Data#3 reports revenue drop, profit rise

Revenue down 5 per cent, while gross profit up 2.1 per cent
Data#3 reports revenue drop, profit rise

ASX-listed system integrator Data#3 (ASX:DTL) has reported a 5 per cent revenue slide to $771 million for the financial year (FY) ended 30 June 2013. This compared to revenues of $811.3 million in FY 2012.

The company attributed the drop to decreased product revenues as a result of changes in the way some software licensing contracts were transacted. Product revenue decreased 7.2 per cent to $639.6 million while services revenue rose 8.1 per cent to $130.1 million.

In addition, gross profit was up 2.1 per cent to $122.5 million. Total gross margin increased from 14.8 per cent to 15.9 per cent due to improved product margins.

Earnings before interest, tax, depreciation and amortisation (EBITDA) were down 3.8 per cent to $18.7 million.

According to Data#3 chairman Richard Anderson, the company delivered a “solid financial result” in 2013 amidst volatile economic conditions and a flat technology market.

“Data#3 has continued to enhance its financial position through diligent management of its balance sheet and strong cash flows,” he said in a statement to the ASX.

“Consequently, we have increased our payout ratio to 89 per cent to maintain a dividend consistent with the previous year.”

Data#3 managing director John Grant added that the business had been restructured and simplified during 2013.

“For FY14, our overall financial objective is to at least match FY13’s result.”

Turing to operating results by Australian state, Grant said that its Queensland business remained a leader due to stronger performance from software licensing and managed services.

“We were very pleased to be reappointed in May as a panel supplier of hardware and associated services to the Queensland government,” he said. The company also had a win at Ipswich City Council where the decision was made to move its data centre infrastructure into the Data#3 cloud.

Turing to New South Wales and the Australian Capital Territory, Grant said that these remained its largest states by revenue due to a federal government agreement for Microsoft licenced software in 2012.

However, its Victorian business suffered a revenue decline of 10 per cent due to deferral of some IT projects.

“Our South Australian business achieved solid top line growth. Declines in contribution from our product and project services businesses were offset by a solid increase in software licensing due to a renewal of the South Australian government’s Microsoft software agreement,” he said.

According to Grant, performance from its Western Australian was the strongest across the company.

“Revenue more than doubled and contribution to profit, while off a small base, more than tripled. This was strongly fuelled by the implementation of Cisco equipment at Perth’s new Fiona Stanley Hospital and the implementation of a private cloud solution for Toyota WA.”

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More about: Cisco, Data#3, Microsoft, Toyota
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