DATA#3 LIMITED — Annual Report 2016

Aug 21, 2016

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FY16 RESULTS BRIEFING

22 AUGUST 2016

CONTENTS

FY16 Summary 3 Our Business 6 FY16 Financial Performance 10 Update on recent acquisitions 19 FY17-19 Strategy 22 FY17 Outlook 26 Q&A

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FY16 SUMMARY

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FY16 SUMMARY

“We continued to grow revenue and profit the year with NPAT 30% ahead of the pcp.

The board is pleased to declare a full year dividend of 8.0 cps, an increase of 27% on pcp.

FY16 total shareholder return was 41.4%”

Laurence Baynham Data[#] 3 Limited - CEO

4

FY16 SUMMARY

• 3 year business plan on track

• Sustained revenue & profit growth

• Growth in traditional business with increasing shift to services / annuity

• Very strong growth in the emerging cloud-based business

• Mixed financial performance from recent acquisitions

• Restructured senior management team and simplified business structure

• Record staff satisfaction and national Employer of Choice award

• Board restructure / renewal program progressing

5

OUR BUSINESS

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7

OUR SOLUTIONS

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

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PDO[2 ] Customer Solution Lifecycle – Position, Plan, Design, Deploy, Operate, Optimise

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OUR BUSINESS – Strategic Partners

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

Plus largest partner in Australia for several infrastructure and software suppliers

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FY16 FINANCIAL PERFORMANCE

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FY16 PERFORMANCE – SUSTAINED GROWTH

Revenue	Up 13.0%	$983.2M
Product	Up 12.0%	$794.0M
Services	Up 16.9%	$187.4M
Cloud-based (included in Product & Services above)	Up 110.5%	$99.0M
Other revenues		$1.9M
Gross Profit(excluding Other Revenue)	Up 13.2%	$146.6M
Product	Up 10.6%	$73.2M
Services	Up 15.9%	$73.4M
Gross Margin	Unchanged	14.9%
EBITDA	Up 31.6%	$22.4M
EBIT	Up 31.2%	$18.9M
NPBT	Up 28.2%	$19.5M
NPAT (excluding minority interests)	Up 30.4%	$13.8M
Earnings per share	Up 30.4%	8.98 cents
Dividend per share	Up 27.0%	8.00 cents

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STRATEGIC SHIFT IN BUSINESS MIX

Product revenue ($M)

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1,000
794.0
800 689.1 697.3 709.2
639.6
586.4
600
400
200
0
FY11 FY12 FY13 FY14 FY15 FY16
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Total revenue ($M)

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983.2
1,000 870.5
811.4 833.6
771.0
800 697.8
600
400
200
0
FY11 FY12 FY13 FY14 FY15 FY16
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Services revenue ($M)
187.4
200
160.2
160 130.2 134.8
120.4
109.8
120
80
40
0
FY11 FY12 FY13 FY14 FY15 FY16
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FY16 Product revenue included $90M from reselling vendor cloud subscription services, up from $47M in PCP.

FY16 Services revenue included $9M of cloud-based services.

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STEADY GROWTH IN GROSS PROFIT

Product gross profit ($M)

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80 73.2
63.9 64.2 62.0 66.2
60.0
60
40
20
0
FY11 FY12 FY13 FY14 FY15 FY16
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Total gross profit ($M)
160 146.6
129.5
140 120.0 122.5 118.9
111.7
120
100
80
60
40
20
0
FY11 FY12 FY13 FY14 FY15 FY16
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Services gross profit ($M)
80 73.4
63.3
56.1 58.3 56.8
60 51.7
40
20
0
FY11 FY12 FY13 FY14 FY15 FY16
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Product gross margin decreased fractionally from 9.3% to 9.2%, delivering a 10.6% increase in product gross profit.

Services gross margin decreased slightly as mix changed but on higher revenues delivered 15.9% increase in services gross profit.

Total gross margin held steady at 14.9%, and total gross profit increased by 13.2%

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13

EXPENSES REFLECT GROWTH STRATEGY

Internal staff costs ($M)

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120 105.0
97.8
100 87.9 90.2 92.9
77.0
80
60
40
20
0
FY11 FY12 FY13 FY14 FY15 FY16
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Internal staff costs up 7.4% with headcount increased by the Business Aspect acquisition and general organic growth.

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Operating expenses ($M)
24.0
25
18.1
20 16.7
16.0
14.6 14.2
15
10
5
0
FY11 FY12 FY13 FY14 FY15 FY16
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Operating expenses up 32.5% mostly due to expansion from acquisition and investment activity.

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14

SUSTAINED EARNINGS GROWTH

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NPAT ($M)
20
15.0
13.7 13.8
15 12.1
10.6
10 7.5
5
0
FY11 FY12 FY13 FY14 FY15 FY16
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EPS (cents)
12
9.74
10 8.88 8.98
7.88
8 6.89
6 4.89
4
2
0
FY11 FY12 FY13 FY14 FY15 FY16
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DPS (cents)
8.00
7.70
8 7.00 7.00
6.30
6
4.50
4
2
0
FY11 FY12 FY13 FY14 FY15 FY16
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Solid growth in revenue and gross profit delivered strong growth in profit, with earnings per share up 30.4% and total dividend up 27.0%.

Total shareholder return during the year was 41.4%.

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SOLID BALANCE SHEET & CASHFLOW

• Strong balance sheet with no material debt

• Any borrowings are back-to-back with customer contracts

• Cash flow ‘seasonality’ consistent with previous years

• Operating cash flow and inventory impacted by sizable infrastructure projects in progress at year-end.

• Average DSOS of 26 days - industry best practice

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16

BROAD-BASED MARKET GROWTH

% change in gross profit FY16 vs. FY15

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QLD NSW ACT VIC & TAS SA WA
35%
25%
19.0%
18.0%
14.0%
15% 12.0%
10.0%
5%
-5%
-10.0%
-15%
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17

FY16 PERFORMANCE – PEOPLE

People Numbers

People Satisfaction / 5

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Employer of Choice (% recommended by Data[#] 3)

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Data[#] 3 was also named Australia’s Best Company in the 2016 Employer of Choice Award for the Human Resources Director (HRD) Magazine. Data[#] 3 won the gold medal in the large category (500+ employees), followed by MYOB who received silver, and Johnson & Johnson who received the bronze medal.

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18

UPDATE ON RECENT ACQUISITIONS

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BUSINESS ASPECT

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• Steady growth with national expansion

• First full year of operation in the group

• Year of investment for national growth

• Earn-out not achieved in FY16

• Increasing contribution to group profit

• Strategic positioning

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DISCOVERY TECHNOLOGY

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• Controlling interest acquired in July 2015, and fully consolidated in FY16 result

• Software developer of Wi-Fi content management and analytics application “CCX”

• Operates independently of Data[#] 3

• FY16 financial performance disappointing due to abnormal expenses and long sales cycles

• Market demand is high and significant pipeline of opportunities is expected to drive improved contribution

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21

FY17–19 STRATEGY

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UNDERLYING FUNDAMENTALS INFLUENCING SECTOR GROWTH

• Economic outlook is mixed but overall neutral for commercial customers

• Education and health sectors will continue to grow

• A rapid shift to consumption-based and service-centric solutions is occurring

• Digital solutions will increasingly transform business models

• Security as the number one priority

• Public cloud usage will become mainstream

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LONG TERM OBJECTIVES

1. Deliver sustained profit growth

2. Grow services revenue with an increase in annuity and an increase in margin

3. Grow cloud services revenues.

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KEY PRIORITIES IN FY17

1. Investing in sales enablement to better position ourselves with our customer’s digital transformation

2. Growing our Business Aspect consulting business and leveraging Data[#] 3 where appropriate

3. Improving contribution from Discovery Technology

4. Establishing a health sector practice and emulating the success we have seen with our sector investment in education

5. Investing in new internal systems to improve operational efficiency

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FY17 OUTLOOK

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FY17 OUTLOOK

Our overall financial goal for FY17 is to continue to deliver earnings growth and returns to shareholders

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27

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.

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CONTACT US

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

Follow Us Twitter.com/Data3Limited Facebook.com/Data3Limited Linkedin.com/company/Data3 Youtube.com/Data3Limited

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