DATA#3 LIMITED — Interim / Quarterly Report 2008

Feb 21, 2008

Appendix 4D

ASX Half-Year Report

Name of entity:

ABN:

Data[#] 3 Limited

31 010 545 267

Reporting period:

Half-year ended 31 December 2007

Previous corresponding period: Half-year ended 31 December 2006

Results for announcement to the market

Results
Revenue from ordinary activities	up	16 % to	$157,308,000
Profit from ordinary activities after tax attributable to members	up	22 % to	$3,713,000
Net profit for the period attributable to members	up	22 % to	$3,713,000

Dividends	Amount per security	Franked amount per security
Current period
Ordinary dividend	18.0 cents	18.0 cents
Previous corresponding period
Ordinary dividend	14.0 cents	14.0 cents
The record date for determining entitlements to the dividend is 14 March 2008.

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.

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Data#3 Limited and Controlled Entities

Notes to Appendix 4D

For the half-year ended 31 December 2007

Net tangible assets per security

		Current period	Previous period
	Net tangible asset backing per ordinary security	$0.93	$0.80

Control gained over entities having a material effect

Name of entity (or group of entities) N/A

Loss of control of entities having a material effect

Name of entity (or group of entities) N/A

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
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
14 September 2007	28 September 2007	Ordinary	22.0 cents	22.0 cents	$3,409,000
14 March 2008	28 March 2008	Ordinary	18.0 cents	18.0 cents	$2,786,000

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Data#3 Limited and Controlled Entities

Notes to Appendix 4D

For the half-year ended 31 December 2007

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	N/A	N/A
	Current period	Previous period
Consolidated entity’s percentage holding in each of these entities	-	-
Aggregate share of profits after tax of these entities.	-	-

Compliance Statement

This report is based on financial statements reviewed by the auditor, copies of which are attached.

Signed:

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John Grant Managing Director

Date: 22 February 2008

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Data[#] 3 Limited ABN 31 010 545 267 Half-Year Report 31 December 2007

Data[#] 3 Limited and Subsidiaries

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 2007.

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 J E Grant Mr W T Powell.

Mr I Johnston was a director from the date of his appointment on 2 November 2007 up to the date of this report.

Review of operations

Total revenue of the group for the half-year was $157,308,000 (2006: $135,768,000), an increase of 16%.

As detailed in the 2007 Annual Report we have changed the way we categorise and report revenue.

Viewing revenue in Product and Services categories, product revenue increased 16% from $102,536,000 to $119,150,000, and services revenue increased 14% from $32,959,000 to $37,575,000.

This is simplistic at best and in no way reflective of either the dependency or complexity of the products and services that constitute an integrated technology solution or of the expertise and capability of our people as they design, deploy and operate these solutions. A more appropriate segregation of revenue aligns the offerings we deliver with how our customers view their information and communication technology systems, namely in Software Licensing Solutions, Infrastructure Solutions and People Solutions categories. Revenue by “solution area” is as follows:

• Software Licensing Solutions revenue increased by 25% from $49.8 million to $62.4 million

• Infrastructure Solutions revenue increased by 8% from $68.1 million to $73.6 million

• People Solutions revenue increased by 18% from $17.6 million to $20.7 million

As reported previously, contribution at the gross margin level and the relativity of expenses to this are our measures of growth and performance. Pleasingly, the overall gross margin percentage remained unchanged, and staff and operating expenses as a percentage of gross margin contribution remained unchanged from the previous corresponding period.

Net profit before tax (NPBT) was $5,314,000, ahead of the profit guidance provided at the Annual General Meeting in November 2007 and consistent with the latest profit guidance given on 21 January 2008. This represents an increase of 23% on the previous corresponding half-year NPBT of $4,328,000.

Net profit after tax (NPAT) was $3,713,000, an increase of 22% based on the previous corresponding half-year NPAT of $3,037,000. This represented basic earnings per share (EPS) of 23.92 cents, an increase of 23% based on the previous corresponding half-year EPS of 19.46 cents.

Historically the net cash flow from operating activities is an outflow in the first half. The debtors’ days sales outstanding remained on or ahead of 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.

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Data[#] 3 Limited and Subsidiaries

Directors’ report (continued)

Dividends

The directors have declared a fully franked dividend of 18.0 cents per share payable on 28 March 2008.

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.

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R A Anderson

Director

Brisbane

Dated this 22[nd] day of February 2008

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The Directors Data[#] 3 Limited Level 2, Data[#] 3 Centre 80 Jephson Street TOOWONG QLD 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 2007, 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

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J J Evans Partner

Brisbane, Queensland 22 February 2008

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Liability limited by a scheme approved under Professional Standards Legislation.

Data[#] 3 Limited and Subsidiaries

Consolidated Income Statement For the half-year ended 31 December 2007

	Half-year	Half-year
	2007	2006
	$’000	$’000
Revenue
Sale of goods	119,150	102,536
Services	37,575	32,959
Other	583	273
	157,308	135,768
Expenses
Changes in inventories of finished goods	(1,365)	101
Purchase of goods	(101,620)	(89,766)
Employee and contractor costs directly on-charged (cost of sales on
services)	(18,586)	(15,822)
Other cost of sales on services	(3,143)	(2,509)
Other employee and contractor costs	(22,622)	(18,805)
Telecommunications	(503)	(450)
Rent	(1,439)	(1,320)
Travel	(683)	(796)
Professional fees	(364)	(222)
Depreciation and amortisation	(310)	(295)
Finance costs	(13)	(6)
Other	(1,346)	(1,550)
	(151,994)	(131,440)
Profit before income tax expense	5,314	4,328
Income tax expense	(1,601)	(1,291)
Net profit	3,713	3,037
Basic earnings per share	23.92c	19.46c
Diluted earnings per share	23.92c	19.46c

The above consolidated income statement should be read in conjunction with the accompanying notes.

5

Data[#] 3 Limited and Subsidiaries

Consolidated Balance Sheet As at 31 December 2007

	31 December 2007	30 June 2007
	$’000	$’000
Current assets
Cash and cash equivalents	6,973	17,367
Trade and other receivables	41,797	51,396
Inventories	3,620	4,985
Other	1,157	1,609
Total current assets	53,547	75,357
Non-current assets
Available-for-sale financial assets	-	5
Property and equipment	1,143	1,084
Deferred tax assets	1,194	1,087
Intangible assets	4,408	4,470
Total non-current assets	6,745	6,646
Total assets	60,292	82,003
Current liabilities
Trade and other payables	35,798	53,736
Current tax liabilities	920	1,391
Provisions	791	685
Other	3,169	6,293
Total current liabilities	40,678	62,105
Non-current liabilities
Provisions	574	490
Other	233	331
Total non-current liabilities	807	821
Total liabilities	41,485	62,926
Net assets	18,807	19,077
Equity
Contributed equity	8,813	9,387
Retained profits	9,994	9,690
Total equity	18,807	19,077

The above consolidated balance sheet should be read in conjunction with the accompanying notes.

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Data[#] 3 Limited and Subsidiaries

Consolidated Statement of Changes in Equity For the half-year ended 31 December 2007

	Number of	Contributed	Retained	Total
	Ordinary	Equity	Profits	Shareholders’
	Shares			Equity
	’000	$’000	$’000	$’000
2007
Balance at 30 June 2007	15,591	9,387	9,690	19,077
Net profit	-	-	3,713	3,713
Buyback of ordinary shares	(96)	(574)	-	(574)
Payment of dividends	-	-	(3,409)	(3,409)
Balance at 31 December 2007	15,495	8,813	9,994	18,807
2006
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

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

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Data[#] 3 Limited and Subsidiaries

Consolidated Cash Flow Statement

For the half-year ended 31 December 2007

	Half-year
	2007	2006
	$’000	$’000
Cash flows from operating activities
Net profit before income tax	5,314	4,328
Depreciation and amortisation	310	295
Loss on sale of property, equipment and software assets	20	-
Income taxes paid	(2,176)	(2,070)
Change in operating assets and liabilities:
(Increase) / decrease in trade receivables	9,641	(1,650)
(Increase) / decrease in inventories	1,365	(101)
(Increase) / decrease in other operating assets	410	(364)
(Increase) / decrease in net deferred tax assets	(107)	(155)
Increase / (decrease) in trade payables	(18,451)	(9,018)
Increase / (decrease) in unearned income	(3,124)	(155)
Increase / (decrease) in other operating liabilities	435	66
Increase / (decrease) in current tax liabilities	104	120
Increase in liability for employee benefits	170	74
Net cash outflow from operating activities	(6,089)	(8,630)
Cash flows from investing activities
Payments for plant and equipment	(310)	(123)
Payments for software assets	(17)	(2)
Proceeds received from former joint venture partner	-	526
Other	5	-
Net cash inflow / (outflow) from investing activities	(322)	401
Cash flows from financing activities
Payments for buyback of shares	(574)	(176)
Dividends paid	(3,409)	(2,658)
Net cash outflow from financing activities	(3,983)	(2,834)
Net (decrease) in cash and cash equivalents held	(10,394)	(11,063)
Cash and cash equivalents at the beginning of the reporting period	17,367	13,997
Cash and cash equivalents at the end of the reporting period	6,973	2,934

The above consolidated cash flow statement should be read in conjunction with the accompanying notes.

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Data[#] 3 Limited and Subsidiaries

Notes to the consolidated financial statements For the half-year ended 31 December 2007

Note 1. Significant accounting policies

Statement of compliance

This general purpose financial report for the half-year reporting period ended 31 December 2007 has been prepared in accordance with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001.

Basis of preparation

This report should be read in conjunction with the annual report for the year ended 30 June 2007 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 2001. The accounting policies adopted in this interim financial report are the same as those applied in the 2007 annual report.

The consolidated entity is of a kind referred to in ASIC Class Order 98/0100, 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.

Note 2. Segment information

Business segment

The group predominantly operates in one business segment. Its activities include software licensing and software asset management; the design, deployment and operation of desktop, network and data centre hardware and software infrastructure; and the provision of contract and permanent 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
	2007	2006
	$’000	$’000
Note 3. Dividends
Dividends paid on ordinary shares during the half-year
Final fullyfranked dividend for 2007: 22.0c(2006: 17.0c)	3,409	2,658
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 18.0 cents (2006: 14.0 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 28 March 2008 out of retained profits at the end of the
half-year,but not recognised as a liabilityat the end of the half-year,is	2,786	2,183

9

Data[#] 3 Limited and Subsidiaries

Notes to the consolidated financial statements (continued) For the half-year ended 31 December 2007

Half-year Half-year 2007 2006 2007 2006 Shares Shares $’000 $’000	Half-year Half-year 2007 2006 2007 2006 Shares Shares $’000 $’000
Note 4. Equity securities repurchased Repurchase of ordinary shares during the half-year On-market buyback of shares 95,606 44,115 574	176

Equity securities repurchased have been cancelled by the company.

Note 5. 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 6. Contingent liabilities

There have been no material changes in contingent liabilities from those disclosed in the June 2007 annual report.

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Data[#] 3 Limited and Subsidiaries

Directors’ declaration

In the directors’ opinion the attached financial statements and notes:

• (a) comply with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and

• (b) give a true and fair view of the group’s financial position as at 31 December 2007 and of its performance, as represented by the results of its operations and its cash 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.

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R A Anderson

Director

Brisbane

Dated this 22[nd] day of February 2008

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Independent auditor’s review report

To the members of Data[#] 3 Limited

Report on the half-year financial report

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We have reviewed the accompanying half-year financial report of Data[#] 3 Limited, which comprises the consolidated balance sheet as at 31 December 2007, 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 establishing and maintaining internal controls 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 2007 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 Data[#] 3 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 halfyear 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 2007 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

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Brisbane, Queensland 22 February 2008

J J Evans Partner

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Liability limited by a scheme approved under Professional Standards legislation.