COMPETITION BYTES DATA#3 PROFIT

DATA#3 Limited (ASX:DTL) has recorded a 38 per cent drop in full year profit to $7.5 million, in line with its guidance factoring in challenging market conditions.

The business technology provider delivered increased product and service revenues in FY14, with the total up 8.1 per cent to $833.6 million.

Earnings before interest, tax, depreciation and amortisation was down 34.7 per cent to $12.2 million, attributed to a combination of increased expenses and a decline in gross profit.

The company is facing increased competition, coupled with changes to the sales mix within products and services.

Managing director John Grant (pictured) says although Data#3 delivered top line revenue growth, profit margins came under significant pressure.

“Responding to the changing industry dynamics, we have repositioned the business with investments in managed services and cloud,” Grant says.

“While we have had some notable success to date and customer take up of these new technologies and delivery models is growing, it is yet to reach significant scale.

“We see market conditions remaining challenging over FY15.”

Grant says the company will drive organic growth and tap into the large market place, by investing into its solutions platform and sales capacity.

This will include its Schools Information Suite and partnership with Wi-Fi analytics company Discovery Technology.

Chairman Richard Anderson says considering the challenges, the results are a testament to the company’s ability to adapt to the market.

“2014 has been one of Data#3’s more challenging years,” Anderson says.

“With sentiment towards IT investment remaining flat and in a highly competitive and transforming technology market, Data#3 has done well to deliver revenue growth albeit at reduced margins.”

Anderson says the company will continue to monitor its balance sheet and cash flow.

DTL will pay a fully franked dividend of three cents per share on September 30.