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I am pleased to report that this is our fourth successive year of improvements in revenues and earnings with significant progress in performance reported across all businesses. The early efforts we made to restructure our business in the wake of the IT downturn between 2001 and 2003, have allowed the Group to continue to deliver consistent improvements in results.
In an increasingly global market, where size is often a competitive advantage, Datatec has been able to leverage its scale and geographic reach to establish a strong position as a leading technology infrastructure solutions and services provider in the markets in which we operate. Of the Group's $3,2 billion revenue generated in the past year, almost half or 48% was generated from North America, 38% from Europe, 7% from Asia-Pacific, 5% from the Middle East and Africa and 2% from South America. The Group has long-established relationships with many of the world's leading technology vendors in many of the high growth sectors of the global Information and Communications Technology ("ICT") market.
By virtue of this strong position, the Group has been able to take advantage of favourable economic conditions in most regions and markets. Moderating growth in the US has been offset somewhat by a resurgent Asia and buoyed by better than expected growth in Europe. Revenue has continued to grow strongly, driven by increasing demand for converged networking, data centre consolidation and proliferating security requirements. In particular the continuing strong performance of Cisco Systems, the industry's leading vendor and the Group's largest supplier, supports our current optimism.
Growth has also been underpinned by market share gains. This is particularly true in Westcon and Logicalis. They have benefi ted from recent acquisitions which have improved scale and expanded the skills and knowledge base of the organisation. This has resulted in increased vendor support as a consequence of our ability to broaden our solutions and services offerings as well as increasing exposure to key growth geographies. Current market research and feedback from both vendor partners and customers indicate that current growth drivers should be sustained for the foreseeable future.
PERFORMANCE
In the year ending 28 February 2007, the Group saw revenue grow by 17% to $3,2 billion (2006 restated: $2,7 billion).The 2006 revenue and margins have been restated for the effect of the change in accounting relating to vendor maintenance contracts as explained in the finance report. Earnings before interest, tax, depreciation and amortisation ("EBITDA") increased by 40% to $119 million from $85 million, operating profits rose 45% to $100 million from $69 million, and headline earnings per share ("HEPS") grew 52% to 40,8 cents (2006: 26,9 cents). Shareholders will benefit from an increased capital distribution of approximately 10 US cents per share (70 SA cents) compared with approximately 5 US cents per share (30 SA cents) in the previous year.
SECONDARY LISTING
To coincide with this improving financial performance and together with the Group's expanding international portfolio of businesses, the Board decided to seek a secondary listing on the AIM market of the London Stock Exchange to complement the company's listing in Johannesburg, and to gain access to a deeper pool of liquidity and broaden our international shareholder base.
Since admission to the London Stock Exchange in October 2006, Datatec has raised $60 million of equity capital. The London listing supports the Group's growth strategy, improves access to international investors and raises the profile of Datatec and its operating subsidiaries.
CORPORATE GOVERNANCE
Datatec remains committed to high standards of corporate governance and continually reviews corporate behaviour to ensure compliance with international best practice. Being listed on both the JSE and AIM market of London, the Group is fully compliant with the King II report on corporate governance for South African companies.
BLACK ECONOMIC EMPOWERMENT
In July 2006, progress was made in the development of our black economic empowerment ("BEE") initiatives in South Africa. Datatec announced the merger of its South African operations with African Legend Technologies to form an IT group comprising Westcon SA and African Legend Indigo (formerly Rangegate). The new group is 45% black owned, significantly ahead of the ICT Charter recommendations, and will provide a larger base from which Datatec will seek to develop its operations in South Africa.
PROSPECTS
With our focus on the fast growing networking and IT services sector, we are in an excellent position to exploit our scale and resources to develop the Group internationally through organic and acquisitive growth. The continuing prudent approach to managing its cost base and tight controls of working capital should result in consistent and more predictable improvements in fi nancial performance.
BOARD AND APPRECIATION
During the year we were pleased to welcome two experienced independent non-executive directors to the Board. Professor Wiseman Nkuhlu was appointed as a non-executive director on 1 September 2006. Professor Nkuhlu is currently chairman of Pan African Capital Holdings (Pty) Ltd and holds directorships with Kagiso Trust Investments, and AngloGold Ashanti. Between October 2000 and July 2005, he served as economic adviser to President Thabo Mbeki and chief executive of the Secretariat of New Partnerships for Africa's Development (NEPAD). Stephen Davidson was appointed as a non-executive director on 1 February 2007. Stephen is Chairman of SPG Media Group PLC, Enteraction TV Limited and Digital Marketing Group PLC and is also a non-executive director of Inmarsat PLC, Betex Group PLC and EBT Mobile China PLC.
We are delighted that Wiseman and Stephen have agreed to join the Board and bring their many years of international experience to the continued development of the Group. I thank all my fellow directors for their continued contribution and support. Finally, on behalf of the Board, I would like to express my sincere appreciation to all of Datatec's employees for their splendid efforts which have made this, our 21st year, so successful.
Leslie Boyd
Chairman
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