DATA#3 LIMITED — Interim / Quarterly Report 2017

Feb 21, 2017

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FY17 INTERIM RESULTS BRIEFING

22 FEBRUARY 2017

CONTENTS

CONTENTS
1H FY17 Summary	3
Our Business	6
Recent Customer Example	9
1H FY17 Financial Performance	11
Strategy	18
FY17 Outlook	22
Q&A	24

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1H FY17 SUMMARY

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4

“We delivered a solid 1H with NPAT and EPS growth of 34%. The board is pleased to declare an interim dividend of 3.35 cps, an increase of 34% on the previous 1H”

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5

OPERATIONAL ACHIEVEMENTS

• Continued strategic shift towards services

• Solid growth in cloud-based revenues to $58M

• Continued investment in systems and people

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OUR BUSINESS

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7

7

8

OUR SOLUTIONS

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

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These solutions are delivered using our Customer Solution Lifecycle (pdo)[2] Position, Plan, Design, Deploy, Operate, Optimise

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RECENT CUSTOMER EXAMPLE

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• First Emergency Services Organisation to go to the Public Cloud

• SES criteria included systems availability, scalability and security

• Our solution includes the design, implementation and ongoing support services for Microsoft Azure Public Cloud platform

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1H FY17 FINANCIAL PERFORMANCE

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12

1H FY17 PERFORMANCE – SUSTAINED GROWTH

Revenue	Up 10.6%	$506.0M
Product	Up 11.5%	$413.9M
Services	Up 6.6%	$91.3M
Public cloud (included in Product & Services above)	Up 44.2%	$58.0M
Other Revenue	Up 7.4%	$0.8M
Gross Profit(excluding Other Revenue)	Up 8.1%	$74.0M
Product	Up 0.9%	$34.7M
Services	Up 15.4%	$39.2M
Gross Margin	Down slightly	14.6%
EBITDA	Up 25.2%	$9.1M
EBIT	Up 35.0%	$7.4M
NPBT	Up 33.5%	$8.1M
NPAT(excluding minority interests)	Up 34.0%	$5.7M
Earnings per share	Up 34.0%	3.71 cents
Dividend per share	Up 34.0%	3.35 cents

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13

STRATEGIC SHIFT IN BUSINESS MIX

Product revenue ($M)

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500
413.9
375.2
371.1
400 338.6 332.7 329.7
300
200
100
0
1H12 1H13 1H14 1H15 1H16 1H17
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Total revenue ($M)

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600
506.0
500 457.5
435.8
406.2 399.1 406.4
400
300
200
100
0
1H12 1H13 1H14 1H15 1H16 1H17
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Services revenue ($M)

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100 91.3
85.6
75.8
80
66.6 65.1
59.1
60
40
20
0
1H12 1H13 1H14 1H15 1H16 1H17
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1H FY17 total revenue included $58.0M of cloud-based revenue

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14

SOLID GROWTH IN SERVICES GROSS PROFIT

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Product gross profit ($M)
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50
40 34.4 34.7
31.8 32.5
30.5
28.7
30
20
10
0
1H12 1H13 1H14 1H15 1H16 1H17
Services gross profit ($M)
50
39.2
40 34.0
31.9
27.6 29.2 28.8
30
20
10
0
1H12 1H13 1H14 1H15 1H16 1H17
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Total gross profit ($M)
80 74.0
68.4
61.6 62.4
59.4
57.5
60
40
20
0
1H12 1H13 1H14 1H15 1H16 1H17
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Product gross margin decreased as mix changed, and total product gross profit increased by 0.9%.

Services gross margin improved with a change in mix, and services gross profit increased by 15.4%.

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15

EXPENSES REFLECT GROWTH STRATEGY

Internal staff costs ($M)

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54.8
60 51.4
49.2
46.7
50 43.8 44.7
40
30
20
10
0
1H12 1H13 1H14 1H15 1H16 1H17
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Internal staff costs up 6.6% with market-based increases and headcount growth in Business Aspect consulting.

Operating expenses ($M)

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14
11.7 11.9
12
8.9
10 8.0 8.3
8 6.8
6
4
2
0
1H12 1H13 1H14 1H15 1H16 1H17
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Operating expenses stabilized following acquisitions in FY15 & FY16.

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16

SUSTAINED EARNINGS GROWTH

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NPAT ($M)
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EPS (cents)

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7.2
8
6.8
5.7
6
4.3
3.6
4
2.6
2
0
1H12 1H13 1H14 1H15 1H16 1H17
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4.70
5 4.40
3.71
4
2.77
3 2.32
1.67
2
1
0
1H12 1H13 1H14 1H15 1H16 1H17
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DPS (cents)

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5
4 3.45 3.45 3.35
3 2.50
2.10
2 1.50
1
0
1H12 1H13 1H14 1H15 1H16 1H17
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Solid growth in revenue and gross profit generated steady growth in profit, with earnings per share and interim dividend up 34%.

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17

SOLID BALANCE SHEET & CASHFLOW

• Strong balance sheet with no material borrowings

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

• Cash flow ‘seasonality’ consistent with previous years

• Average DSOS of 27 days - industry best practice and consistent with PCP

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FY17–19 STRATEGY

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19

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 is the number one priority

• Public cloud usage will become mainstream

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20

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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21

KEY PRIORITIES IN FY17

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

2. Progressing well, using Corporate Executive Board methodologies

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

4. Strong revenue growth with further investment in geographic expansion

5. Improving contribution from Discovery Technology

6. Returned to modest profit contribution

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

8. Solid progress, on plan

9. Investing in new internal systems to improve operational efficiency

10. Ongoing program of work; making steady progress with planning for new ERP system

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FY17 OUTLOOK

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23

FY17 OUTLOOK We are confident that we have the right strategy to underpin sustainable growth in long term shareholder returns. Our first half performance and current pipeline provides a solid foundation to achieve our full year objective of delivering earnings growth and returns to shareholders.

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Q&A

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25

APPENDIX 1 – FINANCIAL SUMMARY

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26

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

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

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