Slide 1: FY14 Interim Results Briefing
For personal use only FY14 INTERIM RESULTS BRIEFING 19th February 2014 DATA#3 LIMITED (DTL)
Slide 2: Interim Result
For personal use only INTERIM RESULT
Slide 3: Performance Reflected Market Challenges
PERFORMANCE REFLECTED MARKET CHALLENGES For personal use only FY14 first half (1H14) under plan & pcp • Revenue declined 1.8% to $399.1M • Gross profit margin declined from 15.2% to 14.4% • Product gross profit declined 11.7% to $28.7M • Services gross profit decreased 1.3% to $28.8M • Staff costs i
Slide 4: Revenue Trends
REVENUE TRENDS For personal use only Total revenue ($M) Services revenue ($M) 500 75 66.6 65.1 436 59.1 406 399 400 378 51.6 307 50 38.9 39.4 300 230 200 25 100 0 0 1H09 1H10 1H11 1H12 1H13 1H14 1H09 1H10 1H11 1H12 1H13 1H14 Product revenue ($M) 400 375.2 324.8 338.6 332.7 Services & product revenue
Slide 5: Gross Profit Trends
GROSS PROFIT TRENDS For personal use only Total gross profit ($M) Services gross profit ($M) 70 61.6 29.2 59.4 57.5 27.6 28.8 54.9 30 24.4 43.4 20.0 45 40.0 20 17.2 20 10 -5 0 1H09 1H10 1H11 1H12 1H13 1H14 1H09 1H10 1H11 1H12 1H13 1H14 Product gross profit ($M) Services gross profit decreased 30.4 3
Slide 6: Regional Movement in GP
REGIONAL MOVEMENT IN GP For personal use only % change in gross profit Continued delays in ramp up 1H14 vs. 1H13 of Queensland Government IT investment and a subdued corporate sector saw QLD 19% 20% slow further, particularly in software sales 3% 3% Very strong growth in VIC was underpinned by solid
Slide 7: Internal Expense Trends
INTERNAL EXPENSE TRENDS For personal use only Internal staff costs ($M) 46.7 50 43.8 44.7 Internal staff costs up 4.4% 40 36.8 due to increased cost of 31.1 30 28.9 doing business and the need to retain capacity at 20 competitive levels in all 10 locations 0 1H09 1H10 1H11 1H12 1H13 1H14 Operating e
Slide 8: Profit, Earnings & Dividend Trends
PROFIT, EARNINGS & DIVIDEND TRENDS For personal use only NPAT ($M) EPS (cents) 10 6 7.9 5.2 7.2 4.7 8 6.8 5 4.4 6 4 3.1 4.7 4.0 3 2.6 4 2.6 1.67 2 2 1 0 0 1H09 1H10 1H11 1H12 1H13 1H14 1H09 1H10 1H11 1H12 1H13 1H14 Interim dividend (cents) 4 3.80 3.45 3.45 3 The impact of higher costs 2.30 2.00 2 1.
Slide 9: Movement in NPBT Over PCP
MOVEMENT IN NPBT OVER PCP For personal use only Movement in NPBT elements compared to 1H13 9.8 10.0 8.0 6.0 3.7 4.0 $M 1.3 2.0 -0.6 0.3 -7.1 0.0 1H13 NPBT Product Services Unallocated Unallocated 1H14 NPBT -2.0 segment segment corporate corporate -4.0 profit profit revenue costs -6.0 -8.0 9
Slide 10: 1H Balance Sheet and Cashflow
1H BALANCE SHEET AND CASHFLOW For personal use only • Strong balance sheet • No material debt • Cash flow ‘seasonality’ in line with trend • Average daily 1H cash balance up from $50.4M to $60.2M 10 1
Slide 11: People Numbers & Costs
PEOPLE NUMBERS & COSTS For personal use only Internal people numbers Ended slightly below pcp • 1H13 average headcount 684 750 707 • 1H14 average 695 headcount 686 700 681 681 689 686 • Net reduction 687 679 681 676 677 680 from restructure in 650 September • 1H cost/person 1H14 1H13 increase of 600
Slide 12: Contractor Trends
CONTRACTOR TRENDS For personal use only People Solutions Contractor numbers up 7% 350 334 314 308 309 308 300 300 306 291 294 288 290 284 1H14 1H13 250 Jul Aug Sep Oct Nov Dec 12
Slide 13: Significant Contracts in 1H FY14
For personal use only SIGNIFICANT CONTRACTS IN 1H FY14
Slide 14: Full Outsource & Project Delivery: Brisbane Airport Corporation
FULL OUTSOURCE & PROJECT DELIVERY For personal use only Brisbane Airport Corporation • Competitive tender • 3 + 1 + 1 years • Full outsource incl services desk, field support and remote management • Extends to PMO and subcontract project delivery “excited by potential to improve service delivery and
Slide 15: Pure IaaS: McInnes Wilson Lawyers
PURE IaaS For personal use only McInnes Wilson Lawyers • Competitive tender • 3 year Platinum agreement for Data#3 IaaS • Includes migration • Moving from small in- house team to Data#3 services “transition going well” 15
Slide 16: Selective Outsource: AstraZeneca
SELECTIVE OUTSOURCE For personal use only AstraZeneca - Pharmaceuticals • Competitive tender • Service Desk & Field Services agreement AUS/NZ • 2 year agreement moving from in-house to Data#3 services • Onshore management of global vendors “customer satisfaction over 90% after 6 months” 16
Slide 17: Staff Augmentation Outsource: British American Tobacco
STAFF AUGMENTATION OUTSOURCE For personal use only British American Tobacco • Competitive tender • Data#3 Hybrid IT staff augmentation • 3 years – full management of 40+ IT team • One supplier, fixed price, one invoice and cost savings “12% cost reduction with impressive soft benefits” 17
Slide 18: 1H FY14 Summary
For personal use only 1H FY14 SUMMARY
Slide 19: 1H FY14 Summary
1H FY14 SUMMARY For personal use only Summary “In a challenging market in which decisions remained difficult and competitive particularly for our core product and associated services businesses, we were not able to achieve our financial objectives. However with strong cash management and a strong ba
Slide 20: What We Do
For personal use only WHAT WE DO
Slide 21: Realignment and Consolidation
REALIGNMENT AND CONSOLIDATION For personal use only July restructure • Aligned around our customers’ needs for HYBRID IT, a combination of on premise, outsourced and cloud • Realigned the 5 areas of specialisation into 3 o Software Solutions o Infrastructure Solutions o Managed Solutions • Consolida
Slide 22: FY14 Structure
FY14 STRUCTURE For personal use only Business technology solutions from product to cloud Software Infrastructure Managed Solutions Solutions Solutions 22
Slide 23: FY14 Structure
FY14 STRUCTURE For personal use only Business technology solutions From product to cloud Software Infrastructure Managed Solutions Solutions Solutions Project Services Service Desk Cloud Consulting Cloud Delivery 23
Slide 24: FY14 Structure
FY14 STRUCTURE For personal use only National Initiatives States Telstra, Supply Chain Education Business technology solutions From product to cloud Software Infrastructure Managed Solutions Solutions Solutions Project Services Service Desk Cloud Consulting Cloud Delivery HR Supply Chain Group Admin
Slide 25: Shareholder Perspective Going Forward
For personal use only SHAREHOLDER PERSPECTIVE GOING FORWARD
Slide 26: Shareholder Perspective
SHAREHOLDER PERSPECTIVE For personal use only 4 questions …… 1. Is DTL’s FY14 plan still appropriate? 2. Has it been well executed? 3. In a market in transition, is DTL positioned to grow revenues, profit and dividends? 4. When can we expect this to happen? 26
Slide 27: Is DTL's FY14 plan still appropriate?
SHAREHOLDER PERSPECTIVE For personal use only Is DTL’s FY14 plan still appropriate? Assumptions • Difficult macro-economic times • Significant technology disruptors will drive Hybrid IT with emphasis on cloud • Aggressive competition for the best people Simplified structure Enhance strategic positio
Slide 28: Is DTL's FY14 plan still appropriate?
SHAREHOLDER PERSPECTIVE For personal use only Is DTL’s FY14 plan still appropriate? We are certain that it is. 28
Slide 29: Has the plan been well executed?
SHAREHOLDER PERSPECTIVE For personal use only Has the plan been well executed? In place but impact Simplified structure underestimated and took time for sales momentum to build Enhance strategic positioning by Additional operating expenditure extending our solutions into required in aaS and sales HY
Slide 30: Has the plan been well executed?
SHAREHOLDER PERSPECTIVE For personal use only Has the plan been well executed? While we underestimated the impact of the July restructure, particularly on sales performance, this is now past and our teams are fully engaged in the new areas of specialisation. 30
Slide 31: Is DTL positioned to grow revenues, profit and dividends?
SHAREHOLDER PERSPECTIVE For personal use only In a market in transition, is DTL positioned to grow revenues, profit and dividends? 1. A unique point in time 2. Three elements to the transition 3. Our response 4. The customer references that support this 31
Slide 32: A Market Uniquely in Transition
A MARKET UNIQUELY IN TRANSITION For personal use only IBM S/3 INTERNET IBM S360 CLOUD iPhone IBM PC 1960 1970 1980 1990 2000 2010 32
Slide 33: Three Elements to the Transition
THREE ELEMENTS TO THE TRANSITION For personal use only IT IT consumption Risk shifting commoditising changing 33
Slide 34: Implications of the Transition
IMPLICATIONS OF THE TRANSITION For personal use only IT IT consumption Risk shifting commoditising changing Data centre HYBRID IT From desktop product From product to implementation to and related outsource to adoption services cloud Competitive and From Capex to New service types price sensitive Op
Slide 35: Our Response to the Trends
OUR RESPONSE TO THE TRENDS For personal use only IT IT consumption Risk shifting commoditising changing Sales efficiency People augmentation Niche adoption Investment in services in supply chain Maturing selective Consulting and automation sourcing solutions Business 35 Productivity ‘Rapid’ service
Slide 36: Supporting References
SUPPORTING REFERENCES For personal use only IT IT consumption Risk shifting commoditising changing 36
Slide 37: Is DTL positioned to grow revenues, profit and dividends?
SHAREHOLDER PERSPECTIVE For personal use only In a market in transition, is DTL positioned to grow revenues, profit and dividends? We think we are and as our customers re-architect their IT strategies, we believe we’re positioned strongly with offerings and references. 37
Slide 38: When can we expect this to happen?
SHAREHOLDER PERSPECTIVE For personal use only When can we expect this to happen? We’re seeing conditions improving which should translate in time to more positive sentiment toward investment. This in turn will lead to more significant take-up in aaS and transformational services. 38
Slide 39: 2H FY14 Outlook
For personal use only 2H FY14 OUTLOOK
Slide 40: 2H Guidance
2H GUIDANCE For personal use only “With the shortfall in first half performance it will be very difficult for the company to achieve its original target to at least match FY13” 40
Slide 41: 2H Guidance
2H GUIDANCE For personal use only “However activity levels are very high and with pipeline building our original 2H FY14 target, while aggressive, is not beyond reach. We will keep shareholders advised as the second half progresses” 41
Slide 42: Q&A
For personal use only Q&A
Slide 43: Appendix – Financial Summary
APPENDIX 1 – FINANCIAL SUMMARY For personal use only 43
Slide 44: Disclaimer
DISCLAIMER For personal use only 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. T
Slide 45: Interested in how Data#3 can help?
Interested in how Data*3 can help? www.data3.com.au | 1300 23 28 23 Follow Us twitter. com/Data3Limited facebook.com/Data3Limited
Slide 46: For personal use only
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