Datacom reports strong 2019 as Australian business kicks in

Datacom reports strong 2019 as Australian business kicks in

Datacom is shifting towards becoming an active business partner rather than an outsourcer

Greg Davidson (Datacom Group)

Greg Davidson (Datacom Group)

Credit: Datacom

Datacom Group has maintained its record of over 20 successive years of growth in the year to 31 March, 2019, with operating revenue up 17 per cent.

However, year-on-year comparisons were complicated by the company's shift to new accounting standards as the previous year has not been restated.

Total operating revenue of $1.3 billion, represented an improvement of 17 per cent over 2018 while profit before tax improved to $61.9 million. Profit after tax improved to $42 million.

Full year operating cash inflow remained solid at $71.3 million while capital expenditure increased to $67.8 million. 

The lift in profit was attributed to improving performance in Datacom's Australian business.

CEO Greg Davidson told Reseller News that Datacom had been quite big in Australia for a while but a couple of long-running "seed" contracts had done very well for the company.

Datacom has been working with the Western Australian government, for instance, to deliver a similar shared infrastructure solution to that it had already provided to the New Zealand government.

The company also closed its old data centre facilities in Australia to offer Datacom@AirTrunk for customers wanting to house equipment close to a cloud network to eliminate latency and ease the transition to the cloud.

The largest percentage of revenue for the group was still generated through the IT outsourcing business which is built on the back of customer feedback with five service offerings – modern workplace, cloud services, modern outsourcing, application resiliency and networking, and security.

However, Davidson said, the market was now being driven by customer demand for digital strategy, transformation and disruption.

"I can't think of a company not touched by it," he said.

“Our on-the-ground experience and deep domain expertise means we are starting to gain real traction as an active business partner with our customers, not just an outsourcing provider,” Davidson said.

Containerisation of legacy applications was key, Davidson said. Datacom delivered this for legacy Customs applications in New Zealand and the technology is now in high demand.

Containerisation is operating system virtualisation, allowing legacy apps to be hosted in, managed and served from modern infrastructure.

"We are going to be doing containerisation everywhere," Davidson said. "It is a key part of modern transformation."

Globally, Datacom had also welcomed its first big wins in the United States.

Capital expenditure increased to $67.8 million, in support of the company's long-term business strategy including investments in local government solutions with Datascape, and in payroll solutions for Australia and New Zealand. 

The company also completed expansion of its four New Zealand data centres.

Datacom's cited its work on the Australian Organ Matching System, for instance, as a world first in terms of innovation and delivery, and Datacom's relationship with regional governments was also delivering great results, Davidson said.

As well as the organ matching system, Datacom referenced development of a mobile-first experience for Silver Fern Farms' farmers to help them run more efficiently and helping New Zealand Customs Service to modernise its border management system.

Datacom also announced two new directors, Tony Carter and Chris Day, who join the board from 1 August.

Carter is the current chair of Air New Zealand and Fisher & Paykel Healthcare Limited, and a
director of Vector Limited, Fletcher Building Limited and ANZ Bank New Zealand Limited.

Day is a director at Landcorp and advisor to the executive committee at Silver Fern Farms. He has held a number of senior financial posts at Z Energy, Contact Energy, AXA New Zealand, NZ Post and the Wool Board. 

All values referred in this article are in New Zealand dollars (NZD). 

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