DATA#3 LIMITED — Annual Report 2015

Aug 19, 2015

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FY15 RESULTS BRIEFING

20 AUGUST 2015

CONTENTS

CONTENTS
FY15 Summary	3
Our Business	6
FY15 Financial Performance	10
Acquisitions & Investments	21
FY16-18 Strategy	24
FY16 Outlook	32
Q&A	34

FY15 SUMMARY

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4

FY15 SUMMARY

“We built on the strong 1H and finished the year with NPAT 41% ahead of the pcp. The board is pleased to declare a full year dividend of 6.3 cps, an increase of 40% on pcp”

5

FY15 SUMMARY

Successfully transitioning the business:

• Transition program

• Solid strategy centred on customers

• Customer satisfaction up

• People satisfaction up

• Acquisitions accretive

• Management strength and depth

Overall a solid and improved performance.

OUR BUSINESS

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7

8

OUR BUSINESS – WHAT WE DO

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Making our customers
more successful and
delivering exceptional
performance and
shareholder returns
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9

OUR BUSINESS – Strategic Partners

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Top 10 worldwide, global awards, global advisory role Top 10 Asia Pacific, advisory board Top 10 worldwide, global advisory board with CEO

Plus largest partner in Australia for several infrastructure and software suppliers

FY15 FINANCIAL PERFORMANCE

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11

FY15 PERFORMANCE - GROWTH

Revenue	Up 4.4%	$870.5M
Product	Up 1.7%	$709.2M
Services	Up 18.9%	$160.2M
Gross Profit	Up 8.9%	$129.5M
Product	Up 6.6%	$66.2M
Services	Up 11.4%	$63.3M
Gross margin	Up 0.6 pp	14.9%
Product	Up 0.4 pp	9.3%
Services	Down 2.7 pp	39.5%
Expenses	Up 5.8%	$115.9M
People	Up 5.3%	$97.8M
Opex	Up 8.5%	$18.1M
NPBT	Up 40.0%	$15.2M
NPAT	Up 40.9%	$10.6M
Dividend	Up 40.0%	6.3 cents

12

STRATEGIC SHIFT IN BUSINESS MIX

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Product revenue ($M)
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800 689.1 697.3 709.2
639.6
586.4
600 513.6
400
200
0
FY10 FY11 FY12 FY13 FY14 FY15
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Total revenue ($M)

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1000
870.5
833.6
811.4
771.0
800 697.8
599.2
600
400
200
0
FY10 FY11 FY12 FY13 FY14 FY15
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Services revenue ($M)

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160.2
160
130.2 134.8
120.4
109.8
120
85.0
80
40
0
FY10 FY11 FY12 FY13 FY14 FY15
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FY15 product revenue included approximately $47M from reselling vendor cloud subscription services.

13

SOLID GROWTH IN GROSS PROFIT

Services gross profit ($M)

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80
63.3
56.1 58.3 56.8
60 51.7
42.9
40
20
0
FY10 FY11 FY12 FY13 FY14 FY15
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Total gross profit ($M)

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140 129.5
120.0 122.5 118.9
111.7
120
100 90.0
80
60
40
20
0
FY10 FY11 FY12 FY13 FY14 FY15
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Product gross profit ($M)

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80
60.0 63.9 64.2 62.0 66.2
60
47.1
40
20
0
FY10 FY11 FY12 FY13 FY14 FY15
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Services gross margin decreased as mix changed but on higher revenues delivered 11.4% increase in services gross profit.

Product gross margin increased driving a 6.6% increase in product gross profit.

14

EXPENSES REFLECT GROWTH STRATEGY

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Internal staff costs ($M)
97.8
100 87.9 90.2 92.9
77.0
80
63.5
60
40
20
0
FY10 FY11 FY12 FY13 FY14 FY15
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Internal staff costs up 5.3% as headcount increased with Business Aspect acquisition, and growth to support the sales focused plan.

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Operating expenses ($M)
20 18.1
16.0 16.7
16 14.6 14.2
11.6
12
8
4
0
FY10 FY11 FY12 FY13 FY14 FY15
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Operating expenses up 8.5% mostly due to expansion from acquisition and investment activity.

15

RETURN TO GROWTH

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NPAT ($M)
20
15.0
13.7
15 12.1
10.9 10.6
10 7.5
5
0
FY10 FY11 FY12 FY13 FY14 FY15
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EPS (cents)
12
9.74
10 8.88
7.88
8 7.09 6.89
6 4.89
4
2
0
FY10 FY11 FY12 FY13 FY14 FY15
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DPS (cents)

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7.70
8 7.00 7.00
6.30
5.60
6
4.50
4
2
0
FY10 FY11 FY12 FY13 FY14 FY15
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Solid growth in gross profit in line with our sales focused strategy generated a return to growth in profit and earnings, with the dividend up 40%.

Total shareholder return during the year was 24%.

16

FY15 PERFORMANCE - NPBT

Change in NPBT elements from FY14 to FY15

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20.0
15.2
15.0
10.9
10.0
$M 6.5
4.1
5.0
0.5
0.0
-0.5
-1.4
-5.0
-4.9
-10.0
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FY15 PERFORMANCE – CASHFLOW

• Strong balance sheet with no material debt

• Cash flow ‘seasonality’ consistent with previous years

• Strong operating cash flow of $24.3M, with cash flow conversion of 2.3 times

• Payments for acquisitions and investments (net of cash acquired) of $7.8M

• Year-end net cash of $27.0M

• Average DSOS of 27 days - industry best practice

18

GROWTH REFLECTS STRATEGIC SHIFT

SOFTWARE SOLUTIONS

MANAGED SOLUTIONS

• Licensing revenue matched PCP and with growth in annuity-based subscriptions

• Revenue up 4% to $71M

• Continued investment impacted profitability

• Services up 13%

APPLICATION SOLUTIONS

INFRASTRUCTURE SOLUTIONS

• Revenue up 36% to $4.1M

• Revenue up 13% to $279M

CONSULTING

• Products up 12% and services up 20%

• Revenue $10.6M, boosted by Business Aspect acquisition

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STRONG GROWTH IN QLD & WA

% change in gross profit FY15 vs. FY14

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NSW & VIC &
QLD ACT TAS SA WA
30% 28.0%
20%
10.0%
10%
4.0% 4.0%
0.0%
0%
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QLD – largest profit contribution NSW, ACT & VIC – growth below plan

TAS – early days and small

SA – growth in tough market

WA – diversified customers and strong growth.

20

RECORD CUSTOMER & PEOPLE SATISFACTION

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Customer satisfaction /5
5
3.96 4.03 4.03 3.98 3.86 4.06
4
3
2
1
0
FY10 FY11 FY12 FY13 FY14 FY15
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People satisfaction /5
5
3.87 3.98 3.98 3.97 3.97 4.11
4
3
2
1
0
FY10 FY11 FY12 FY13 FY14 FY15
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People numbers
1117
1200
990 989 989
1000 888
779
800
600
400
200
0
FY10 FY11 FY12 FY13 FY14 FY15
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94.4% of our people recommend Data[#] 3 as employer of choice.

ACQUISITIONS & INVESTMENTS

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22

BUSINESS ASPECT

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Acquisition of Business Aspect successfully completed

• Effective date 5[th] September 2014

• Contributed $10.4M to revenue

• Fully relocated into Data[#] 3 offices and consulting capability expanded into NSW, ACT and VIC

• Engagement with Data[#] 3 sales force and pipeline and sales now building steadily

23

DISCOVERY TECHNOLOGY

Fully engaged as reseller with Discovery Technology

• Developer of Wi-Fi content management and analytics application “CCeX” - Connected Customer eXperience

• 46.2% investment effective 1[st] August 2014, with additional 15.4% acquired on 3[rd] July 2015

• Data[#] 3’s share of FY15 profit was $0.5M

• Not integrated into Data[#] 3 but fully engaged with Data[#] 3 as a reseller, generating infrastructure business

• Opportunities in retail, airport and education sectors

FY16-18 STRATEGY

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UNDERLYING FUNDAMENTALS INFLUENCING SECTOR GROWTH

• Economic outlook is neutral and similar to FY15

• Education and health sectors will continue to grow

• A rapid shift to consumption based and cloud services

• Global Public Clouds will dominate

• Security as the number one priority

• Digital solutions will increasingly drive new business models

• Increased IT spend outside of Business IT

26

FY16-18 HIGH LEVEL STRATEGY

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Our strategy is the pathway to enable our Customers’ Success .

It unites Innovative Solutions , Remarkable People and Organisational Excellence through our Solutions Framework. We believe that making our customers more successful consistently over time will deliver Exceptional Performance for Data[#] 3.

27

PRIORITIES UNDERPINNING STRATEGIC GROWTH

Strategic priorities for FY16

• Customer Success by enabling business and technology outcomes

• Innovative Solutions that are increasingly service centric in a Hybrid IT world

• Remarkable People who are high performing, evolving and valued

• Organisational Excellence through optimisation, alignment and planned transformation

• Exceptional Performance that delivers sustainable value for our shareholders and other stakeholders

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OUR SOLUTIONS

We offer a range of technology solutions to help customers achieve their business objectives.

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THE PATH TO OUR FUTURE

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+
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T4 Our core consists primarily of software licenses and on People Solutions premise infrastructure solutions Marketing Sales Services Processes

+

Services Revenue consists of all services provided by Data[#] 3 and vendor partners including cloud services.

30

OUR TRANSITION STRATEGY

Our transition strategy is to:

1. Grow and transform the core

2. Build specialist business units to address new market demands

3. Partner or acquire to address new market opportunity

31

ACTIONS IN PROGRESS FOR FY16

1. Establish new security practice

2. Expand partnerships in education sector

3. Accelerate public cloud opportunities

4. Deliver sales development programs to support the transition strategy

5. Leverage Business Aspect & Discovery Technology

FY16 OUTLOOK

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FY16 OUTLOOK

Our overall financial goal for FY16 is to improve on FY15’s result

Q&A

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APPENDIX 1 – FINANCIAL SUMMARY

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DISCLAIMER

This 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.

CONTACT US

Interested in how Data[#] 3 can help? www.data3.com.au | 1300 23 28 23

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