Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Datacom annual profit rises 61% as new services lift sales

Datacom annual profit rises 61% as new services lift sales, fatten margins

By Paul McBeth

Aug. 2 (BusinessDesk) - Datacom Group lifted annual profit 61 percent as the next generation of services helped the country's biggest IT services provider boost sales and fatten margins, paving the way for a bigger dividend.

Profit rose to $43.7 million, or $6.63 per share, in the 12 months ended March 31, from $27.2 million, or $4.09 per share, a year earlier, the Wellington-based firm's financial statements show. Revenue rose 9.8 percent to $1.16 billion, and gross profit of $701.5 million was at a margin of 60.6 percent, up from 59.8 percent in 2016. Of that revenue, 5.2 percent, or $59.7 million, was from its biggest customer, compared to 8.5 percent, or $90 million, a year earlier.

"Datacom's growth in the 2016/17 year has been the direct result of long-term strategic investments across a number of areas in order to position Datacom strongly to deliver for customers into the future," chairman Craig Boyce said in his report. "Investments in new generations of network services has started to stimulate returns, as have public cloud transitions and transformations."

The firm toppled Spark New Zealand as the country's biggest IT services provider in 2015, on an expanding footprint on both sides of the Tasman and last year opened four new offices to give it a bigger presence across Asia.

Boyce said Datacom's management team was preparing for more growth across Asia in the coming period, "expanding upon Datacom's provision of cloud-based software, market enablement, and platform management services to customers in over 30 countries."

The board declared annual dividends of $3.10 a share, or $20.4 million, up from $2.30, or $15 million, in 2016.

The IT services firm had cash and equivalents of $44.6 million as at March 31, having increased operating cash flow 5.8 percent to $73.4 million. It spent $36.3 million on buying property, plant, and equipment, and reported a net outflow of $30.3 million from its financing activities.

Boyce said the company's systems business continued to generate the most revenue and profit for the firm and was benefiting from bringing its Australian and New Zealand units under one leadership team, while the software development business was a "strong performer". Meantime, the payrolls business boosted earnings and revenue by expanding its product offering, he said.

"During the 2016/17 year, Datacom embarked on a significant business transformation journey which will touch every aspect of operations and will deliver a more efficient, higher performing and customer centric organisation," Boyce said. "Early results of this transformation have already been realised through continued sales success and partnerships with a significant number of new customers, each with fresh IT challenges."

Datacom boosted its staff numbers 4.7 percent to 4,880 in the year, for an 8.4 percent increase in salaries and wages to $468.2 million. Some 2,857 people were employed in New Zealand or about 8.1 percent of the country's 35,100 employed in information media and telecommunications. The company's bill for contractors and temporary staff rose 5.9 percent to $19.8 million.

Termination costs shrank to $571,000 in the 2017 year from $1.2 million in 2016.



© Scoop Media

Business Headlines | Sci-Tech Headlines


Water: Farming Leaders Pledge To Help Make Rivers Swimmable

In a first for the country, farming leaders have pledged to work together to help make New Zealand’s rivers swimmable for future generations. More>>


Back Again: Government Approves TPP11 Mandate

Trade Minister Todd McClay says New Zealand will be pushing for the minimal number of changes possible to the original TPP agreement, something that the remaining TPP11 countries have agreed on. More>>


By May 2018: Wider, Earlier Microbead Ban

The sale and manufacture of wash-off products containing plastic microbeads will be banned in New Zealand earlier than previously expected, Associate Environment Minister Scott Simpson announced today. More>>


Snail-ier Mail: NZ Post To Ditch FastPost

New Zealand Post customers will see a change to how they can send priority mail from 1 January 2018. The FastPost service will no longer be available from this date. More>>


Property Institute: English Backs Of Debt To Income Plan

Property Institute of New Zealand Chief Executive Ashley Church is applauding today’s decision, by Prime Minister Bill English, to take Debt-to-income ratios off the table as a tool available to the Reserve Bank. More>>


Divesting: NZ Super Fund Shifts Passive Equities To Low-Carbon

The NZ$35 billion NZ Super Fund’s NZ$14 billion global passive equity portfolio, 40% of the overall Fund, is now low-carbon, the Guardians of New Zealand Superannuation announced today. More>>