Data#3 : DTL Appendix 4E & Annual Financial Report

Appendix 4E‌‌‌‌‌‌‌‌‌‌

ASX Preliminary Final Report

Name of entity	Data#3 Limited
ABN	31 010 545 267
Reporting period‌‌	Year ended 30 June 2017 (FY17)
Previous corresponding period‌	Year ended 30 June 2016 (FY16)

Results for announcement to the market

Results	$‌‌
Revenues from ordinary activities‌	up	11.7 %	to	$1,098,221,000
Profit from ordinary activities after tax attributable to members	up	11.2 %	to	$15,375,000
Net profit for the period attributable to members	up	11.2 %	to	$15,375,000

Dividends‌	Amount per security	Franked amount per security
Current period‌
Interim dividend	3.35 cents	3.35 cents
Final dividend‌	5.55 cents	5.55 cents
Previous corresponding period‌‌‌
Interim dividend‌	2.5 cents	2.5 cents
Final dividend	5.5 cents	5.5 cents
The Record Date for determining entitlements to the dividend is 15 September 2017.‌‌‌

Brief explanation of the figures reported above

In a competitive and transforming technology market, Data#3 has again delivered solid revenue and profit growth and has continued to enhance its financial position through strong cash flow and diligent management of its balance sheet.

Consequently, we have been able to reward shareholders with an 11.3% increase in dividends.

Please refer to the attached audited Annual Financial Report for the year ended 30 June 2017 for the following information:‌

• consolidated statement of comprehensive income

• consolidated balance sheet

• consolidated statement of changes in equity

• consolidated statement of cash flows

• notes to the consolidated financial statements

Appendix 4E (continued)

for the year ended 30 June 2017

Retained profits

Current year Previous year $'000 $'000

Retained profits at the beginning of financial period	31,564	28,095
Net profit attributable to members	15,375	13,830
Net transfers to and from reserves	-	-
Dividends provided for or paid	(13,627)	(10,316)
Other	-	(45)
Retained profits at end of financial period	33,312	31,564

Additional dividend information

Details of dividends declared or paid during or subsequent to the year ended 30 June 2017 are as follows:

Record date	Payment date	Type	Amount per security	Franked amount per security	Total dividend $'000
16/9/2016	30/09/2016	Final	5.50 cents	5.50 cents	8,469
17/3/2017	31/3/2017	Interim	3.35 cents	3.35 cents	5,158
15/9/2017	29/9/2017	Final	5.55 cents	5.55 cents	8,546

Total dividend per security (interim plus final)

Current year	Previous year
Ordinary securities	8.90 cents	8.00 cents

Data#3 Limited Dividend Reinvestment Plan

The Data#3 Dividend Reinvestment Plan has been suspended from 1 September 2006.

Net tangible assets per security

Current year	Previous year
Net tangible asset backing per ordinary security	$0.17	$0.16

Control gained over entities having a material effect

Not applicable.

Loss of control of entities having a material effect

Not applicable.

Appendix 4E (continued)

for the year ended 30 June 2017

Details of aggregate share of profits (losses) of associates and joint venture entities

Not applicable.

Compliance with IFRS

The attached Annual Financial Report complies with Australian Accounting Standards, which include AIFRS. Compliance with AIFRS ensures that the financial report complies with International Financial Reporting Standards (IFRS).

Commentary on the results for the period

The results for the 2017 financial year (FY17) reflect continued solid performance in a competitive and relatively flat technology market, with growth in product and services businesses driving earnings per share growth of 11.2% to 9.99 cents, and fully franked dividends for the year of 8.9 cents per share.

Please refer to the attached Operating and Financial Review for further information in relation to the results for the period.

Compliance statement

This report is based on financial statements that have been audited. Signed:

Richard Anderson

Director

Date: 23 August 2017

Operating and Financial Review

Following the success of FY15 and FY16, our plan for FY17 sought to refine the existing strategy rather than make major changes. The ICT industry is fast moving and can be complex, so our aim for the FY17 plan was to improve the connection with our people, customers and business partners and to simplify our business processes where possible.

The strategic planning process for FY17 - FY19 identified the following trends in adoption and use of business technology:

• Digital solutions would increasingly transform business models;

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

• Security was the number one priority; and

• Public cloud usage would become mainstream.

The three key components of the FY17 plan were:

1. To enable our customers' digital transformation.

   We believed we could help our customers position, plan, design, deploy and ultimately manage their technology solutions that underpin their digital transformation.

2. To accelerate our transition to services.

   In addition to our traditional services, we saw the market opportunity to increasingly provide our technology solutions 'as a service' or consumption based.

3. To grow and leverage our core capability.

We planned to continue our focus on growing and leveraging our core capability in software and infrastructure.

Market conditions in FY17 in both the public and private sectors remained challenging and relatively patchy; however, our strategy to continue to grow our core business while building our service-centric revenues has seen steady progress, resulting in continued market share and earnings growth.

Whole of group performance

Total revenue was $1,098.2 million, 11.7% higher than last year's $983.2 million, with increases in both product and services revenues. We are pleased with the continued growth of our core business and the significant growth in the emerging cloud- based business, which saw total cloud-based revenues increase by 71.2% from $99.0 million to $169.5 million. This means we gained market share in a relatively flat IT sector.

Total gross profit (excluding other revenue) increased by 8.4% from $146.6 million to $158.9 million, representing a fractionally lower total gross margin of 14.5%.

Total revenue ($M): Total gross profit ($M):

In July 2015 Data#3 exercised its option to acquire a controlling interest in Discovery Technology Pty Ltd ("Discovery Technology"), and as a result Discovery Technology has been included in Data#3's consolidated financial statements in FY16 and FY17. Following a disappointing operating loss from Discovery Technology in FY16, the business achieved a significant profit turnaround and delivered a total before tax profit contribution of $1.4 million in FY17.