Our focusChairman's REVIEW

We are committed to delivering long-term, sustainable and above-average returns to shareholders through portfolio management and the development of our principal subsidiaries in technology solutions and services to targeted customers in identified markets.

A key part of the sustainability of our strategy is developing our people to enable them to realise their full potential and build a sustainable skills pool for the benefit of Datatec. Protecting our environment and supporting communities in which we operate is important to us and we all take particular pride in the work of the Datatec Educational and Technology Trust (highlighted here in this report).

All activities of the Group underpin our commitment to being ethical, honest, socially responsible corporate citizens. All employees sign up to Datatec’s Code of Conduct which is firmly rooted in the ten principles of the United Nations Global Compact and helps to direct the actions within our global context.

Governance

We see excellence in governance as fundamental to the sustainability of our business and I am confident that we have an experienced and well-balanced Board with a majority of independent directors who contribute actively to all deliberations and play a significant role in guiding the formulation of our growth strategy.

Risk management is firmly embedded in Datatec with the risk policy set by the Board and enacted throughout the Group through a risk management framework. The aim is to harmonise a set of procedures involving managers throughout the Group’s divisions in order to identify, manage and where appropriate, mitigate risks faced by the business.

Financial overview

The Group delivered improved results driven by a strong Westcon performance throughout the year and across all regions. The recovery in North America supported a 13.3% growth in revenue to US$6.4 billion while an improvement in operating leverage saw the Group increase underlying earnings per share by 17.1% to 41.8 US cents.

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 third year running due to our sound financial position. This reflects our confidence in the Group’s long-term strategy. Our dividend cover policy remains unchanged, which is to distribute to shareholders at least one-third of underlying earnings per share.

This year Datatec changed from making capital distributions to shareholders in cash (paid from contributed tax capital) to scrip distributions with a cash dividend alternative (paid from distributable reserves). This change allows Datatec to increase its capital base to support continued growth and will also facilitate 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 would prefer to receive a cash dividend.

The Company paid an interim scrip distribution with cash dividend alternative of 88 ZAR cents (approximately 8 US cents) to shareholders on 1 December 2014. Shareholders who did not elect to receive cash constituted 61.8% of the issued share capital and received scrip distribution shares amounting to 1.64% of their existing holdings. Shareholders who elected to receive cash constituted 38.2% of the issued share capital.

The Board has declared a final scrip distribution with cash dividend alternative of 108 ZAR cents (approximately 9 US cents) in relation to the financial year ended 28 February 2015.

Shareholders

Datatec’s shares are listed on the JSE and on AIM. Our largest shareholders are South African investment managers which are among more than 4 000 shareholders spread across the world. I would like to thank them for their continued support. We see our shareholders as key stakeholders and our primary partners to deliver on our sustainable growth strategy which is set out in this Integrated Report.

Appreciation

I would like to extend my thanks to my fellow directors for their wise stewardship and strategic guidance. Specifically I thank our CEO, Jens Montanana, for his exemplary leadership of the Group.

I also express my appreciation to each of our more than 8 000 employees for their dedication and loyalty.

Datatec’s employees contribute not only to the Group but also in many ways to the communities in which they live and work. This Integrated Report contains some examples of the social commitment our employees demonstrate.

Last but not least, I thank our customers and vendor partners for their continued support.

 

Stephen Davidson
Chairman
13 May 2015