DATA#3 LIMITED — Interim / Quarterly Report 2012

Feb 19, 2012

Data[#] 3 (DTL) 1H FY12 performance 20[th] February 2011

1

Strong top line growth in a challen in market g g

• Total revenue up 15% to $436M

• Product revenue up 15.5% to $375M

• Services revenue up 14.5% to $59M

• Sales gross margin down 0.9% to13.7% due to shift in sales mix

• Expenses up 13% with continuing investment

• Net profit after tax down 9.5% to $7.2M

• Earnings per share down 9.5% to 4.7 cents

• Strong cash flows and balance sheet with no material debt

• Interim fully franked dividend of 3.45 cps – consistent with 1H11 payout ratio

2

Our business

3

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Volume software
licensing and asset
management
Software
Infrastructure
Licensing
Workforce design and
recruitment & deployment
projects
contracting
People Integrated
Solutions Solutions
Customer
Outsourced/Cloud Lifecycle
Managed Product
infrastructure Services Solutions hardware
maintenance, solutions
support & operations
4
7
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Our national footprint

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Brisbane
Head Office
Warehouse &
Configuration Centre
Perth Office
Canberra Office
Adelaide Office Sydney
Office
Warehouse &
Melbourne Configuration Centre
Office Datacentre
Warehouse &
Configuration Centre
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5

Strong revenue growth, ahead of market rowth g

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Total revenue ($M)
600
436
378
400
307
230
157
200 136
0
1H07 1H08 1H09 1H10 1H11 1H12
Services revenue ($M)
100
80
59
60 52
38 39 39
33
40
20
0
1H07 1H08 1H09 1H10 1H11 1H12
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Product revenue ($M)
600
375
400 325
267
191
200
119
103
0
1H07 1H08 1H09 1H10 1H11 1H12
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• Solid growth overall well ahead of market

• Shift in sales mix towards product revenues

• Declining sentiment in project related hardware and services

6

Earnings ahead of long run trend

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EPS (cents)
NPAT ($M)
10 6
5.2
7.9 4.7
8 7.2 5
4.7 4 3.1
6 4.0 2.6
3 2.4
3.7
2.0
4 3.0
2
2
1
0 0
1H07 1H08 1H09 1H10 1H11 1H12 1H07 1H08 1H09 1H10 1H11 1H12
DPS (cents)
4 3.80 • Earnings ahead of long run trend
3.45
but down on exceptionally high
3 2.30
2.00 1H11
1.80
2
1.40 •
Decline in higher margin services
1
•
Dividend payout ratio
0 maintained at 1H11 level
1H07 1H08 1H09 1H10 1H11 1H12
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• Earnings ahead of long run trend but down on exceptionally high 1H11

• • Decline in higher margin services

• • Dividend payout ratio maintained at 1H11 level

7

Strong balance sheet and cash flow

Net operating cash flow ($M)

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80.0 66.8
59.6
60.0
40.0
20.0
0.0
-20.0 1H '10 2H '10 1H '11 2H '11 1H '12
-21.9
-40.0
-37.1
-60.0
-54.8
Cash ($M)
64.3
60 56.1 57.0 55.3
40 32.4
20
11.9
8.6
5.9
1.3 0.8
0
1H '10 2H '10 1H '11 2H '11 1H '12
Closing cash balance
Average cash balance
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• Strong balance sheet with no material debt

• • Cash flow ‘seasonality’ in line with trend

• • Average cash balance $55.3M

8

Cost structure reflects investment

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Internal cost ratio (%)
89
87.5
87
85.4
85.3 85.1
85
85.2
83
81
81.3
79
77
75
1H07 1H08 1H09 1H10 1H11 1H12
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• Internal cost ratio [internal staff & operating expenses as % of gross profit] increased on pcp

• • Opex investment flat

• • People numbers up 17%

• People investment up 19%

9

Performance of the specialist businesses

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10

Software Licensing – continuing track record of rowth g

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Revenue ($M)
300
273.9
250
219.9
200
179.9
150
116.5
100
49.8 [62.4]
50
0
1H07 1H08 1H09 1H10 1H11 1H12
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• Total revenue up 24.5% to $273.9M

• Particularly strong contribution from State Govt, large commercial organisations and Pacific Islands

• Decision on new Federal Government contract imminent

• Strong market acceptance of new workforce productivity practice

11

Infrastructure Solutions – minimal growth as ro ect investment declines p j

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Revenue ($M)
160
138.0 [139.1]
140
120
111.0
100 91.9
80 73.6
68.0
60
40
20
0
1H07 1H08 1H09 1H10 1H11 1H12
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• Revenue flat at $139.1M

• Products down 2.7% to $102.6M

• Project services down 8.3% to $15.2M

• Managed services up 33.3% to $21.3M

• Strategic wins in outsourcing

• Strong growth in Maintenance Contracts with expansion of offerings to HP and IBM and significant growth in Cisco

12

People Solutions – growth continues in patchy market

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Revenue ($M)
25
20.8 [21.1] 21.0
20
18.4
17.6
•
Total revenue up 15.2% to
15.3
15 $21.2M
•
Permanent placement
revenues up
10
•
Contractor numbers up 10%
•
Placement rate firm at 34%
5
0
1H07 1H08 1H09 1H10 1H11 1H12
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13

All strategic initiatives on track

• Strong customer acceptance of Strategic Consulting practice

• Strong customer acceptance of Workforce Productivity practice

• Trusted Cloud for Infrastructure as a Service built out and being taken to market

• New strategic supplier relationship with EMC

• Supply chain automation

• Automation of back-end EDI and pricing complete

• Decision made on quotation and online portal provider - live by July 1

14

1H summary

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15

1H summary

• Strong top line growth in difficult market

• Very strong performance from 3/5 areas of specialisation

• Decline in project revenues was not anticipated – driven by delay of major investment projects

• NSW market particularly challenging

• Continuing program of investment on track and delivering productivity gains

• All strategic initiatives on track

16

2H FY12

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17

Addressing the challenging market

• Aligning costs with market opportunity

• Continuing investment to drive productivity

• Increasing demand generation activities

• Turning more of our good people toward the customer

• Improving the sales process

18

Tender flow and win rate improved since AGM

		Full Year 2010	Full Year 2011	Oct AGM	1H 2012
	Submitted bids	357	345	147	207
	Decided bids	271	238	32	69
	Won	126	119	18	42
	% won	46%	50%	56%	61%
	Undecided			115	138

19

Market outlook entering 2H 2012

2H outlook ex ectations p Growth in software licensing in line with market Seasonalit biased to 1H y

Some improvement in product procurement Reviewing investment & resourcing levels Major Qld Govt contract comes to market Remaining negative in integration services Reviewin investment & resourcin levels g g Growth in mana ed services g Some growth in recruitment & contracting Chan e in Qld Govt su l conditions g pp y

20

2H12 outlook summary

“We see the uncertain conditions that marked the first half continuing at least for the remainder of this financial year.

Under these circumstances we are not in a position to provide guidance for the full year and will keep shareholders informed”

21

Data[#] 3 remains well positioned to perform ahead of the market

• Global uncertainty still playing out

• IT services market in flux but still has strong underlying fundamentals

• Data[#] 3 operates in large markets ($22.5B in 2011)

• Data[#] 3 has strong and interdependent relationships with global market leaders

• Data[#] 3 has capacity and capability to compete and grow in all markets

• Data[#] 3 is viewed as a preferred employer

• Data[#] 3 has a strong financial position and track record

22

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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