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Datacom FY net profit slides as revenue growth offset by higher expenses

Friday 27th July 2018

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Datacom Group reported a 46 percent slide in net profit as stronger revenue growth was offset by higher expenses. 

New Zealand's biggest IT services provider said its net profit after tax for the year to March 31 was $23.5 million, compared to $43.7 million recorded in the 2017 annual report.  Revenue lifted 9 percent in the year to March 31 to $1.27 billion. Capital expenditure, however, increased by 53 percent over the prior year to $55.4 million and operating expenditure on major investments increased by 35 percent to $19.1 million. 

“Datacom’s long-term strategy is to reinvest much of its profit back into the business to help further grow and develop new IP, build better physical infrastructure, and enter new markets,"  a spokeperson said in response to emailed questions. "This strategy is unchanged. These investments are designed to position the company for the long term, which is reflected in Datacom’s 20 years of continuous revenue growth. Investments which have been made during 2017/2018 will likely take more than a single financial year to mature and produce results."

The company said it invested to "grow its capabilities and global footprint and support new lines of business using its own intellectual property." It opened new offices in Auckland, Adelaide, and Singapore during the year, and entered new partnership with Australian data centre provider, AirTrunk.

Staff numbers lifted 9.3 percent to 5,332. 

"We’re confident in our ability to capitalise on strategic growth areas such as cybersecurity and customer experience," said Datacom Group chief executive Greg Davidson in a statement. 

Revenue lifted 8.8 percent in Australia and Asia and 9.8 percent in New Zealand, driven by work with the Department of Home Affairs in Australia, and Auckland Airport, NZ Lotteries Commission and Vector in New Zealand. It also embarked on major new projects with existing customers such as Transport for NSW, The Department of Premier and Cabinet in Queensland, and the Accident Compensation Corp in Wellington. 


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