DATA#3 LIMITED — Investor Presentation 2011

Aug 21, 2011

Data[#] 3 (DTL) 2011 results presentation

22 August 2011

1

Best ever performance across all ke metrics y

• Total revenue up 16% to $697.8M

• Product revenue up 14% to $586.4M

• Services revenue up 29% to $109.8M

• 59% under contract

• Sales gross margin up from 15.0% to16.1%

• EBIT growth faster than revenue, up 34% to $20.5M

• EBIT margin up from 2.5% to 2.9%

• Net profit before tax up 38% to $21.8M

• Earnings per share up 37% to 91.4 cents

• Strong balance sheet with no material debt

• Return on equity up from 41.8% to 49.7%

• Total dividend up 38% to 77 cents, fully franked

2

Track record of growing revenue & market share

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Total revenue ($M)
800
697.7
5 year CAGR 24%
600 530.5 [599.2]
363.7
400
239.6 [285.1]
200
0
2006 2007 2008 2009 2010 2011
Services revenue ($M)
120 109.8
5 year CAGR 15%
100
85.0
81.0 79.6
80 70.2
53.9
60
40
20
0
2006 2007 2008 2009 2010 2011
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Product revenue ($M)
700
586.4
600 5 year CAGR 26% 450.0 [513.6]
500
400
281.8
300 185.0 [214.4]
200
100
0
2006 2007 2008 2009 2010 2011
•
IT market growth of 4%
•
Data [#] 3 growth of 16%
•
Attractive IT services market
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Track record of growing profit & earnings

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EBIT ($M)
25
20.5
5 year CAGR 21%
20
15.2
13.4
15 12.2
9.9
10 7.8
5
0
2006 2007 2008 2009 2010 2011
EPS (cents)
100 91.4
5 year CAGR 20%
80 70.9
63.8
58.9
60
46.1
36.9
40
20
0
2006 2007 2008 2009 2010 2011
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NPAT ($M)
20
5 year CAGR 21% 15.0
15
10.9
9.8
9.1
10
7.2
5.7
5
0
2006 2007 2008 2009 2010 2011
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• Services @ higher margins • Productivity/efficiency gains from leveraged cost structure

4

Track record of growing shareholder returns

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30 June share price ($)
ROE (%) 13.24
60% 14
49.7%
50% 12
[42.8%] [42.1%] [41.8%] 10
40% 33.8% [37.7%] 8.01
8
30% 6.00 5.60 6.00
6
3.70
20%
4
10% 2
0% 0
2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011
80 DPS (cents) 77.0 • Sector leading ROE
5 year CAGR 22%
60 50.0 56.0 • Dividend reflects strong
46.0
36.0 earnings and growth
40
28.0
opportunities
20
•
79% payout ratio
0
2006 2007 2008 2009 2010 2011
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5

Strong balance sheet and cash flows

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NTA ($M) Net operating cash flow ($M)
30
25.6
80.0 66.8
20.9 59.6
20 17.9 60.0
16.0
14.6
40.0
12.3 22.4
20.0
10
0.0
-20.0 2H '09 1H '10 2H '10 1H '11 2H '11
0 -21.9
-40.0
2006 2007 2008 2009 2010 2011
-60.0
-54.8
Cash ($M) 64.3
60 56.1 57.0 • Strong balance sheet with no
material debt
40 32.4
28.0
•
NTA up 27%
20
•
4.7 5.9 6.9 Cash flow ‘seasonality’
1.3 0.8
0 • FY11 average cash balance $32.5M,
2H '09 1H '10 2H '10 1H '11 2H '11
up from $19.1M in FY10
Closing cash balance
Average cash balance
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Our business

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Volume software
What we do
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
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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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Satisfaction improving as we increase eo le numbers p p

638 permanent 42 casual 352 contractors >1,000 people

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638
600
502
400 352
277
200
0
2010 2011 2010 2011
Contractors Permanent
+27% +27%
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People satisfaction /5
5
4.0 4.1 3.9 4.0
4
3
2
1
0
2008 2009 2010 2011
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% Recommend Data[#] 3 as employer of choice

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100
96.6
94.5
93.8
92.8
90
80
2008 2009 2010 2011
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10

Customer focus in mid to large corporate and overnment g

Mid to large corporate

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Government

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11

Strong partnerships with leading global su liers pp

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12

Performance of the specialist businesses

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13

Software Licensing – continuing track record of rowth g

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Revenue ($M) 356.7
350
319.6
292.8
300
250
200
143.3
150
98.2
100 81.6
50
0
2006 2007 2008 2009 2010 2011
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• Total revenue up 12% to $356.7M

• 5 year CAGR of 34%

• 16[th] year of consecutive growth

• On Microsoft’s worldwide partner engagement board

• First sales of Microsoft’s public cloud-delivered Office 365 and BPOS

• First customers for new worker productivity practice

14

Infrastructure Solutions – continuing track record of rowth g

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Revenue ($M) 301.1
300
248.3
250
197.6
200
174.9
148.3
150
132.7
100
50
0
2006 2007 2008 2009 2010 2011
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• Total revenue up 21% to $301.1M

• Products up 18% to $231.3M

• Project services up 58% to $34.6M

• Managed services up 18% to $35.1M

• 5 year CAGR of 18%

• New government panel contracts in Qld, ACT & Vic

• New integration centres in NSW & Vic

15

People Solutions - returns to growth

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Revenue ($M)
44.7
45
39.2
40 38.2 38.3
35
30.7
30
24.6
25
20
15
10
5
0
2006 2007 2008 2009 2010 2011
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• Total revenue up 25% to $38.3M

• • 5 year CAGR of 9%

• • Contractor numbers up 27%

• • New national leadership

• • New operational systems

• • Lower operating costs

16

Continued reinvestment to drive productivity and efficiency

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90 Internal cost ratio (%)
88
86
84
82
80
78
76
74
72
70
2006 2007 2008 2009 2010 2011
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• Internal cost ratio [internal staff & operating expenses as % of gross margin] improved from 83.4% to 81.9%

• Internal systems investment up 12% on previous corresponding period

• Staffing investment up 21%

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Strategy to sustain performance

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Well articulated and connected strate gy

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Simple business model well executed

• Addressing largest ICT market segments

• • Reseller for leading global vendors

• • Great people with market leading skills

• • Sales focused/customer ‘intimate’

• • Move quickly to opportunity

• • Working capital funded from cashflow

• • Invest to grow

• • Limited capital expenditure

20

A complete solution for customers

Licensing Solutions

Integrated Solutions

Product Solutions

Managed Services People Solutions

Software Licensing

Asset Management Business Productivity & Knowledge United Communications Identity Management Network Platforms Consolidation and Virtualisation Systems Management Managed Operating Environment ICT Strategic Consulting

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A complete solution for customers

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A complete solution for customers

Product Expertise Software Licensing Asset Management Business Productivity & Knowledge United Communications Identity Management Network Platforms Consolidation and Virtualisation Systems Management Managed Operating Environment ICT Strategic Consulting

23

FY12 outlook

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Environment

Macro environment

End user technology NBN - Need for productivity Need for efficiency +

Global economy Potential flow on to Australia

Micro environment

New technologies - Large market Support from partners + Market coverage Customers looking for Trusted partner

Early in investment cycle Higher costs

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Investing for growth

• More people to increase capacity & capability – up 18% on FY11

• Infrastructure to support operations – up 14% on FY11

• Supply chain to lower costs in volume areas

• New and refurbished premises to provide market differentiation and enhance people satisfaction and mobility

• ‘Trusted Cloud’ infrastructure to provide options for customers

• Internal systems to drive productivity and ease of use

26

Anticipate slowing growth in line with market for Software Licensin g

• Expect to hold margins

• Microsoft reseller program restructuring over 3 years

• Anticipate little impact on gross margin

• Possible cash flow impact through change in billing cycles

• New players may compete for people and customers

• Investing to lower costs and improve customer access

• Efficiency gains through supplier automation

• Improved customer access via new customer portal

• Investing in expanding offerings

• Licensing in Data[#] 3 trusted cloud and in public cloud

• Growing asset management and workplace productivity services

27

Anticipate growth in changing product procurement market

• Expect to continue to gain market share

• Traditional PC market flat

• Solid growth in tablets in the enterprise

• Margins expected to hold

• Increasing opportunity in ‘Desktop as a service’

• Winners & losers with consolidation in Government purchasing

• Qld Govt contract comes to market

• Investing to create market differentiation, lower costs and improve customer access

• Configuration and warehousing centres

• New customer portal and supply chain automation

28

Anticipate strong growth in integration services

• Expect project opportunity to increase as customers invest in business enablement

• Expect partners to continue to require greater investment as part of certification

• Expect margins to hold

• Expanding strategic consulting practice

• Investing in Solution Centres for customer pilots

• Investing to deliver private cloud infrastructure offerings

• Tighter control over project risk and cost through new professional services system

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Anticipate solid growth in managed services

• Expect outsourcing opportunity to increase as customers lower operating expense and deal with skill shortages

• Expect opportunity for maintenance contracts to grow with product sales volumes

• Seeing customers focus on user enablement and support and actively plan for hybrid cloud/on premises infrastructure

• Competitive market led by global partners

• Expect to hold margins

• Investing in sales capability, delivery systems and processes, and trusted cloud infrastructure

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Anticipate solid growth in recruitment and contractin g

• Expect strong overall market opportunity

• Expect margins in Qld Govt to decline in 2H with implementation of central purchasing model

• Expect growth in NSW and Victoria in commercial sector

• Expanding HR reselling and consulting offerings

• Investing further to deliver efficiency gains through automation

31

FY12 outlook summary

.....the company’s financial objective for 2012 is to at least equal the performance of the previous year. This assumes stabilisation of the current global market conditions and means steady underlying growth given increased internal investment, particularly in new premises and systems

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Data[#] 3 is well positioned to grow

• Global uncertainty still to play out

• IT Services market has attractive 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

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Q&A

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Appendix 1 – Financial summary

	2011	2010
	($’000)	($’000)	% Change
Revenue by segment:
Product	$586,354	$513,585	+14%
Services	$109,804	$85,015	+29%
Other revenue	$1,630	$615
Total Revenue	$697,788	$599,215	+16.5%
Revenue by area of specialisation:
Software Licensing	$356,709	$319,649	+12%
Infrastructure Solutions	$301,110	$248,299	+21%
People Solutions	$38,339	$30,652	+25%
Total gross margin $	$111,745	$90,045	+24%
Total gross margin %	16.1%	15.0%
EBITDA	$21,189	$16,262	+30%
EBIT	$20,514	$15,247	+34.5%
EBIT margin %	2.9%	2.5%
NPBT	$21,827	$15,793	+38%
NPAT	$14,999	$10,914	+37%
Earnings per share	91.4 cents	70.9 cents	+37%
Dividend per share	77.0 cents	56.0 cents	+37.5%
Return on equity%	49.7%	41.8%		35
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Appendix 2 - Definitions

Cost Ratio:

Internal staff and operating costs as % of GM$ Private Cloud:

Data[#] 3 designed and built for exclusive customer use either on or off the customer’s premises; may be either customer or Data[#] 3 owned & operated Data[#] 3 Trusted Cloud:

Infrastructure as a service. Data[#] 3 owned and managed in premium data centre facilities in Australia

Public Cloud:

Standard and packaged services made available to all; owned by the service provider

Desktop as a Service

Desktop infrastructure and applications owned, managed and supported by Data[#] 3 exclusively for a customer

Technology Consumption Model:

Data[#] 3’s model showing the 7 ways in which customers consume technology

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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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