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Data#3 (DTL)2011 results presentation

22 August 2011

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Best ever performance across all key metrics

• Total revenue up 16% to $697.8M

• Product revenue up 14% to $586.4M

• Services revenue up 29% to $109.8M

• 59% under contract

• Sales gross margin up from 15.0% to16.1%

• EBIT growth faster than revenue, up 34% to $20.5M

• EBIT margin up from 2.5% to 2.9%

• Net profit before tax up 38% to $21.8M

• Earnings per share up 37% to 91.4 cents

• Strong balance sheet with no material debt

• Return on equity up from 41.8% to 49.7%

• Total dividend up 38% to 77 cents, fully franked

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Track record of growing revenue & market share

• IT market growth of 4%

• Data#3 growth of 16%

• Attractive IT services market

239.6285.1

363.7

530.5599.2

697.7

0

200

400

600

800

2006 2007 2008 2009 2010 2011

Total revenue ($M)

5 year CAGR 24%

53.9

70.281.0 79.6 85.0

109.8

0

20

40

60

80

100

120

2006 2007 2008 2009 2010 2011

Services revenue ($M)

5 year CAGR 15%

185.0 214.4281.8

450.0513.6

586.4

0

100

200

300

400

500

600

700

2006 2007 2008 2009 2010 2011

Product revenue ($M)

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5 year CAGR 26%

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Track record of growing profit & earnings

• Services @ higher margins

• Productivity/efficiency

gains from leveraged cost

structure

7.89.9

12.2 13.415.2

20.5

0

5

10

15

20

25

2006 2007 2008 2009 2010 2011

EBIT ($M)

5 year CAGR 21%

5.77.2

9.1 9.8 10.9

15.0

0

5

10

15

20

2006 2007 2008 2009 2010 2011

NPAT ($M)

3

36.946.1

58.9 63.870.9

91.4

0

20

40

60

80

100

2006 2007 2008 2009 2010 2011

EPS (cents)

5 year CAGR 20%

5 year CAGR 21%

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Track record of growing shareholder returns

• Sector leading ROE

• Dividend reflects strong

earnings and growth

opportunities

• 79% payout ratio

33.8%37.7%

42.8% 42.1% 41.8%49.7%

0%

10%

20%

30%

40%

50%

60%

2006 2007 2008 2009 2010 2011

ROE (%)

28.036.0

46.0 50.056.0

77.0

0

20

40

60

80

2006 2007 2008 2009 2010 2011

DPS (cents)

5 year CAGR 22%

4

3.70

6.00 5.60 6.00

8.01

13.24

0

2

4

6

8

10

12

14

2006 2007 2008 2009 2010 2011

30 June share price ($)

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Strong balance sheet and cash flows

12.314.6 16.0

17.920.9

25.6

0

10

20

30

2006 2007 2008 2009 2010 2011

NTA ($M)

28.0

1.3

64.3

0.8

57.0

4.7

32.4

5.9

56.1

6.9

0

20

40

60

2H '09 1H '10 2H '10 1H '11 2H '11

Closing cash balanceAverage cash balance

22.4

-21.9

66.8

-54.8

59.6

-60.0

-40.0

-20.0

0.0

20.0

40.0

60.0

80.0

2H '09 1H '10 2H '10 1H '11 2H '11

Net operating cash flow ($M)

• Strong balance sheet with no

material debt

• NTA up 27%

• Cash flow ‘seasonality’

• FY11 average cash balance $32.5M,

up from $19.1M in FY10

Cash ($M)

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Our business

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Volume software licensing and asset

management

Workforce recruitment & contracting

Infrastructure design and deployment projects

Lifecycle hardware solutions

Outsourced/Cloud infrastructure maintenance,

support & operations

Customer

Software Licensing

Integrated Solutions

Product Solutions

Managed Services

People Solutions

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What we do

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BrisbaneHead OfficeWarehouse & Configuration Centre

Sydney OfficeWarehouse & Configuration CentreDatacentre

Melbourne OfficeWarehouse & Configuration Centre

Adelaide Office

Perth Office

Canberra Office

Our national footprint

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638 permanent42 casual

352 contractors

>1,000 people

277352

502

638

0

200

400

600

2010 2011 2010 2011

Contractors +27%

Permanent +27%

Satisfaction improving as we increase people numbers

96.693.8 92.8

94.5

80

90

100

2008 2009 2010 2011

% Recommend Data#3 as

employer of choice4.0 4.1 3.9 4.0

0

1

2

3

4

5

2008 2009 2010 2011

People satisfaction /5

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Mid to large corporate

Government

Customer focus in mid to large corporate and government

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Strong partnerships with leading global suppliers

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Performance of the specialist businesses

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Software Licensing – continuing track record of growth


• 5 year CAGR of 34%

• 16th year of consecutive growth

• On Microsoft’s worldwide partner engagement board

• First sales of Microsoft’s public cloud-delivered Office 365 and BPOS

• First customers for new worker productivity practice

81.698.2

143.3

292.8

319.6

356.7

0

50

100

150

200

250

300

350

2006 2007 2008 2009 2010 2011

Revenue ($M)

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Infrastructure Solutions – continuing track record of growth


• Products up 18% to $231.3M

• Project services up 58% to $34.6M

• Managed services up 18% to $35.1M


• New government panel contracts in Qld, ACT & Vic

• New integration centres in NSW & Vic

132.7148.3

174.9

197.6

248.3

301.1

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100

150

200

250

300

2006 2007 2008 2009 2010 2011

Revenue ($M)

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People Solutions - returns to growth



• Contractor numbers up 27%

• New national leadership

• New operational systems

• Lower operating costs

24.6

38.2

44.7

39.2

30.7

38.3

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5

10

15

20

25

30

35

40

45

2006 2007 2008 2009 2010 2011

Revenue ($M)

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• Internal cost ratio [internal staff & operating expenses as % of gross margin] improved from 83.4% to 81.9%

• Internal systems investment up 12% on previous corresponding period

• Staffing investment up 21%

70

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82

84

86

88

90

2006 2007 2008 2009 2010 2011

Internal cost ratio (%)

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Continued reinvestment to drive productivity and efficiency

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Strategy to sustain performance

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Well articulated and connected strategy

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• Addressing largest ICT market segments• Reseller for leading global vendors• Great people with market leading skills• Sales focused/customer ‘intimate’• Move quickly to opportunity• Working capital funded from cashflow• Invest to grow• Limited capital expenditure

Simple business model well executed

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A complete solution for customers

Software Licensing

Consolidation and Virtualisation

Asset Management

Business Productivity & Knowledge

United Communications

Identity Management

Network Platforms

Systems Management

Managed Operating Environment

ICT Strategic Consulting

16 Solution Sets

Network Platforms 1

Network Platforms 2

Network Platforms 3

Network Platforms 4

Network Platforms 5

Multiple Offerings within each Solution

Set

Delivered across multiple customer

consumption platforms

Data#3’s Customer

Consumption Model

5 Areas of Specialisation

Licensing Solutions

Integrated Solutions

Product Solutions

Managed Services

People Solutions

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Product OutsourceExpertise SolutionTrusted

Cloud

Private

Cloud

Public

Cloud

Software Licensing

Consolidation and Virtualisation

Asset Management

Business Productivity & Knowledge

United Communications

Identity Management

Network Platforms

Systems Management

Managed Operating Environment

ICT Strategic Consulting


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FY12 outlook

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End user technologyNBNNeed for productivityNeed for efficiency +

Global economyPotential flow on to Australia-

Environment

Macro environment

Micro environment

New technologiesLarge marketSupport from partnersMarket coverageCustomers looking for Trusted partner

+ Early in investmentcycleHigher costs-

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• More people to increase capacity & capability – up 18% on FY11

• Infrastructure to support operations – up 14% on FY11

• Supply chain to lower costs in volume areas

• New and refurbished premises to provide market differentiation and enhance people satisfaction and mobility

• ‘Trusted Cloud’ infrastructure to provide options for customers

• Internal systems to drive productivity and ease of use

Investing for growth

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• Expect to hold margins

• Microsoft reseller program restructuring over 3 years

• Anticipate little impact on gross margin

• Possible cash flow impact through change in billing cycles

• New players may compete for people and customers

• Investing to lower costs and improve customer access

• Efficiency gains through supplier automation

• Improved customer access via new customer portal

• Investing in expanding offerings

• Licensing in Data#3 trusted cloud and in public cloud

• Growing asset management and workplace productivity services

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Anticipate slowing growth in line with market for Software Licensing

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• Expect to continue to gain market share

• Traditional PC market flat

• Solid growth in tablets in the enterprise

• Margins expected to hold

• Increasing opportunity in ‘Desktop as a service’

• Winners & losers with consolidation in Government purchasing

• Qld Govt contract comes to market

• Investing to create market differentiation, lower costs and improve customer access

• Configuration and warehousing centres

• New customer portal and supply chain automation

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Anticipate growth in changing product procurement market

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• Expect project opportunity to increase as customers invest in business enablement

• Expect partners to continue to require greater investment as part of certification

• Expect margins to hold

• Expanding strategic consulting practice

• Investing in Solution Centres for customer pilots

• Investing to deliver private cloud infrastructure offerings

• Tighter control over project risk and cost through new professional services system

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Anticipate strong growth in integration services

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• Expect outsourcing opportunity to increase as customers lower operating expense and deal with skill shortages

• Expect opportunity for maintenance contracts to grow with product sales volumes

• Seeing customers focus on user enablement and support and actively plan for hybrid cloud/on premises infrastructure

• Competitive market led by global partners

• Expect to hold margins

• Investing in sales capability, delivery systems and processes, and trusted cloud infrastructure

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Anticipate solid growth in managed services

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• Expect strong overall market opportunity

• Expect margins in Qld Govt to decline in 2H with implementation of central purchasing model

• Expect growth in NSW and Victoria in commercial sector

• Expanding HR reselling and consulting offerings

• Investing further to deliver efficiency gains through automation

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Anticipate solid growth in recruitment and contracting

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.....the company’s financial objective for 2012 is to at

least equal the performance of the previous year. This

assumes stabilisation of the current global market

conditions and means steady underlying growth given

increased internal investment, particularly in new

premises and systems

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FY12 outlook summary

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• Global uncertainty still to play out

• IT Services market has attractive underlying fundamentals

• Data#3 operates in large markets ($22.5B in 2011)

• Data#3 has strong and interdependent relationships with global market leaders

• Data#3 has capacity and capability to compete and grow in all markets

• Data#3 is viewed as a preferred employer

• Data#3 has a strong financial position and track record

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Data#3 is well positioned to grow

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Q&A

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2011

($’000)

2010

($’000) % Change

Revenue by segment:

Product $586,354 $513,585 +14%

Services $109,804 $85,015 +29%

Other revenue $1,630 $615

Total Revenue $697,788 $599,215 +16.5%

Revenue by area of specialisation:

Software Licensing $356,709 $319,649 +12%

Infrastructure Solutions $301,110 $248,299 +21%

People Solutions $38,339 $30,652 +25%

Total gross margin $ $111,745 $90,045 +24%

Total gross margin % 16.1% 15.0%

EBITDA $21,189 $16,262 +30%

EBIT $20,514 $15,247 +34.5%

EBIT margin % 2.9% 2.5%

NPBT $21,827 $15,793 +38%

NPAT $14,999 $10,914 +37%

Earnings per share 91.4 cents 70.9 cents +37%

Dividend per share 77.0 cents 56.0 cents +37.5%

Return on equity % 49.7% 41.8%

Appendix 1 – Financial summary

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Cost Ratio:Internal staff and operating costs as % of GM$

Private Cloud:Data#3 designed and built for exclusive customer use either on or off the customer’s premises; may be either customer or Data#3 owned & operated

Data#3 Trusted Cloud:Infrastructure as a service. Data#3 owned and managed in premium data centre facilities in Australia

Public Cloud:Standard and packaged services made available to all; owned by the service provider

Desktop as a ServiceDesktop infrastructure and applications owned, managed and supported by Data#3 exclusively for a customer

Technology Consumption Model:Data#3’s model showing the 7 ways in which customers consume technology

Appendix 2 - Definitions

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DisclaimerThis presentation has been prepared by Data#3 Limited (“the Company”). It contains general background

information about the Company’s activities current as at the date of the presentation. It is information

given in summary form and does not purport to be complete. The distribution of this presentation in

jurisdictions outside Australia may be restricted by law and you should observe any such restrictions.

This presentation is not (and nothing in it should be construed as) an offer, invitation, solicitation or

recommendation with respect to the subscription for, purchase or sale of any security in any jurisdiction,

and neither this document nor anything in it shall form the basis of any contract or commitment. The

presentation is not intended to be relied upon as advice to investors or potential investors and does not

take into account the investment objectives, financial situation or needs of any particular investor. These

should be considered, with or without professional advice, when deciding if an investment is appropriate.

The Company has prepared this presentation based on information available to it, including information

derived from publicly available sources that have not been independently verified. No representation or

warranty, express or implied, is made as to the fairness, accuracy, completeness, correctness or reliability

of the information, opinions and conclusions expressed.

Any statements or assumptions in this presentation as to future matters may prove to be incorrect and

differences may be material. To the maximum extent permitted by law, none of the Company, its directors,

employees or agents, nor any other person accepts any liability, including, without limitation, any liability

arising from fault or negligence on the part of any of them or any other person, for any loss arising from

the use of this presentation or its contents or otherwise arising in connection with it.

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for personal use only - australian securities exchange · • first customers for new worker...

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