DATA#3 LIMITED — AGM Information 2003

Nov 5, 2003

Data#3 Limited 2003 AGM Chairman's Address

6 November 2003

Ladies and Gentlemen,

Welcome to this 2003 Annual General Meeting of Data*3 Limited.

Once again we are particularly delighted to welcome you to the company's Corporate and Brisbane Office, the third occasion on which the annual meeting has been held here.

The company's annual report issued with the notice of today's meeting presents the 2003 financial year results and the financial position as at 30 June 2003. The report reveals another excellent result achieved by the company for the 2003 financial year. Whilst impacted by the "Powerlan loss", the result demonstrates the ability the company has to sustain financial performance. The restoration of the full payment of dividends indicates that we believe that the company has now completely recovered from these losses and is well positioned to enjoy improving results in future years.

The administration of Powerlan Old is progressing and based on the funds currently held by the administrators we are certain of recovering the \$1.15 million receivable recognised in our

financial statements at 30 June 2003. We estimate the company's total possible recovery ranges up to approximately \$1.8 million. Any additional funds that may be recovered from the ongoing administration process in excess of the current \$1.15 million receivable will further mitigate the "Powerlan loss" reflected in the 2003 result.

Performance in key areas such as receivables collections, cash management and cost control continues to be first rate.

Our prime objectives for the 2004 financial year are to continue to build sustainable profitability, and to improve on the underlying performance of 2003. We aim to achieve this with a more balanced contribution to earnings across all businesses and locations, and by maximising the contribution from our specialist businesses.

At the end of the first quarter we are on plan towards achieving this goal.

Whereas in 2002 and 2003 above expected results in some areas were offset by losses in other areas, we are now performing to plan in most of our businesses with the overall company results in profit for each of the first three months of trading. All aspects of the company's operations are being closely monitored and corrective action is being taken where performance is not satisfactory. Our Chief Executive John Grant will provide further details in his address.

While concerns over the global and Australian economic and business climates appear to be easing, continuing constraint from our customers on IT expenditure and changes in the way some of our major vendors are approaching the market will limit any significant change in fortune for the ICT reseller and services sector generally. We remain confident of solid trading results through to the half-year and will be positioning for this to continue for the full year.

As mentioned earlier the restoration of full dividends with the distribution of 7.5 cents per share on 31 October 2003 is very pleasing for all concerned - shareholders, management and the Board. Combined with the first half dividend of 2.5 cents this represents a total dividend of 10 cents per share for the 2003 financial year and 65% of available profits for distribution. Presuming business performance holds, we expect to continue the payment of dividends in line with the policy included in the prospectus for the company's float.

The policy of geographic and service expansion set out in 1997 when the company listed on the ASX remains in place. In July 2002 we completed the acquisition of Stockford Limited's Navision Solution Centre business and in October effectively completed acquisition of Powerlan's share in the joint ventures ODS and OSS. Two other acquisition opportunities were reviewed in depth during the year and ultimately rejected as

not meeting our investment and operational criteria. This morning we announced the acquisition of the web services business f5, a small but highly regarded operation with attractive and complementary software and services offerings. This enhances our already strong position as a Microsoft Gold partner. We will continue to examine all opportunities that reasonably may be expected to enhance the company's results and financial position.

As stated in the annual report, SAP for whom we have been a reseller from prior to the listing has been in the process of rolling out a new global reseller agreement. We have considered our position in the light of the new agreement and in the market generally and have made a decision not to continue as a reseller. During the period we have operated as a reseller, we have developed market-leading capability in Technology Solutions and Recruitment for the SAP customer. We intend to further develop these capabilities and to focus on continued development of our Microsoft application business.

The Board and senior management's strategic review in January 2003 reconfirmed the company's current business model as the means by which it can produce acceptable total returns to shareholders for the next 5 years. Targets have been established for these returns and the Board and the management team's remuneration is structured in line with these targets.

$\ddot{4}$

The Senior Management Team led by John Grant continues to comprise the General Managers of the Procurement, Technology, Recruitment and Application Solutions Business Units and the Company Secretary and Chief Financial Officer. This structure of specialised product and service divisions implemented through a strong geographical presence in Queensland and in Sydney, and smaller operations in Melbourne and Canberra, provides the basis for continuing to improve performance. Whilst we will not contemplate unnecessary change to what has proven to be a successful structure we will continue to examine the longer-term viability of all businesses. Where appropriate returns are not evident changes will be made.

The Board continues to maintain a strong focus on staff and management remuneration and a significant percentage of the annual remuneration of these executives is subject to the achievement of pre-set performance targets. In 2003 the proportion of the remuneration of the CEO and the five General Managers that was subject to the achievement of performance targets averaged 32%.

As discussed at last year's meeting, in addition to the annual remuneration arrangements the company has in place an option plan and a share scheme. However during the past year no shares were issued to employees and no options other than those mentioned at the last Annual General Meeting have been issued. No options have been issued to directors.

As previously announced, the Board believes that it is appropriate for its numbers to be extended to a total of five members. With the Powerlan distraction of the past year now gone the search, which had been commenced to identify two new appointments to the Board, will be completed. Also as previously stated Graham Clark has expressed an intention to stand down from the Board at the appropriate time. As Graham must retire by rotation he stands for re-election at this meeting and, if elected, will continue until the process to expand the Board is completed.

At last years meeting I commented that although the results of the company's efforts had improved significantly in an operational sense the same had not yet consistently emerged on the stock exchange. It is indeed pleasing that the achievement of five continuous half-years of profitable results has now been recognised through an increased price for the company's shares.

We intend, through continual improvement in results and maintenance of dividends to enhance the total return to shareholders.

Mr Max White left the company at the end of October 2003. Max was a founding shareholder and director, and has served in various capacities over the last 19 years. When the company was listed in 1997 he served as a member of the Board initially, and since 2000 has headed the company's Application Solutions division. As part of his departure from the company Max White has sold all of the shares he previously owned in the company. He leaves on amicable terms and with our best wishes to pursue his own interests in the IT industry.

In response to significant demand for the company's shares the founder shareholders placed a proportion of their shareholdings with institutional investors in September 2003. We recognise that the sale of shares by founder shareholders can be a sensitive issue for the market, however this has enabled the reintroduction of institutional investors to the register, which we believe is beneficial for the market in the company's shares, and should provide greater liquidity. The company shares have continued to trade at a price higher than the placement price.

I will now ask our Chief Executive Officer, Mr John Grant, to the microphone to address operational aspects of the company's 2003 performance and the outlook for the current financial year. At the completion of his address I will invite your comments and questions regarding the annual report and further information that we have released today. Whilst the

$\gamma$

Australian Corporations Act 2001 does not require shareholders to vote on the Financial Report, Directors Report and Report of the Auditors, we welcome any questions that you may wish to raise today.