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Datacom Group reports FY20 financial results

Fuseworks Media
Fuseworks Media

Datacom Group today reported financial results for the year to 31 March 2020 (FY20).

Revenue climbed to $1.34 billion, up from $1.30 billion in the prior year (FY19).

Net profit after tax is $19 million, a decline from $40 million in FY19 as the company continues to transition to a new operating model that positions Datacom for future growth.

Net operating cash inflows of $64 million (unchanged from FY19) remain solid.

Investment in infrastructure to grow the business continued with capital expenditure on both tangible and intangible assets of $56 million ($67 million in FY19), demonstrating the strength of the company’s underlying financial position.

Commenting on the results, Datacom Group CEO Greg Davidson said, "The last financial year has seen Datacom invest back into the business to set ourselves up for the next phase of growth. Over the past two years we have been focused on repositioning ourselves as a business that has a heightened focus on customer value and market relevance and executes across regions alongside our customers and partners."

"One of our biggest areas of focus has been working with our customers to co-create a modern approach to delivering IT services - one that shifts from the process-driven agreements of the last few years to agile teams, greater automation and a lean operational core. Customers know that the pace of change in their own organisations has increased and they want partnerships that are value focussed, more flexible and enable change when needed," said Davidson.

"We’re now starting to realise the opportunity in Australia where we have built a sustainable business and our focus on customers is best reflected in the renewal of a number of major contracts this past year."

Datacom’s focus continues to be providing value and driving job creation in the markets we operate in. The company directly employs 6500 people and as part of the response to the COVID-19 outbreak was asked to increase headcount dramatically for a term to support the Australian government sector.

"Our ethos has been to help navigate our customers through this difficult time while maintaining jobs for our people. We added more than 2000 roles to our Datacom customer service hub in a matter of weeks, enabling a more rapid Federal response to the pandemic and demonstrating a capability to flex with customer demand," said Davidson.

Acceleration of digital transformation during crisis

As New Zealand moved to shut down all but essential services in an effort to limit the spread of the pandemic, Datacom helped dozens of businesses, government agencies and community organisations with their business continuity plans to ensure they could all serve their customers and citizens remotely.

"We worked with Youthline to ensure the organisation could continue to support New Zealand’s at-risk youth during these difficult times, and helped Genesis Energy take one million pieces of paper out of its process, streamlining its LPG delivery business in time for the winter demand."

The new reality of the global pandemic also fuelled organisations to bring forward key digital projects. TSB bank deployed a major project in two weeks, something that in usual circumstances would have taken months. Datacom re-platformed TSB’s ageing customer service hub to enable its customers to contact the bank directly online rather than rely on in-branch, face-to-face communication.

Increased demand for cloud and platform services

As the market adjusts to hybrid working, remote connectivity and online presence, we’re experiencing heightened demand in our cloud and platforms business. Customers are looking to determine what mix of cloud solutions will best help them address their business needs securely, and unlock the value of applications like Salesforce, Dynamics 365 and Pega.

"We see a rapidly growing demand for the modernisation of systems and, as ever, the move to the cloud will help continue to transform our customers across Australia and New Zealand in both public and commercial sectors. Whether it’s rolling out a new website for the Australian Pharmacy Council with our partner Microsoft, or working with AWS to migrate Land Use Victoria off a dozen disparate systems to one data centre and better manage its 700,000 annual applications and 3.4 million electronic titles, or helping Nelson City Council develop its real-time data platform to boost environmental sustainability and enhance city services. We work with the right partners to meet our customer’s needs," said Davidson.

Datacom’s trans-Tasman cybersecurity practice continues to grow as security incidents increase and organisations take steps to better prepare themselves for the evolving cybersecurity landscape. A global shortage of trained cybersecurity experts has resulted in our partnership with Unitec which aims to fill the security skills gap by offering a one-year vocational diploma in cybersecurity, the first New Zealand-based pre-degree cybersecurity qualification.

Expanding payroll operations

Datacom Payroll has also expanded its global footprint - and is focused on growth in Australia with a view to replicating the success we’ve seen in New Zealand, where Datacom processes more than 15% of the national payroll each week. In aggregate the payroll data is also proving to be an economic barometer of the impact from COVID-19, wage subsidies and the increasing levels of unemployment.

Implementing governance for the next phase of growth

The last year also saw Datacom’s governance move to prepare the company for its next phase of growth. On 31 March 2020 Craig Boyce retired after 20 years as director and Tony Carter was appointed to chair. Chris Day was also appointed to director and leads the Audit

Committee while Robin Keall, who has a long history with Datacom as a former CFO and company secretary, was appointed to the board during the year. At the executive level,

Alexandra Coates has stepped up to head the Australian business and Justin Gray has recently moved to Datacom to lead New Zealand’s public sector operation. Karl Wright, formerly Core Services leader has been promoted to the position of Chief Information Officer.

"As we face volatility in the global economy, Datacom is well positioned to support customers with our diversified portfolio of businesses. Our underlying fundamentals are strong and we believe the company is building on the types of services and products that the market needs at a time like this.

"Having closed out FY20 we are fully focused on ensuring FY21 builds on these strengths and opportunities."

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