DATA#3 LIMITED — Interim / Quarterly Report 2016

Feb 21, 2016

APPENDIX 4D

Name of entity Data[#] 3 Limited ABN 31 010 545 267

Reporting period Half-year ended 31 December 2015 Previous corresponding period Half-year ended 31 December 2014

RESULTS FOR ANNOUNCEMENT TO THE MARKET

Results			$’000
Revenues from ordinary activities	up	12.6% to	457,508
Profit from ordinary activities after tax attributable to members	up	19.2% to	4,261
Net profit for the period attributable to members	up	19.2% to	4,261

Dividends	Amount per	Franked amount	Franked amount
	security	per security
Current period
Interim dividend	2.5 cents		100%
Previous corresponding period
Interim dividend	2.1 cents		100%

The record date for determining entitlements to the dividend is 17 March 2016. The dividend is payable on 31 March 2016.

BRIEF EXPLANATION OF THE FIGURES REPORTED ABOVE

Please refer to the Review of Operations in the Directors’ Report which begins on page 1 of the attached Interim Financial Report for the half year ended 31 December 2015.

Net tangible assets per security	Current period	Previous period
Net tangible asset backing per ordinary security	$0.13	$0.12

DATA[#] 3 LIMITED APPENDIX 4D HALF-YEAR 31 DECEMBER 2015

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Data[#] 3 Limited ABN 31 010 545 267

INTERIM FINANCIAL REPORT

Half-year ended 31 December 2015

CONTENTS	PAGE
DIRECTORS’ REPORT	1
AUDITOR’S INDEPENDENCE DECLARATION	4
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME	5
CONDENSED CONSOLIDATED BALANCE SHEET	6
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY	7
CONDENSED CONSOLIDATED CASH FLOW STATEMENT	8
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	9
DIRECTORS’ DECLARATION	13
INDEPENDENT AUDITOR’S REVIEW REPORT	14

DIRECTORS’ REPORT

Your directors present their report on Data[#] 3 Limited and its subsidiaries (together referred to as “Data[#] 3”, “the group”, or “we, our, or us”) for the half-year ended 31 December 2015.

1. DIRECTORS

The following persons were directors of Data[#] 3 Limited for the entire half-year and up to the date of this report:

Richard Anderson Ian Johnston Terry Powell

Glen Boreham and John Grant were directors from the beginning of the year until 30 September 2015 and 31 December 2015, the respective dates they ceased to be directors.

2. REVIEW OF OPERATIONS

SUMMARY OF OUR FY16 PLAN

Our strategic planning identified the following trends in adoption and use of business technology:

• digital solutions would increasingly drive new business models;

• a rapid shift to consumption-based and service-centric solutions was occurring;

• security was the number one priority;

• cloud, big data and mobile were big drivers;

• software was dominating infrastructure; and

• increased IT spend was being driven by business users outside the traditional IT department.

Acknowledging the transition that is continuing within our customers and in technology, Data[#] 3 is transitioning itself to capitalize on market opportunity and to satisfy customer demand.

At the start of the 2016 financial year (FY16) we implemented a refined organisation structure with five areas of specialisation – Consulting, Software Solutions, Infrastructure Solutions, Managed Services and Application Solutions – and we established a dedicated security practice within this structure. We also implemented a new leadership structure and a measured approach to drive the continuing transition of our solutions, our people and our business. Internally we refer to this transition program as ‘T4 - Transition Together Towards Tomorrow’. The key execution elements of this transition include:

• continuing to drive growth in our core software licensing and infrastructure businesses;

• assisting our customers with the shift from on-premises capital expenditure to consumption-based operating expenditure; and

• increasing emphasis on services which increase customer value, and increase margin.

Our overall financial objective for FY16 is to increase earnings over FY15.

FIRST HALF PERFORMANCE

Our activity levels and pipeline of opportunities increased steadily during the period, and we ended the first half with performance substantially ahead of the previous corresponding period (PCP), and within market guidance provided at the AGM in November 2015. This first half performance underpins the full year financial objective.

Total first half revenue increased by 12.6% from $406.4 million to $457.5 million with increases in both product and services revenues.

Total gross profit (excluding other revenue) increased by 9.6% from $62.4 million to $68.4 million, and total gross margin decreased from 15.4% to 15.0% reflecting the competitive market and changes in the sales mix in the services segment.

DATA[#] 3 LIMITED INTERIM FINANCIAL REPORT HALF-YEAR 31 DECEMBER 2015

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DIRECTORS’ REPORT (CONTINUED)

2. REVIEW OF OPERATIONS (CONTINUED)

Net profit before tax increased by 17.3% from $5.2 million to $6.1 million, demonstrating a further improvement in our overall cost structure.

Net profit after tax (excluding minority interests) increased by 19.2% from $3.6 million to $4.3 million. This represented basic earnings per share of 2.77 cents, an increase of 19.2% from 2.32 cents in the previous first half.

Product revenue and gross profit

Total product revenue increased by 12.6% from $329.7 million to $371.1 million, reflecting very strong growth in public cloud solutions (up 36.1% from $29.5 million to $40.2 million) and solid growth in the traditional on-premises solutions (up 10.2% from $300.2 million to $330.9 million). The components of the on-premises solutions changed, with solid growth in infrastructure sales while maintaining very significant on-premises software licensing revenues.

Total product gross profit increased by 12.6% from $30.5 million to $34.4 million.

Services revenue and gross profit

Total services revenue increased by 12.9% from $75.8 million to $85.6 million. Consulting, professional services and maintenance revenues grew steadily, offsetting relatively flat managed services and application services revenues.

Total services gross profit increased by 6.7% from $31.9 million to $34.0 million.

Other revenue

Other revenue decreased from $0.9 million to $0.8 million, mostly due to a reduction in interest income resulting from the lower interest rates compared to the previous first half.

Operating expenses

Internal staff costs increased by 4.4% from $49.2 million to $51.4 million and other operating expenses increased by 31.3% from $8.9 million to $11.7 million. These increases include the additional staff and operating costs from the Discovery Technology Pty Ltd (“Discovery Technology”) acquisition that are included in the consolidated results from 3 July 2015 onwards (refer to the Acquisition section, and Note 6 to the attached financial statements).

Additional rent, depreciation and amortisation expenses accounted for $1.5 million of the $2.8 million increase in other operating expenses.

Staff numbers (excluding Discovery Technology) remained relatively steady in the half, and average salaries increased in line with the broader industry trend in a competitive market for the best people. The acquisition of Discovery Technology added approximately 20 staff.

Cash flow

The net cash flow from operating activities is typically an outflow in the first half due to the timing of receipts and payments around 30 June. The traditional May/June sales peak produces higher than normal collections pre-30 June that generate temporary cash surpluses which subsequently reverse after 30 June when the associated supplier payments occur. The first half net cash outflow from operating activities of $86.5 million was slightly more than the $84.4 million outflow in the PCP due mostly to the reversal of the higher temporary cash surplus at 30 June 2015.

The key trade receivables indicator of average days’ sales outstanding remained ahead of target and at 26 days is industry best practice and even slightly better than the previous first half.

DATA[#] 3 LIMITED INTERIM FINANCIAL REPORT HALF-YEAR 31 DECEMBER 2015

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DIRECTORS’ REPORT (CONTINUED)

2. REVIEW OF OPERATIONS (CONTINUED)

Acquisition

In July 2015 we acquired an additional 15.4% of the issued capital of Discovery Technology Pty Ltd (“Discovery Technology”), a company specialising in Wi-Fi analytics, so that at 31 December 2015 our total interest in Discovery Technology was 61.6%. As a result of obtaining control, Discovery Technology has been consolidated in our consolidated financial statements for the half.

Further details of the acquisition are provided in Note 6 to the attached financial statements.

OUTLOOK

We remain strongly focused on achieving our full year financial objective, and the first half performance positions us well to achieve that goal.

In the longer term Data[#] 3’s strategic transition from primarily product centric to increasingly service centric positions us well to continue growth in shareholder value. We have a robust business, no material debt, long-term customer relationships, committed supplier partnerships, and a great team. We will continue to develop and offer the combination of on-premises and cloud-based solutions for our customers’ changing requirements.

3. DIVIDENDS

The directors have declared a fully franked dividend of 2.5 cents per share payable on 31 March 2016, an increase of 19.0% on the previous corresponding period.

4. 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.

5. ROUNDING OF AMOUNTS

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 22 February 2016

DATA[#] 3 LIMITED INTERIM FINANCIAL REPORT HALF-YEAR 31 DECEMBER 2015

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AUDITOR’S INDEPENDENCE DECLARATION

As lead auditor for the review of the financial report of Data[#] 3 Limited for the financial half-year ended 31 December 2015, 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.

This declaration is in respect of Data[#] 3 Limited and the entities it controlled during the period.

PITCHER PARTNERS Chartered Accountants

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J J Evans Partner

Brisbane, Queensland 22 February 2016

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DATA[#] 3 LIMITED INTERIM FINANCIAL REPORT HALF-YEAR 31 DECEMBER 2015

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CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the half-year ended 31 December 2015

	Half-year	Half-year
	December	December
	2015	2014
	$’000	$’000
Revenue
Sale of goods	371,124	329,726
Services	85,631	75,816
Other	753	896
	457,508	406,438
Expenses
Changes in inventories of finished goods	2,114	3,107
Purchase of goods	(338,835)	(302,286)
Employee and contractor costs directly on-charged (cost of sales on services)	(26,735)	(25,436)
Other cost of sales on services	(24,891)	(18,516)
Other employee and contractor costs	(51,397)	(49,229)
Telecommunications	(873)	(747)
Rent	(4,152)	(3,067)
Travel	(871)	(869)
Professional fees	(438)	(378)
Depreciation and amortisation	(1,732)	(1,360)
Finance costs	(42)	(92)
Other	(3,594)	(2,399)
	(451,446)	(401,272)
Profit before income tax	6,062	5,166
Income tax expense	(1,851)	(1,590)
Profit for the half-year	4,211	3,576
Other comprehensive income for the half-year, net of tax	-	-
Total comprehensive income for the half-year	4,211	3,576
Profit and comprehensive income is attributable to:
Owners of Data#3 Limited	4,261	3,576
Non-controlling interests	(50)	-
	4,211	3,576
Earnings per share for profit attributable to the ordinary equity holders of the	Cents	Cents
company:
Basic earnings per share	2.77c	2.32c
Diluted earnings per share	2.77c	2.32c

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

DATA[#] 3 LIMITED INTERIM FINANCIAL REPORT HALF-YEAR 31 DECEMBER 2015

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CONDENSED CONSOLIDATED BALANCE SHEET as at 31 December 2015

	31 December	30 June
	2015	2015
	$’000	$’000
Current assets
Cash and cash equivalents	14,605	108,966
Trade and other receivables	95,194	153,667
Inventories	6,011	3,915
Other	5,609	2,997
Total current assets	121,419	269,545
Non-current assets
Property and equipment	6,206	6,458
Investment accounted for using the equity method (note 6)	-	3,057
Deferred tax assets	3,211	2,332
Intangible assets	15,646	12,264
Total non-current assets	25,063	24,111
Total assets	146,482	293,656
Current liabilities
Trade and other payables	88,715	234,051
Borrowings	-	402
Current tax liabilities	1,007	1,186
Provisions	2,815	2,763
Other	15,447	15,606
Total current liabilities	107,984	254,008
Non-current liabilities
Provisions	3,043	2,880
Other	421	395
Total non-current liabilities	3,464	3,275
Total liabilities	111,448	257,283
Net assets	35,034	36,373
Equity
Contributed equity	8,278	8,278
Retained earnings	25,844	28,095
Equity attributable to owners of Data#3 Limited	34,122	36,373
Non-controlling interests	912	-
Total equity	35,034	36,373

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

DATA[#] 3 LIMITED INTERIM FINANCIAL REPORT HALF-YEAR 31 DECEMBER 2015

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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the half-year ended 31 December 2015

	Attributable to owners of Data#3 Limited
	Contributed Equity Retained Earnings Total Non- controlling interests Total Equity
	$‘000 $‘000 $‘000 $‘000 $‘000
2015
Balance at 30 June 2015	8,278 28,095 36,373 - 36,373
Profit for the half-year	- 4,261 4,261 (50) 4,211
Other comprehensive income for the half-year, net of tax	- - - - -
Total comprehensive income for the half-year	- 4,261 4,261 (50) 4,211
Transactions with owners in their capacity as owners:
Finalisation of provisional accounting for the Business Aspect acquisition	- (45) (45) - (45)
Payment of dividends	- (6,467) (6,467) - (6,467)
Non-controlling interest on acquisition of subsidiary	- - - 917 917
Non-controlling interest - accretion of share options	- - - 45 45
Balance at 31 December 2015	8,278 25,844 34,122 912 34,034
2014 Balance at 30 June 2014 Profit for the half-year Other comprehensive income for the half-year, net of tax	8,278 25,344 33,622 - 33,622 - 3,576 3,576 - 3,576 - - - - -
Total comprehensive income for the half-year	- 3,576 3,576 - 3,576
Transactions with owners in their capacity as owners: Payment of dividends	- (4,619) (4,619) - (4,619)
Balance at 31 December 2014	8,278 24,301 32,579 - 32,579

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

DATA[#] 3 LIMITED INTERIM FINANCIAL REPORT HALF-YEAR 31 DECEMBER 2015

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CONDENSED CONSOLIDATED CASH FLOW STATEMENT

for the half-year ended 31 December 2015

	Half-year	Half-year
	December	December
	2015	2014
	$’000	$’000
Cash flows from operating activities
Net profit after income tax	4,211	3,576
Depreciation and amortisation	1,839	1,730
Provision for doubtful debts	57	-
Non-controlling interest - accretion of share options	45	-
Other	(18)	47
Changes in operating assets and liabilities:
Decrease in trade receivables	57,207	69,179
Increase in inventories	(2,053)	(3,154)
Increase in other operating assets	(357)	(835)
Increase in net deferred tax assets	(1,056)	(1,360)
Decrease in trade payables	(136,889)	(139,475)
Decrease in unearned income	(250)	(5,009)
Decrease in other operating liabilities	(9,083)	(10,167)
Increase (decrease) in current tax liabilities	(179)	771
Increase in liability for employee benefits	46	267
Net cash outflow from operating activities	(86,480)	(84,430)
Cash flows from investing activities
Payment for acquisition of subsidiary, net of cash acquired	554	(5,298)
Payment for investment	-	(2,509)
Payments for plant and equipment	(523)	(110)
Payments for software assets	(1,051)	(33)
Proceeds from sale of plant and equipment	13	-
Net cash outflow from investing activities	(1,007)	(7,950)
Cash flows from financing activities
Dividends paid to company’s shareholders	(6,467)	(4,619)
Finance lease payments	(407)	(370)
Net cash outflow from financing activities	(6,874)	(4,989)
Net decrease in cash and cash equivalents held	(94,361)	(97,369)
Cash and cash equivalents at the beginning of the reporting period	108,966	103,427
Cash and cash equivalents at the end of the reporting period	14,605	6,058

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

DATA[#] 3 LIMITED INTERIM FINANCIAL REPORT HALF-YEAR 31 DECEMBER 2015

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation of interim financial report

We have prepared this general purpose interim financial report for the half-year reporting period ended 31 December 2015 in accordance with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001.

This interim financial report does not include all the notes of the type normally included in an annual financial report and accordingly should be read in conjunction with our annual report for the year ended 30 June 2015 and any public announcements we have made during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

We have adopted all the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board that are relevant to our operations and effective for the current reporting period. The accounting policies adopted in this interim financial report are the same as those applied in the previous financial year and the corresponding interim reporting period. A number of new or amended standards became applicable for the current reporting period, however no change to our accounting policies was necessary as a result of adopting these new/changed standards.

NOTE 2. SEGMENT INFORMATION

Our business is conducted primarily in Australia. Our management team makes financial decisions and allocates resources based on the information it receives from our internal management system. We attribute sales to an operating segment based on the type of product or service provided to the customer. Revenue from customers domiciled in Australia comprised 99% of external sales for the half-year ended 31 December 2015 (2014: 99%).

We have identified two reportable segments, as follows:

• Product - providing hardware and third party software for our customers' desktop, network and data centre infrastructure; and

• Services - providing consulting, project, managed and maintenance services, as well as workforce recruitment and contracting services, in relation to the design, implementation, operation and support of ICT solutions.

The following table shows summarised financial information by segment for the half-years ended 31 December 2015 and 2014.

DATA[#] 3 LIMITED INTERIM FINANCIAL REPORT HALF-YEAR 31 DECEMBER 2015

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 2. SEGMENT INFORMATION (CONTINUED)

	Product	Product		Services	Services	Services		Total	Total	Total
	Half-year to			Half-year to				Half-year to
	December			December				December
	2015	2014		2015		2014		2015		2014
	$’000	$’000		$’000		$’000		$’000		$’000
Revenue
Total revenue	371,165	329,726		90,122		79,408		461,287		409,134
Inter-segment revenue	(41)		-	(4,491)		(3,592)		(4,532)		(3,592)
External revenue	371,124	329,726		85,631		75,816		456,755		405,542
Costs of sale
Cost of goods sold	(336,721)	(299,179)		-			-	(336,721)		(299,179)
Employee and contractor costs directly
on-charged	-		-	(26,735)		(25,436)		(26,735)		(25,436)
Other cost of sales on services	-		-	(24,891)		(18,516)		(24,891)		(18,516)
Gross profit	34,403		30,547	34,005		31,864		68,408		62,411
Gross margin	9.3%		9.3%	39.7%		42.0%		15.0%		15.4%
Other expenses	(24,644)	(23,066)		(33,700)		(30,223)		(58,344)		(53,289)
Segment profit	9,759		7,481	305		1,641		10,064		9,122
Unallocated items
Interest and other revenue								753		896
Other employee and contractor costs								(2,261)		(2,198)
Rent								(626)		(661)
Depreciation and amortisation								(1,080)		(1,196)
Other								(788)		(797)
								(4,002)		(3,956)
Profit before income tax								6,062		5,166
Reconciliation of revenue:
External revenue								456,755		405,542
Unallocated corporate revenue
Interest and other revenue								753		896
Total revenue								457,508		406,438

DATA[#] 3 LIMITED INTERIM FINANCIAL REPORT HALF-YEAR 31 DECEMBER 2015

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3. DIVIDENDS

Details of dividends paid during the current period or the previous corresponding period are as follows:

Record date	Payment date	Type	Amount per	Franked amount	Total dividend
			security	per security	$’000
16/9/2014	30/9/2014	Final	3.0 cents	3.0 cents	4,619
17/3/2015	31/3/2015	Interim	2.1 cents	2.1 cents	3,234
16/9/2015	30/9/2015	Final	4.2 cents	4.2 cents	6,467

Dividends not recognised at the end of the half-year

Since the end of the half-year, the directors have declared an interim dividend of 2.5 cents per fully paid ordinary share, fully franked based on tax paid at 30%. The aggregate amount of the interim dividend to be paid on 31 March 2016 out of retained earnings at the end of the half-year, but not recognised as a liability at the end of the half-year, is $3,849,000.

NOTE 4. 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 5. CONTINGENT LIABILITIES

There have been no material changes in contingent liabilities from those disclosed in the June 2015 annual report.

NOTE 6. BUSINESS COMBINATIONS

Discovery Technology

On 20 August 2014 Data[#] 3 Limited (Data[#] 3) acquired 46.2% of the issued capital of Discovery Technology Pty Ltd (“Discovery Technology”), a company specialising in Wi-Fi analytics, at a cost of $2.5 million. On 3 July 2015 Data[#] 3 exercised its option to acquire a further 15.4% shareholding in Discovery Technology for $0.5 million, bringing Data[#] 3’s total shareholding to 61.6%. As a result of obtaining control, Discovery Technology has been consolidated in Data[#] 3’s consolidated financial statements from 3 July 2015. We have recognised the non-controlling interest in Discovery Technology at the non-controlling interest’s proportionate share of Discovery Technology’s net identifiable assets. The equity-accounted carrying value of Data[#] 3’s investment immediately before the acquisition date approximated fair value, therefore no gain or loss resulted from remeasurement at the date of acquisition.

Details of the acquisition are as follows:

	$’000s
Total purchase consideration
Cash paid (total purchase consideration)	3,000
Purchase consideration – cash outflow
Cash consideration	3,000
Less: cash acquired	(1,054)
Outflow of cash to acquire subsidiary, net of cash acquired	1,946

DATA[#] 3 LIMITED INTERIM FINANCIAL REPORT HALF-YEAR 31 DECEMBER 2015

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 6. BUSINESS COMBINATIONS (CONTINUED)

NOTE 6. BUSINESS COMBINATIONS (CONTINUED)
Assets acquired and liabilities assumed	Fair value
	$’000s
Cash and cash equivalents	1,054
Receivables	1,011
Other current assets	77
Plant and equipment	118
Software assets	1,260
Payables	(666)
Employee benefit liabilities	(288)
Deferred tax liability (net)	(177)
Net identifiable assets acquired	2,389
Add: goodwill	2,077
Less: non-controlling interest	(917)
share of previously equity-accounted profits	(549)
	3,000

We have accounted for the assets acquired and liabilities assumed on a provisional basis as we are awaiting information to finalise these amounts. The goodwill is attributable to application development capability and expertise and is allocated between the product and services segments in proportion to the revenue generated by each segment. None of the goodwill is expected to be deductible for income tax purposes.

Acquisition-related costs of $41,000 were included in profit and loss for the year ended 30 June 2015.

Data[#] 3 retains a further option to acquire the balance of the shares in the company at market price by 30 June 2017.

DATA[#] 3 LIMITED INTERIM FINANCIAL REPORT HALF-YEAR 31 DECEMBER 2015

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DIRECTORS’ DECLARATION

In the opinion of the directors:

• (a) the financial statements and notes set out on pages 5 to 12 are in accordance with the Corporations Act 2001, including:

• (i) complying with Australian Accounting Standards and the Corporations Regulations 2001 and other mandatory professional reporting requirements, and

• (ii) giving a true and fair view of the group’s financial position as at 31 December 2015 and of its performance for the half-year ended on that date; 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 22 February 2016

DATA[#] 3 LIMITED INTERIM FINANCIAL REPORT HALF-YEAR 31 DECEMBER 2015

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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 2015, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated cash flow statement for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration of the consolidated entity comprising the company and the entities it controlled at the period's end or from time to time during the half-year.

Directors' Responsibility for the Half-Year Financial Report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

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 a 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 half-year 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 2015 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.

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INDEPENDENT AUDITOR’S REVIEW REPORT (CONTINUED)

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 2015 and of their performance for the half-year ended on that date; and

• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001.

PITCHER PARTNERS

Chartered Accountants

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J J Evans Partner

Brisbane, Queensland 22 February 2016

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