Hey @Strawman I still think grabbing Brad Colledge for a SM meeting (if available) would be of great value!!
2024 Annual General Meeting
Despite the challenging economic conditions experienced in FY24, I’m pleased to report that your company delivered record gross sales of $2.8 billion for FY24 and growth in line with IT market forecasts. This was comprised of 7.2% growth in product sales and 9.6% growth in services sales. In addition, we maintained average gross margin earned on these sales to deliver gross profit growth of 7.8%, which was a considerable achievement.
We achieved growth across most customer sectors this financial year, including Government, Defence, Education and Mining. Geographically, we continued to expand in the ACT, Victoria, Western Australia and Fiji, while sales in QLD and New South Wales were relatively flat year on year given the particularly competitive local markets.
I’ll now touch on some of the financial and operational highlights from FY24.
The breadth of our offerings, our track record for delivering for our large private sector and government customers, and the strength of our supplier relationships are all factors contributing to our continued growth in gross sales. We are also pleased to report that our recurring business in FY24 has grown to 67%, boosted by growth in Managed Services and Software Solutions of 12% and 11% respectively, in line with our strategy. Down slightly on the prior year, our Infrastructure Solutions business was impacted by customers ordering in advance of requirements in prior periods, in turn slowing down growth in new orders and delaying decision making.
The company’s balance sheet remains strong and debt free, with inventory and trade receivables returning to their pre-pandemic normal. We are also seeing the benefit of efficient working capital management and a growing average cash position in our record interest income.
Our people numbers increased slightly in FY24, as we strengthened our capabilities in Managed Services and technical product sales roles. Our employee value proposition continues to be enhanced so that we can attract, develop, and retain the best talent. We were proud to have been named as a winner of the 5-Star Employer of Choice Award for 2024 by Human Resources Director Magazine for the ninth year in a row. This award is not limited to the IT sector; it covers all industries and includes many multinational entries. We were also recognised as one of Australia’s Best Workplaces in Technology by Great Place to Work for the first time, and our annual voluntary turnover rate remains below industry average.
This financial year, we again strengthened our partnerships with key global vendors such as Microsoft, Cisco, HP, Adobe and Dell, in addition to many others. By aligning with these partners, we are capturing a significant proportion of the addressable market in medium to large corporate and public sector organisations.
Once again, we achieved huge success with national and international vendor and industry awards. Notably, global Software Partner of the year with Cisco and Microsoft Surface global awards and pleasingly awards focused on our People and Sustainability.
We continually enhance our solutions to adapt to changing market demands. Every customer has a business strategy that includes digital technologies, and all digital technologies require a foundation of multi-cloud, networks, end-user computing and security.
Customers continue to look at ways of optimising their IT environments and we are seeing a shift by customers from purely on premise or public cloud to a hybrid or multi-cloud environment in preparation for their adoption of artificial intelligence (“AI”) and to reduce the significant costs of public cloud computing. This evolution provides further opportunities for us to design, procure and implement hardware, software and services to enable our customers’ success.
Demand for our Security solutions remained strong as security was yet again our customers’ top priority in FY24. In response to increasing demand, we opened our own Security Operations Centre (or “SOC”) in Brisbane in July 2024 to meet the highest standards of data protection and sovereignty in delivering threat monitoring, detection and response. We expect this to present further opportunities in FY25 as protection against the threat of cyber attacks continues to be our customers’ number one priority. Having a local SOC provides comfort to customers who prefer their operations to be supported locally by an Australian company.
The launch of ChatGPT during FY23, followed by Copilot for Microsoft 365 in FY24, has sparked widespread interest in the future of generative AI. We are leading the Australian market for Copilot services and licenses and were one of only 600 organisations globally to have taken part in the Copilot Early Adopter’s Program in FY24. We’re helping our customers understand how they can use and apply Gen AI with our Copilot Readiness Assessments, while also helping them minimise any potential risks surrounding data governance and security through our specialised consulting services.
Our Strategy is to enable our customers’ digital transformation by continually evolving our solutions capability. Our Strategic Priorities remain the same with our focus on innovative solutions, people and community, customer experience and operational excellence.
Despite challenging economic conditions, the market opportunity remains strong. Gartner is forecasting overall IT spend growth in Australia to be 8.7% in calendar year 2025 and to exceed $147 billion. Data#3’s solutions are well aligned to the growth sectors including multi-cloud, security, devices, datacentre, networking and of course AI.
Let’s now move to the outlook for FY25.
Our sales pipeline in FY25 remains strong. Sales activity is high, and we are well placed to capitalise on the market growth opportunities. Investments by the public sector in new infrastructure projects, investments in public and private education and health plus the wave of advancements in AI, should all help to grow our pipeline across all lines of business.
We expect to provide earnings growth on last year’s first half pre-tax profit of $30.8 million. There are, however, many variables that can impact growth, including the timing of customer decision making, government elections, product shipments and services project milestones.
Our current first half projection is to deliver pre-tax profit in the range of $31 million to $33 million. This is in line with our full year objective of delivering sustainable earnings growth. As in the past we expect earnings to skew to the second half and our fourth quarter is again expected to contribute significantly to our annual profit. The first half projection is inclusive of $6.2 million of forecast interest income, compared to $6.5 million in the prior comparative period.
The first half results and interim dividend will be announced on 19 February 2025. It is our intention to maintain our usual dividend practice.
Our performance continues to be underpinned by our leading market position, unrivalled vendor relationships, large and long-term customer base serviced by a highly experienced and skilled Data#3 team. I would like to thank all our people for their incredible commitment and support during the last year and look forward to reporting on our progress in the months ahead.
Finally, I would like to thank all our shareholders and the Board for their support during the last year, and my first reporting season as CEO.
Brad Colledge CEO and Managing Director Data#3 Limited