure our returns to shareholders as scrip distributions with a cash dividend alternative (paid from distributable reserves) which allows Datatec to increase its capital base to support continued growth and also facilitates Datatec’s management of its internal liquidity. It affords shareholders the opportunity to increase their shareholding in Datatec while providing flexibility for those shareholders who prefer to receive a cash dividend.
The Company paid an interim scrip distribution with cash dividend alternative of 105 ZAR cents (approximately 8 US cents) to shareholders on 30 November 2015. The proportion of the Company’s total shares which received the scrip distribution was 12.6% with the balance opting to receive the cash dividend.
The Board has declared a final scrip distribution with cash dividend alternative of 136 ZAR cents (approximately 9 US cents) in relation to the financial year ended 29 February 2016.
Datatec’s shares are listed on the JSE and on AIM. Although we have over 4 000 shareholders internationally, our largest shareholders are South African based.
In February 2016, I had the pleasure of meeting with most of our major shareholders in Johannesburg and Cape Town. We discussed some key matters of corporate governance including the length of service and independence of non-executive directors, diversity on the Board, and some changes proposed to the performance conditions for our Datatec share schemes.
I welcome this interaction with key stakeholders in our business and we have taken into account the feedback we received as can be seen in this Integrated Report.
Of course, we welcome engagement and comments from shareholders at any time and especially at the AGM which this year is on 9 September.
Appreciation and Board changes
I would like to express my gratitude to each of our more than 8 500 employees for their commitment this year. It is not only their contribution to advancing the Group that matters but also in the many ways that they contribute to the communities in which they live and work.
My thanks also go to my fellow directors for their counsel and strategic guidance. In particular, Jens Montanana, our CEO, for his tireless leadership of the Group and Jurgens Myburgh for his strong financial input over the past two years as CFO. We wish Jurgens well in his new role and welcome the return of Ivan Dittrich as CFO following four years of broadened external experience.
After ten years of exemplary service, Professor Wiseman Nkuhlu will retire at the AGM. His role as an independent non-executive director, member of the Audit, Risk and Compliance Committee and Chairman of the Social and Ethics Committee has been inspirational for the business and we are truly honoured to have benefited from his contributions over the years. I am pleased to say that Wiseman has agreed to continue as Chairman of the Datatec Education and Technology Foundation.
Finally, I thank our customers and vendor partners for their continued support.
11 May 2016