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DATA#3 LIMITED Interim / Quarterly Report 2007
64791_rns_2007-02-25_ac404032-9495-4ea2-9340-449a61dbee3a.pdf
Interim / Quarterly Report
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Appendix 4D
ASX Half-Year Report
| Name of entity: | Data # 3 Limited |
|---|---|
| ABN: | 31 010 545 267 |
| Reporting period: | Half-year ended 31 December 2006 |
Previous corresponding period:
Half-year ended 31 December 2005
Results for announcement to the market
| Results | |||
|---|---|---|---|
| Revenue from ordinary activities | up. | $20\%$ to \$135,768,000 | |
| Profit from ordinary activities after tax attributable to members | UD. | $17\%$ to | \$3,037,000 |
| Net profit for the period attributable to members | UD. | $17\%$ to | \$3,037,000 |
| Dividends | Amount per security | Franked amount per security |
|---|---|---|
| Current period | ||
| Ordinary dividend | $14.0$ cents | $14.0$ cents |
| Previous corresponding period | ||
| Ordinary dividend | $11.0$ cents | $11.0$ cents |
| The record date for determining entitlements to the dividend is 16 March 2007. |
Brief explanation of the figures reported above:
Refer to the attached Half-Year Report (Directors' Report – Review of operations section) for commentary on the half-year results.
Data#3 Limited and Controlled Entities
Notes to Appendix 4D For the half-year ended 31 December 2006
Net tangible assets per security
| Current period | Previous period | |
|---|---|---|
| Net tangible asset backing per ordinary security | \$0.80 | \$0.67 |
Control gained over entities having a material effect
| Name of entity (or group of entities) | Not applicable |
|---|---|
| --------------------------------------- | ---------------- |
Loss of control of entities having a material effect
| Name of entity (or group of entities) | Not applicable |
|---|---|
| --------------------------------------- | ---------------- |
Additional Dividend Information
Details of dividends declared or paid during or subsequent to the current period or the previous corresponding period are as follows:
| Record date | Payment date | Type | Amount per security |
Franked amount per security |
Total dividend |
|---|---|---|---|---|---|
| 16 September 2005 |
30 September 2005 |
Ordinary | $11.5$ cents | $11.5$ cents | \$1,766,000 |
| 17 March 2006 | 31 March 2006 | Ordinary | $11.0$ cents | $11.0$ cents | \$1,704,000 |
| 15 September 2006 |
29 September 2006 |
Ordinary | $17.0$ cents | $17.0$ cents | \$2,658,000 |
| 16 March 2007 | 30 March 2007 | Ordinary | $14.0$ cents | $14.0$ cents | \$2,183,000 |
Data#3 Limited and Controlled Entities
Notes to Appendix 4D For the half-year ended 31 December 2006
Dividend Reinvestment Plan
Data#3 Limited Dividend Reinvestment Plan
The Data#3 Dividend Reinvestment Plan has been suspended from 1 September 2006 until further notice from the Board.
Details of associates and joint venture entities
| Name of entities | Not applicable | ||
|---|---|---|---|
| Current period | Previous period | ||
| Consolidated entity's percentage holding in each of these entities |
|||
| Aggregate share of profits after tax of these entities. |
|||
| QDS contribution to net profit after tax | |||
| QSS contribution to net profit after tax |
Compliance Statement
This report is based on financial statements reviewed by the auditor, copies of which are attached.
Signed:
Par Grand.
John Grant Managing Director
Date: 26 February 2007
Data#3 Limited ABN 31 010 545 267
Half-Year Report
31 December 2006
Directors' Report
Your directors present their report on the group consisting of Data#3 Limited and its subsidiaries for the half-year ended 31 December 2006.
Directors
The following persons were directors of Data#3 Limited during the whole of the half-year and up to the date of this report:
Mr R A Anderson Mr I E Grant Mr W T Powell.
Mr G R Clark was a director from the beginning of the half-year until 8 November 2006, the date of his retirement.
Review of operations
Total revenue of the group for the half-year was \$135,768,000 (2005: \$112,832,000), an increase of 20%. Product revenue increased 16% from \$88,069,000 to \$102,536,000, and services revenue increased 35% from \$24,361,000 to \$32,959,000.
The first half product revenue consisted of the following elements:
| $\bullet$ ICT Products | \$39.9 million (2005: \$32.6 million) |
|---|---|
| $\bullet$ Software Licensing | \$49.6 million (2005: \$39.9 million) |
| • Enterprise Infrastructure | $$13.0$ million $(2005: $15.6$ million) |
The increase in total product revenue reflected very strong growth in ICT product and software licensing revenues compared to the corresponding previous half.
The first half services revenue consisted of the following elements:
| $\bullet$ ICT Services | \$15.3 million (2005: \$13.5 million) |
|---|---|
| $\bullet$ Recruitment | $$17.6$ million $(2005: $10.9$ million) |
The increase in services revenue was due to increases in project-oriented ICT integration services, and very strong growth in recruitment services.
As reported previously, contribution at the gross margin level and the relativity of expenses to this are our measures of growth and performance. The overall gross margin percentage decreased by approximately 0.4% compared to the previous corresponding period, primarily due to the strong increases in the relatively low margin software licensing and recruitment areas. This growth contributed significantly to an increase over the previous corresponding period of approximately 18% in total gross margin generated. Staff and operating expenses as a percentage of gross margin contribution remained unchanged from the previous corresponding period.
Net profit before tax (NPBT) was \$4,328,000, which is slightly ahead of the profit guidance provided at the Annual General Meeting in November 2006. This represents an increase of 13% on the previous corresponding half-year NPBT of \$3,825,000.
Net profit after tax (NPAT) was \$3.037,000, an increase of 17% based on the previous corresponding half-year NPAT of \$2,598,000. This represented basic earnings per share (EPS) of 19.46 cents, an increase of 15.5% based on the previous corresponding half-year EPS of 16.85 cents.
The net cash flow from operating activities is typically an outflow in the first half, however the current period reflects a higher than usual outflow due to collection delays with a small number of major customers and the nayment of the associated suppliers. We do not see this as any significant collection risk. The debtors' days sales outstanding remained on target, and interest-bearing debt remained minimal.
The group continued its focus on internal systems efficiency and cost control, and the logistics and warehousing function continued to reduce transaction costs through more cost-effective operations.
Directors' Report (continued)
Dividends
The directors have declared a fully franked dividend of 14.0 cents per share payable on 30 March 2007.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 4.
Rounding of amounts to nearest thousand dollars
The company is of a kind referred to in Class Order 98/0100 issued by the Australian Securities & Investments Commission, relating to the "rounding off" of amounts in the directors' report and financial report. Amounts in the directors' report and financial report have been rounded off to the nearest thousand dollars in accordance with that Class Order, unless otherwise indicated.
This report is made in accordance with a resolution of the directors.
- A audmon
R A Anderson Director.
Brisbane Dated this 26th day of February 2007
Chartered Accountants
Floor 5 National Bank House 255 Adefaide Street Brisbane Q 4000 GPO Box 1144 Brishane O 4001 Ph 07 3222 8444 / Fax 07 3221 7779 Website www.jr.com.au Email [email protected]
The Directors Data#3 Limited Level 2, Data83 Centre 80 Jephson Street TOOWONG OLD 4066
Dear Sirs
Auditor's Independence Declaration
As lead engagement partner for the review of the financial report of Data#3 Limited for the half-year ended 31 December 2006, I declare that, to the best of my knowledge and belief, there have been:
- (i) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and
- (ii) no contraventions of any applicable code of professional conduct in relation to the review.
JOHNSTON RORKE
Chartered Accountants
J. Lians
J J Evans Partner
Brisbane, Queensland 26 February 2007
Consolidated Income Statement For the half-year ended 31 December 2006
| Half-year | ||
|---|---|---|
| 2006 | 2005 | |
| \$'000 | \$7000 | |
| Revenues | ||
| Sale of goods | 102,536 | 88,069 |
| Services | 32,959 | 24,361 |
| Other (note 2) | 273 | 402 |
| Total | 135,768 | 112,832 |
| Expenses | ||
| Changes in inventories of finished goods | 101 | 1,116 |
| Purchase of goods | (89,766) | (78, 018) |
| Employee and contractor costs directly on-charged (cost of sales on | ||
| services) | (15,822) | (9,989) |
| Other cost of sales on services | (2,509) | (2,311) |
| Other employee and contractor costs | (18, 805) | (15, 774) |
| Telecommunications | (450) | (386) |
| Rent | (1,320) | (1,173) |
| Travel | (796) | (603) |
| Depreciation and amortisation | (295) | (229) |
| Finance costs | (6) | (2) |
| Other | (1,772) | (1,638) |
| Total | (131, 440) | (109,007) |
| Profit before income tax expense | 4,328 | 3,825 |
| Income tax expense | (1,291) | (1,227) |
| Net profit | 3,037 | 2,598 |
| Basic earnings per share | 19.46c | 16.85c |
| Diluted earnings per share | 19.46c | 16.85c |
The above Consolidated Income Statement should be read in conjunction with the accompanying notes.
Consolidated Balance Sheet As at 31 December 2006
| 31 December 2006 \$'000 |
30 June 2006 \$7000 |
|
|---|---|---|
| Current assets | ||
| Cash and cash equivalents | 2,934 | 13,997 |
| Trade and other receivables | 35,632 | 34,553 |
| Inventories | 3,364 | 3,263 |
| Other | 1,668 | 1,259 |
| Total current assets | 43,598 | 53,072 |
| Non-current assets | ||
| Available-for-sale financial assets | 5 | 5 |
| Property and equipment | 1,255 | 1,352 |
| Deferred tax assets | 1,067 | 912 |
| Intangible assets | 4,553 | 4,626 |
| Total non-current assets | 6,880 | 6,895 |
| Total assets | 50,478 | 59,967 |
| Current liabilities | ||
| Trade and other payables | 28,398 | 37,275 |
| Current tax liabilities | 795 | 1,454 |
| Provisions | 631 | 584 |
| Other | 2,651 | 2,806 |
| Total current liabilities | 32,475 | 42,119 |
| Non-current liabilities | ||
| Provisions | 474 | 424 |
| Other | 429 | 527 |
| Total non-current liabilities | 903 | 951 |
| Total liabilities | 33,378 | 43,070 |
| Net assets | 17,100 | 16,897 |
| Equity | ||
| Contributed equity | 9,387 | 9,563 |
| Retained profits | 7,713 | 7,334 |
| Total equity | 17,100 | 16,897 |
The above Consolidated Balance Sheet should be read in conjunction with the accompanying notes.
Consolidated Statement of Changes in Equity
For the half-year ended 31 December 2006
| 2006 | Number of Ordinary Shares '000' |
Contributed Equity \$'000 |
Retained Profits \$'000 |
Total Shareholders' Equity \$'000 |
|---|---|---|---|---|
| Balance at 30 June 2006 | 15,635 | 9,563 | 7,334 | 16,897 |
| Net profit | 3,037 | 3,037 | ||
| Buyback of ordinary shares | (44) | (176) | (176) | |
| Payment of dividends | (2,658) | (2,658) | ||
| Balance at 31 December 2006 | 15,591 | 9,387 | 7,713 | 17,100 |
| 2005 | ||||
| Balance at 30 June 2005 | 15,350 | 8,706 | 5,091 | 13,797 |
| Net profit | 2,598 | 2,598 | ||
| Issuance of ordinary shares | 145 | 389 | 389. | |
| Payment of dividends | (1,766) | (1,766) | ||
| Balance at 31 December 2005 | 15,495 | 9,095 | 5,923 | 15,018 |
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Consolidated Cash Flow Statement For the half-year ended 31 December 2006
| Half-year | ||
|---|---|---|
| 2006 \$'000 |
2005 \$'000 |
|
| Cash flows from operating activities | ||
| Receipts from customers | 146,678 | 128,401 |
| Payments to suppliers and employees | (153, 535) | (129, 560) |
| Interest received | 303 | 371. |
| Finance costs | (6) | (2) |
| Income taxes paid | (2,070) | (1,140) |
| Net cash (outflow) from operating activities | (8,630) | (1,930) |
| Cash flows from investing activities | ||
| Payments for plant and equipment | (123) | (39) |
| Payments for software assets | (2) | (214) |
| Proceeds received from former joint venture partner | 526 | |
| Other | 2 | |
| Net cash inflow (outflow) from investing activities | 401 | (251) |
| Cash flows from financing activities | ||
| Proceeds from issues of shares | 18 | |
| Payments for buyback of shares | (176) | |
| Dividends paid | (2,658) | (1,395) |
| Net cash (outflow) from financing activities | (2, 834) | (1, 377) |
| Net (decrease) in cash and cash equivalents held | (11,063) | (3,558) |
| Cash and eash equivalents at the beginning of the reporting period | 13,997 | 9,173 |
| Cash and cash equivalents at the end of the reporting period | 2.934 | 5,615 |
The above Consolidated Cash Flow Statement should be read in conjunction with the accompanying notes.
Notes to the Consolidated Financial Statements For the half-year ended 31 December 2006
Note 1. Significant accounting policies
Statement of compliance
This general purpose financial report for the half-year reporting period ended 31 December 2006 has been prepared in accordance with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001.
Basis of preparation
This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2006 and any public announcements made by Data*3 Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act $200I$ . The accounting policies adopted in this interim financial report are the same as those applied in the 2006 annual report.
The consolidated entity is of a kind referred to in ASIC Class Order 98/100, dated 10 July 1998, and in accordance with that Class Order amounts in the financial report have been rounded off to the nearest thousand dollars, unless otherwise stated.
| Half-year | ||
|---|---|---|
| Note 2. Other revenue | 2006 \$2000 |
2005 \$3000 |
| Interest | 273 | 399 |
| Other | $\mathbf{r}$ | 2 |
| 273 | 402 |
Note 3. Segment information
Business Segment
The group predominantly operates in one business segment. Its activities include the procurement of information and communication technology (ICT) products; the design, implementation and support of ICT infrastructure and application solutions; and the provision of ICT recruitment services.
The products and services offered by the group are similar with respect to nature, distribution methods, risks and returns, and customer bases. Revenue is generated by providing customer solutions that draw on all or several areas of specialisation, resulting in strong interdependency among our product and service offerings.
Geographical Segment
The group's operations are based predominantly in Australia.
| Half-year | ||
|---|---|---|
| 2006 | 2005 | |
| Note 4: Dividends | \$'000 | \$'000 |
| Dividends paid on ordinary shares during the half-year | ||
| Final fully franked dividend for $2006:17.0c$ ( $2005:11.5c$ ) | 2,658 | 1,766 |
| Dividends not recognised at the end of the half-year | ||
| Since the end of the half-year, the directors have recommended the payment of | ||
| an interim dividend of 14.0 cents (2005: 11.0 cents) per fully paid ordinary | ||
| share, fully franked based on tax paid at 30%. The aggregate amount of the | ||
| proposed interim dividend expected to be paid on 30 March 2007 out of | ||
| retained profits at the end of the half-year, but not recognised as a liability at | ||
| the end of the half-year, is | 2.183 | 1.704 |
Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2006
Note 5. Equity securities issued
| Half-year | Half-year | |||
|---|---|---|---|---|
| 2006 | 2005 | 2006 | 2005 | |
| Shares | Shares | \$'000 | \$300 | |
| Issues of ordinary shares during the half-year | ||||
| Exercise of options under the Data # 3 Employee | ||||
| Option Plan | w | 20,000 | 18 | |
| Issuance of shares for no cash consideration: | ||||
| Dividend reinvestment plan | $\blacksquare$ | 125.211 | 371 | |
| $\overline{\phantom{a}}$ | 145.211 | 389 | ||
Note 6. Equity securities repurchased
| Half-year | Half-year | |||
|---|---|---|---|---|
| 2006 | 2005 | 2006 | 2005 | |
| Shares | Shares | \$'000 | \$2000 | |
| Repurchase of ordinary shares during the half- | ||||
| vear | ||||
| On-market buyback of shares | 44.115 | $\overline{\phantom{a}}$ | 176 | $\overline{\phantom{a}}$ |
Equity securities repurchased have been cancelled by the company.
Note 7. Subsequent events
No material and unusual events have occurred after the end of the half-year that could affect the financial position and performance of Data#3 Limited or any of its subsidiaries.
Note 8. Contingent liabilities
There have been no material changes in contingent liabilities from those disclosed in the June 2006 annual report.
Directors' Declaration
In the directors' opinion the attached financial statements and notes:
- comply with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations $(a)$ $200I$ ; and
- $(b)$ give a true and fair view of the group's financial position as at 31 December 2006 and of its performance, as represented by the results of its operations and its eash flows, for the half-year ended on that date.
In the directors' opinion:
- $(a)$ the financial statements and notes are in accordance with the Corporations Act 2001; and
- $(b)$ there are reasonable grounds to believe that Data#3 Limited will be able to pay its debts as and when they become due and payable.
This declaration is made in accordance with a resolution of the directors.
& A audmon
RA Anderson Director
Brisbane Dated this 26th day of February 2007 Independent Auditor's Review Report
To the Members of Data#3 Limited
Report on the Half-Year Financial Report
We have reviewed the accompanying half-year financial report of Data#3 Limited, which comprises the consolidated balance sheet as at 31 December 2006, and the consolidated income statement, consolidated statement of changes in equity and consolidated cash flow statement for the half-year ended on that date, a statement of accounting policies, other selected explanatory notes and the directors' declaration of the consolidated entity comprising the company and the entities it controlled at the end of the half-year or from time to time during the half-year.
Directors' Responsibility for the Half-Year Financial Report
The directors of Data"3 Limited are responsible for the preparation and fair presentation of the half-year financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the half-year financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditor's Responsibility
Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of an Interim Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity's financial position as at 31 December 2006 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Data83 Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.
A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Independence
In conducting our review, we have complied with the independence requirements of the Corporations Act 2001.
$Conclusion$
Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Data*3 Limited is not in accordance with the Corporations Act 2001 including:
- (a) giving a true and fair view of the consolidated entity's financial position as at 31 December 2006 and of its performance for the half-year ended on that date; and
- (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001.
JOHNSTON RORKE Chartered Accountants
J J Evans Partner
Brisbane, Queensland 26 February 2007
Floor 5 National Bank Flouse 255 Adelaide Street Relchang (3.4008) GPO Box 1144 Brisbane Q 4001 Ph 07 3222 8444 / Fax 07 3221 7779 Website www.ir.com.au Email [email protected]
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