Sharechat Logo

Datacom lifts capital spending as demand for IT services persists

Thursday 1st August 2019

Text too small?

Datacom Group lifted capital spending by about 22 percent and added almost 1,200 staff in the March 2019 year as demand for IT services continues to outstrip wider economic growth. 

New Zealand's biggest IT services provider reported a net profit of $42 million in the year ended March 31, up from $23.5 million a year earlier, on a 2.4 percent increase in revenue to $1.29 billion. Stripping out adjustments for new accounting standards, revenue was up 17 percent. It employs about 6,500 people worldwide, up from 5,332 a year earlier, for an 11 percent increase in the wage bill to $661.9 million. 

Datacom ramped up its capital investment in recent years, spending $67.8 million in the latest financial year, up from $55.4 million in the March 2018 year. It has invested in local government and payroll products, and expanded four New Zealand data centres. 

Chief executive Greg Davidson said demand for IT services is still growing faster than the economy because they offer such a broad array of applications to so many customers. That's encouraged investment in areas such as software-as-a-service, services in demand by customers including cyber-security, and automating existing services. 

"A lot of the spend you're seeing, and the change you're seeing, is actually us ensuring that we keep listening to our customers and keep evolving our services in order to have that future relevance," he told BusinessDesk. "Fundamental to what we are, has to be a company that's willing to learn." 

Davidson said he spent the past day-and-a-half with the board developing new planning horizons for the company to ensure Datacom can meet changing customer preferences. Some areas, such as software development management needs constant refreshing, whereas investments in payroll and local platforms require multi-year horizons, he said. 

Datacom added two new directors to the board today - Air New Zealand chair Tony Carter and Landcorp director Chris Day. 

Chair Craig Boyce said the new directors will help shape Datacom's vision for the next three years. 

"Datacom’s growth has been tremendous, and we want to ensure the company continues to grow in capability and talent and build our valued reputation among customers in the years ahead. Tony and Chris will be valuable additions to the board and I look forward to working closely with them," Boyce said. 

The privately-held company is controlled by John Holdworth's Evander Management, with the New Zealand Superannuation Fund holding a 39 percent stake. 

It will pay $2.90 a share, or $17.5 million, in dividends for the 2019 year, up from $2.25 a share, or $14.7 million the previous year. 

The company had $97 million of bank debt as at March 31, up from $61.5 million a year earlier. Yesterday, the company reorganised its banking facilities with its existing lender, increasing its funding line by $29.9 million, extending an existing facility by a year, and released the security over its City Road property. It has also established a short-term A$5 million facility that matures at the end of September. 


  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Rio Tinto decision following strategic review of Tiwai
Contact says smelter closure is ‘disappointing’
South Port (SPN) Statement on NZAS Tiwai Point Aluminium Smelter Closure
Rio Tinto announcement on Tiwai Aluminium Smelter
Me Today announces equity raising to accelerate growth
Scott Technology Trading Update; Rising to the COVID Challenge
New non-binding indicative offer received from apvg, shareholder meeting deferred
U.S. Added 4.8 Million Jobs in June as Reopened Businesses Rehired
Auditors have a duty to be alert to fraud
Strong sales recovery but uncertainty remains over economic outlook and potential second wave of COVID-19

IRG See IRG research reports