Datacom delivers strong performance

New Zealand head-quartered and owned information and technology organisation Datacom Group Ltd is pleased to report a strong year of progress and substantial lift in profit for the year ending 31 March 2014.

The total Group profit before tax totalled $64.7m compared to last year’s $50.9m, an increase of 27%. Operating profit before gains on assets divested was in line with last year, with overall revenue up by 1.3% from $870m to $881m.

Datacom Group Chairman Craig Boyce says, "We’re pleased to report an excellent performance. Overall the Group maintained a 10-year compound annual growth rate of 12.5% for revenue and 11% for profit; this result demonstrates the sound strategic direction of the company and the long-term financial stability of the Datacom Group."

Datacom Group CEO Jonathan Ladd says, "It has been an exhilarating year of progress for Datacom."

And today Datacom announces the appointment of Theresa Eyssens as CEO of Datacom Systems Australia. "Theresa Eyssens has the expertise and energy to drive Datacom forward, faster. She is a welcome addition to the Australian marketplace for Datacom and to our Group Executive leadership team," says Jonathan Ladd.

Revenue for Datacom New Zealand rose by 12% to $466m for the year; this was achieved through growth in the core service lines of software development, IT management and data centres across all locations.

Datacom New Zealand strengthened its position as a top-tier provider in the markets in which it operates. As the largest provider of custom software development in New Zealand, Datacom has been adding the skills required to enable clients to benefit from new technologies including mobility and cloud.

The New Zealand payroll business increased its total payee base by over 12%, while the business process outsourcing division, which is now organised on a trans-Tasman basis and named Datacom Connect, hit all its targets.

In March 2014 Datacom acquired Origen Technology, a New Zealand-based supplier of software and services to local government. This business operates under Datacom Solutions, the business unit focused on providing sector-leading IT products and services to the local government, payroll, education and other sectors in the future.

Datacom currently has a network of 12 data centres located in all major Australian and New Zealand cities. Seven are owned and operated by Datacom and five are partner facilities.

Jonathan Ladd says, "While customer requirements are evolving with virtualisation and cloud adoption, Datacom’s regional data centre network is a core platform to enable further competitive growth in the emerging as-a-service delivery paradigm."

Datacom Australia and South East Asia revenue was down on last year, reflecting a depressed IT project spend in the Australian market during calendar 2013, coupled with the reduction in revenue from Asia as a result of the contact centre business divestment.

"We have increased our business in both the state and local government sectors in Australia and our third-party hardware resale business grew during the year and increased its market share and customer base in what has been a difficult market," says Ladd.

The Datacom operations in Kuala Lumpur and Manila traded profitably during the year and are focused on expanding their regional and global customer base.

"Our Asia IT services business is poised to capitalise on the opportunity of a rapidly maturing IT market in Asia, a market which Datacom remains committed to growing its presence," says Ladd.

Excluding the impact of the divestment of Datacom's Asia contact centres, resulting in 850 staff shifting to Convergys, staff numbers increased by 6%. At year end staff numbers totalled 3,756 with 2,371 in New Zealand, 1,245 in Australia and 140 in Asia.

Key points in summary: (in NZD)

- Total operating revenue was $881m, up 1.29%

- Profit before tax was $64.7m compared to last year’s $50.9m, an increase of 27%.

- Profit after tax was $51.4m

- Staff numbers up 6%

- $40.8m capital expenditure for the year