Good morning, ladies and gentlemen. My name is Mark Gray. As the Chair of your board, I would like to extend a warm welcome to all shareholders and guests joining us today at our head office in Brisbane for the 2026 Annual General Meeting of Data#3 Limited. This is a hybrid meeting with in-person attendance and live streaming. I would like to start by introducing your board of directors who are with me today. Our Managing Director and CEO, Brad Colledge. Mark Esler, Non-Executive Director who has been on the board since 2019. Bronwyn Morris AM, Non-Executive Director since December 2024. Diana Eilert, Non-Executive Director since July 2025, and Laurence Baynham, Non-Executive Director who rejoined the board in July 2025. Also in attendance are members of our executive management team, Cherie O'Riordan, Chief Financial Officer, Terence Bonner, Company Secretary and General Counsel, and Tash Wick, Chief People Officer.
We also have in attendance Hayley Harpham, Chief Counsel and moderator for the online questions today. I would also like to welcome Ben Woodbridge and Rebecca Otto. Rebecca is up the back there. Representatives from our independent auditors, PricewaterhouseCoopers. Now for the formalities of the meeting. I note there is a quorum present, and I declare the meeting open. The notice of the meeting was dated 22nd of September 2026, and the meeting has been properly convened. In the notice of meeting, we have set out four resolutions to consider, which are shown on the slide. Please note that only shareholders, proxy holders, or shareholder company representatives may vote on the resolutions. I will shortly start today's proceedings with a summary address and then invite Brad to address the meeting before we move on to the formal business of the day. Turning then to my address.
The company delivered another year of solid above-market growth with record gross sales of AUD 3.4 billion and earnings before tax of AUD 78.8 million. This performance continues Data#3's track record of adapting to evolving technologies and markets while delivering consistent growth in sales and earnings. Since listing in 1997, Data#3 has delivered sustained earnings per share growth, maintained a high dividend payout ratio, and generated strong share market appreciation for shareholders. Over the past five years, from FY 2021 to FY 2026, we have achieved compound annual growth rates of 11.6% for gross sales, 9.4% for gross profit, 16.3% for basic earnings per share, and 16.3% for dividends per share. Again, these are compound annual growth rates.
That consistency reflects the strength of our market position, the breadth of our vendor and customer relationships, and the strength of the recurring nature of a growing share of our business with around 70% recurring revenue anchoring our performance. It is the aim of the board to maintain steady, reliable, and consistent growth into the future. A board renewal process that was supported by an independent recruitment consultant was completed by the end of FY 2025. Diana Eilert and Laurence Baynham were appointed by the board as non-executive directors effective 1 July 2025. Both were elected by shareholders at last year's annual general meeting, as was Bronwyn Morris AM, who joined the board in December 2024. Their appointments have strengthened the board's mix of skills, industry experience, continuity, and strategic perspective. In line with these appointments, the board continued to enhance and embed its governance framework during FY 2026.
We progressed our approach to board composition and succession planning and updated committee responsibilities to support the company's evolving strategy and governance priorities. The Remuneration and Nomination Committee was renamed the People, Remuneration, and Nomination Committee with a broader remit, including people and culture, the use of AI, and the oversight of workplace and whistleblower frameworks. Diana Eilert commenced chairing this committee in November 2025, and we approved an updated committee charter with effect from 1 July 2026. The Audit and Risk Committee continued its focus on financial reporting, risk management, compliance, cybersecurity, and compliance with sustainability reporting requirements. Capital management remained a key focus for board oversight during the year. Data#3 continues to maintain a conservative, debt-free balance sheet and a strong liquidity position with growth historically funded through internal working capital.
The board endorsed a new capital management framework this year designed to preserve financial resilience and to fund operating requirements and investments that support organic growth and deliver consistent shareholder returns. The framework recognizes the importance of maintaining flexibility to respond to seasonal working capital requirements, market opportunities, and potential strategic growth initiatives. The company has maintained historically a high ordinary dividend payout ratio and remains focused on delivering attractive, fully franked returns to shareholders while balancing the need to fund growth and long-term value creation. During the FY 2026 year, the board continued its practice of visiting interstate branches, including trips to Perth, Adelaide, and Canberra, which continued to provide an opportunity to hear from local staff, the local management team, and connect with their customers. Through this, we gained firsthand insights about customer projects in these locations.
During the year, I also took the opportunity to visit our office in Hobart during a private visit to Tasmania. In accordance with our constitution and the ASX listing rules, I retire by rotation at today's meeting, and being eligible, offer myself for re-election. Shareholders are also being asked to consider an increase in the maximum aggregate fee pool available to non-executive directors, which has not been changed since 2022. Both resolutions are explained further in the notice of meeting. As I enter my fourth year as Chair of the Data#3 Board, I remain privileged to serve in this role and to work with such a capable board and management team. Turning now to the financial highlights for FY 2026. Data#3 delivered another record result, achieving gross sales of AUD 3.4 billion, up 12.7% on the previous year.
Growth was delivered across most business units, and statutory revenue increased 6.4% to AUD 907.3 million. Total gross profit increased 5.3% to AUD 305.2 million, and the internal cost ratio improved from 79.7% to 77.5%, reflecting operating leverage delivered through automation, the adoption of AI, and a continued focus on efficient execution across the business. Earnings before interest and tax increased 16.6% to AUD 69.8 million, and profit before tax rose 14% to AUD 78.8 million. Net profit after tax of AUD 54.5 million was up 13.1%, representing basic earnings per share of AUD 0.3516. Total fully franked dividends for the year were AUD 0.3175 per share, up 13%, and a payout ratio of 90.3%. In FY 2026, our balance sheet remained strong and debt-free, with net assets of AUD 95.2 million and a cash position of AUD 326 million at 30 June 2026.
Net cash generated from operating activities was AUD 23.3 million, with the movement on the prior year reflecting primarily the timing of customer receipts in the peak trading month of June. From a strategic plan perspective, we were pleased with the progress made in FY 2026 on our strategic priorities as part of the rolling three-year plan, which Brad will touch on shortly. During FY 2026, we have strengthened our ongoing planning processes to improve the identification, analysis, and prioritization of investment and initiatives to support our strategy. This culminated in the Sovereign 24/7 Security Operations Center proposal and the AI practice initiative, which form part of our plans for FY 2027 and beyond. This month, we have already commenced our new strategic planning cycle with a view to working out further initiatives to power our continued growth into FY 2028 and beyond.
In summary, the business continues to deliver on our strategy of consistent and reliable growth. The success of Data#3 in FY 2026 is underpinned by the expertise of our people and their dedication to our customers. I would especially like to thank all employees for their commitment and contribution to delivering the strong result. I would also like to thank our board for their continued support and guidance. Finally, I would like to thank our shareholders for their ongoing support and trust in Data#3. Your confidence enables us to continue investing in solutions, people, and innovations, positioning the company for sustained long-term growth. in May this year, we were deeply saddened by the sudden passing of Richard Anderson OAM, a foundational figure in Data#3's history.
Richard served on your board for 26 years, including 23 years as chairman, and his calm leadership and stewardship were instrumental in shaping the company into the national organization that it is today. On behalf of the board and everyone at Data#3, it is important we acknowledge Richard's sterling service and extend our ongoing gratitude for his outstanding work and his enduring legacy. Before moving to the formal resolutions, I would like to hand over to Brad Colledge, our MD and CEO, who will provide further detail on the operational performance for FY 2026 and the outlook for the current financial year.
Good morning, ladies and gentlemen, and thank you, Mark. It is my pleasure to welcome you again to Data#3's AGM and thank everyone for making time to join us here in person today, and online. As Mark mentioned, FY 2026 was another record year for the company, with gross sales of AUD 3.4 billion. This represents 12.7% increase on the prior period and continues our track record of sustained earnings growth above IT market growth of 8.9%. Our recurring sales increased from 69% to 70% in FY 2026, reflecting the ongoing shift from our customers to multi-year subscription and as-a-service purchasing models, such as our Device-as-a-Service offering, which grew by more than 100%. Equally pleasing, our internal cost ratio improvement demonstrated improved operating leverage. Macroeconomic conditions remained challenging during the year, with inflationary pressures, geopolitical uncertainty, and global memory shortages contributing to higher hardware prices and extended customer decision cycles.
Despite these conditions, Data#3's business model held strong. Let's now review how our segments of infrastructure, software, and services performed during the financial year. Our infrastructure solutions business delivered gross sales growth of over 14%, supported by strong demand for end-user computing, driven by Windows 11 upgrades, device refresh cycles, and AI-enabled devices, along with hybrid cloud solutions supporting modern data and AI workloads. Gross profit rose 18.6% to AUD 84.5 million. Average gross margin improved from 12.5% to 13%, and management profit increased by more than 78% to AUD 31.2 million, reflecting the disciplined focus on deal margins, high vendor rebates, and automation and restructuring initiatives that improved operating leverage. Our software solutions business delivered gross sales growth of 14.1% to AUD 2.3 billion, with gross profit up 7.6% to AUD 78.1 million, ahead of our expectation of a flat year-on-year result.
This was achieved despite the full year impact of the changes to Microsoft Partner incentive programs and was underpinned by growth in Azure migrations and consumption, Cloud Solution Provider agreements, Copilot, security, software advisory services, and stronger contribution from non-Microsoft vendors, including Adobe, VMware, and Veeam. A key achievement this year was our appointment by the Digital Transformation Agency as the sole panel provider for Microsoft products to the Australian government. A five-year contract, the largest in Data#3's history, and our appointment to the renewed New South Wales Government Microsoft software panel. Our services business delivered a mixed performance with gross sales of AUD 412.3 million, up 3.6%. Business Aspect consulting had a record year, with growth of over 22%. Maintenance services grew 11.5%, supported by a record year in Cisco Enterprise Agreement wins. Managed services grew 9.4% on the back of strong renewals and new contract wins.
This was offset by project services down 15.3% and people solutions down 8.7%, both affected by extended procurement processes and reduced business confidence impacting on customer timing, fewer larger infrastructure projects in some states, and a challenging labor market. FY 2026 was the start of a multi-year transition for project services with leadership changes, new solutions and capability, and enhanced services growth strategy for execution from FY 2027. During FY 2026, we continued to expand and refined our solution offerings across data and AI, cybersecurity, applications and automation, collaboration, end-user computing, hybrid cloud, and networking. AI is both a market opportunity and an important internal productivity lever, and during the year, we embedded AI further across our own operations, including automation across procurement, software development, cybersecurity, and customer experience workflows. Demand for security solutions continued to grow, including for managed security services, further expanding our recurring gross sales streams.
Combined with our cloud advisory and Device-as-a-Service capabilities, this positions Data#3 strongly to meet the evolving and diverse needs of our customers. Our people remain central to our success. During FY 2026, we were recognized as HRD Employer of Choice for the 11th consecutive year and again achieved Great Place to Work accreditation. We're also recognized by our customers with an increase in customer satisfaction score of 4.36 out of 5. Data#3 received significant number of partner awards this year, including Microsoft Country Partner of the Year, a series of global, regional, and local awards with Cisco. We're also recognized for our sustainability leadership with APC by Schneider Electric Sustainability Champion of the Year and HP Amplify Impact Partner of the Year. Let's now move to FY 2027.
In FY 2027, our strategic priorities remain focused on solutions, customer experience, operational excellence, and people and community, supported by operational actions across accelerate services, people engagement, customer engagement, and data and AI. We are taking deliberate action to accelerate the growth and profitability of our services business through a more integrated solutions practice model, stronger sales discipline, clearer ownership of services offerings, and a greater alignment to customer demand. We are also investing in a dedicated AI practice and a customer-facing AI delivery squads, and we are complementing our existing security operations center capability with a 24/7 Sovereign Security Operations Center to support customer requirements for data residency, locally governed services, and regulatory alignment. Infrastructure solutions growth is expected to be supported by AI-ready infrastructure and end-user computing, hybrid cloud, networking, cybersecurity, and lifecycle services. In software, we have a strategic focus on winning with complementary vendor partners, services, and packaged offerings.
Microsoft's AI products and programs provide further opportunity in FY 2027, and we continue to drive large Azure commitments, software advisory, and Microsoft services opportunities in the public sector. The strategy also provides focus on growth in the mid-market, supported by a continued investment in our MyD3 customer portal that enables efficiency and scale. As informed through our FY 2026 annual report and our market trading update on October 1st, we have started the new financial year strongly and have further refined forecasts as first-half visibility improved. Subsequently, we are announcing today that we have an upgraded first-half projection to deliver pre-tax profit in the range of AUD 52 million-AUD 57 million, which represents a 55%-70% growth against the AUD 33.5 million in the previous corresponding period. This includes gross profit growth of around 20% at midpoint and forecasted interest income of around AUD 8.8 million.
There are, as always, many variables that could have an impact on this forecast, including global supply chain conditions, vendor program updates, and timing of customer purchasing decisions, and product deliveries and service project milestones. Profit before tax in FY 2027 is expected to be skewed to the first half, due in large part to the one-off large transactions we announced to the market earlier this month. We expect to deliver growth in the second half and across the full year, although at a more normalized rate than the growth anticipated in the first half. We have a clear strategy to continue delivering sustained earnings growth for our shareholders, underpinned by strong execution and expanding market for technology solutions, excellent support from our vendor partners, and growing momentum from AI. I look forward to updating you on our progress in our half-year results announcement scheduled for 22nd of February, 2027.
In closing, I would like to thank our board, our shareholders, our customers, and most importantly, our exceptional Data#3 team, whose dedication underpins everything we achieve. Thank you. I will now hand back to Mark.
Thanks, Brad. Before we consider each item of business, I'd like to outline the procedural matters for this meeting. For those participating virtually, at the bottom of the webpage, under the webcast and presentation, there are three boxes which allow you to get a voting card, ask a question, and download the AGM documents, being the notice of meeting, the annual report, and the virtual meeting online guide. Shareholders will have the opportunity to comment on and ask questions in relation to the resolutions, both in-person and virtually. I'll hold comments and questions until the item of business has been introduced. For those shareholders using the online platform, you can ask your questions during the meeting by clicking the Ask a Question button and follow the prompts. For each item of business, we'll address questions received from shareholders attending in person first, then from those shareholders participating virtually.
We may choose to aggregate some questions where there are a number of similar questions received. I'd now like to briefly summarize the voting procedures which will apply to this meeting. Voting on each resolution will be conducted by a poll. Shareholders who are attending the meeting in person will have been given a voting card on registration, and the completed voting cards will be collected at the end of the meeting. Shareholders who are participating virtually in the meeting can register to vote by clicking on the Get a Voting Card box at the top of the webpage or below the presentation slides and follow the instructions. Following discussion of all items, shareholders will be given a further five minutes after the meeting has closed to submit their votes via the online portal. After this time, the polls for each relevant item of business will close.
The resolutions before you today have been put forward by your board for your consideration. However, as outlined in the AGM notice, your directors recommend Resolution 2 for your approval, with myself abstaining as that resolution concerns my own re-election. On Resolutions 1, 3, and 4, each of which involves matters in which your directors have an interest, the directors do not make a recommendation. Where undirected proxies have been given in favor of the chair, the chair will vote in favor of the resolution to the extent permitted. The number of proxy votes received on each resolution will be displayed on our slides as we move through the resolutions.
The results of each poll will be announced via the ASX as soon as possible after this meeting and will also be displayed on our website. If you experience any difficulties using the online platform, the helpline number is displayed at the top of the page. You can also refer to the virtual meeting online guide, which is accessible via the online platform. We'll now move to the formal items of business for this meeting. The first item of business for discussion today is to receive and consider the financial report, the sustainability report, the directors' report, and the independent auditors' report for Data#3 and its controlled entities for the year ended 30 June, 2026. Ben Woodbridge, the audit partner with PricewaterhouseCoopers, please stand. Ben? There's Ben.
He is available to answer questions relevant to the conduct of the audit, the preparation and content of the independent auditors' report, the accounting policies adopted by the company, and the independence of the auditor. I would now like to invite questions for this item of business. Are there any comments or questions from shareholders attending in person? There is a roving microphone. If you wish to ask a question, can you please state your name very clearly because this is being recorded. It would be great if you could give us your name very clearly, and if you are representing an organization, if you could indicate that as well. Any questions?
Good morning, Mark. Steve Mabb my name. I am representing. Not sure if that is on. I am representing ASA today and also Teaminvest.
Steve, how are you?
Good, thank you. I just want to congratulate you on a wonderful year. It has been a very impressive performance across the business from what we can see. I also want to thank you for your address today, where you called out the work the board has done visiting our operations across the country. That is fantastic to see and not something that is common amongst some other large ASX companies that we follow. So it is great that you are getting out there and seeing what is happening in the field. I have one request, though, and that is please guard for hubris, because with the wonderful results that you have been delivering for so long, that is a potential threat. So, please continue to guard and watch closely for that across the business.
Then I have two questions around two areas of the business that look particularly strong for either you or Brad, perhaps. The first one is the people and culture in the business and the very strong staff retention and engagement scores that you get. What if anything, have you done in the last couple of years that you think is driving that or improving that? Or any particular examples or things that you are doing there that you think would be helpful for us to know?
I might ask Brad to start on that.
Yeah. There is many factors to that and we have Tash sitting just behind you as well. It is okay, Tash, I will not hand to you. But there are many programs that we run right across our teams. And we quite often get complimentary comments about the culture of Data#3 and why people do stay so long and their enjoyment in working here and the awards that we mentioned earlier. One such program that I popped in and introduced to those who I had not met were people from a leadership development program that we had in this room last week, where we had people from around the country come together on a journey over many months through the financial year around upskilling their skills and their leadership techniques.
That is just one example. We also invest heavily right across our business from our technical people in terms of their technical certification. That is why they want to stay with us. They have a diversity of projects that they get to work on, and that is a great thing. And then across corporate services, for example, we are doing some great innovative things internally, both from a technology perspective and also processes perspective. I think there is always opportunity for challenge within Data#3, and the people are just really well supported by the senior leadership team, which is our broader group, and the executive management team and board, of course.
Wonderful.
If I can just add to that, Steve. I think culture is a somewhat intangible thing at times. It's a mixture of a whole pile of things. You can put your finger on some things, but other things are intangible and often very difficult to measure. But it's that combination which I think is really important and moving around the various offices. The business still has a family feel to it. That's obviously a challenge as we get bigger and bigger, but it still has that family feel to it. The other thing I'd like to say is Diana joined the board, as I've indicated, July 1 last year. Diana's very experienced in the people and culture area. She chairs the People and Culture Committee or People, Remuneration, and Culture Committee. She's worked very closely with Tash.
I think that's been a great bonus to have that experience to drive us forward. Tash has also joined the executive management team in the last couple of years. All that, I think, has helped to sustain the momentum we have in the culture.
Excellent. That's great to hear.
Did you want to add anything to that, Diana?
Just briefly. I think there is a lot of hands-on work that happens in the business, and Tash is doing some really innovative and new programs that she is putting in place. It is really good to see that momentum, and she is getting some real take-up. I will not go into the detail, but there is some real drive for change and excellence in a very grassroots way, and it is really great to see it as you join the board. Congratulations to Tash and the team. I think they are doing a really great job.
Yeah, no, agreed. Thank you on behalf of shareholders for that work that you are doing. The second question was more around a financial metric. We have operated on a fairly low net profit margin for a long time, and we are very comfortable with that. I would be interested, Brad, in your comments here around what you are seeing with competition. It is our belief that that is a bit of a barrier to potentially large new competitors coming after you. Have you got a different view or any views on that in terms of what is happening with competition in general? Are you seeing it increasing, or are you finding that your competitors are acting fairly rationally at the moment?
I will leave it up to the competitors to discuss whether they are acting rationally or not.
Competitors never behave rationally.
But I guess the short answer is we are not seeing any different competitive behavior to what we have seen over many, many years. We do have more commoditized offerings and products that drive very low margins. And one of the, as you alluded to, advantages that we have is that we have been doing this for a long time and we have got some very good systems and processes in place for handling high volumes at low costs and still providing value to our customers. And that is really hard to replicate. So that certainly helps us with our lower margin offerings. Then from a strategy perspective, we complement those lower commodity offerings with higher value services offerings. That is why you will see in the FY 2027 strategy so much focus on the services development that augments the products and software solutions that we are selling.
Great. Okay, thanks.
Thanks, Steve.
Thanks very much.
Question here.
Hi. [Adrian Voss], shareholder. Just a quick question. AI is just shooting along exponentially, and the growth is enormous. You have enormous amounts of money being poured into AI in the U.S. Massive growth there. How is Data#3—
Okay.
—poised to cope with that?
Yep. I will make a general comment and then ask Brad to speak in more detail. We do not take big bets on AI. We are not making massive investments in infrastructure. We are providing services around AI. So we do not have the huge exposure, which is causing a lot of consternation.
Yep. Did you want to add to that?
I will just qualify that. That last bit was as far as competition to Data#3, whether AI will have a negative effect on Data#3?
Yes.
Yeah. Okay. It is a good question. There is always a level of risk with regards to new technologies. But at the moment, that is not what we are seeing. We have actually flipped it the other way, where from a go-to-market perspective, being an IT services and solutions company, what a great opportunity it is for us to help our customers through the AI journey, understanding what it means to them and how they can implement it within their organizations. AI is very good for us from a go-to-market perspective. We are also seeing AI being embedded in the software solutions that we sell that come from our suppliers, our vendors, whether they are the software vendors or the hardware vendors, and then implementing AI to improve efficiencies within Data#3.
Overall, we are able to, well, as Mark said, we are not a hyperscaler, we are not a Microsoft or an AWS or a Google or an Anthropic, investing in those levels ourselves, but we are certainly in a great position to be able to leverage the investments that those organizations are making.
Q uestion over here.
Peter Storer. [Peter Storer], long-term shareholder. Just a comment, if I may. Congratulations on a very solid FY 2026 and a gobsmacking first half to FY 2027. My first question relates to that. We have traditionally had a long history of a skew to the second half. Is this the start of a change, a gradual shift to a more even half, or is this very much a one-off year, do you think? Thank you.
We are seeing this as a bit of a one-off at the moment. We have seen in the past skews. Years ago, we used to have a massive skew to the second half, particularly Q4 and particularly June. Over the years, we have actually tried to provide more offerings to the market that would smooth that out, and we have been successful in doing that, particularly with a lot of our annuity-driven offerings like Device-as-a-Service, for example. But this year we have had some large one-off type of benefits that we have certainly earned, but we do not expect those to occur again certainly in the second half. What we do have is, last year we had a very solid second half, so we still expect to have a very solid second half this year, and our plan is to grow on that second half.
But certainly, with the exceptional results that we have had in this first half, as I have just updated too, we expect to see a skew to the first half for the first time for us.
Okay. Thank you. My second question, a lot of industries have what they call their opportunity pipeline, and I know you guys can't put a number on that, but one thing that is coming up is the Olympics here. Have you got a feel yet for how big the opportunity is going to be and the timing of it?
Yeah. It is another great question, because people say, "The Olympics," and then they think, "Oh, it is a massive opportunity." It might be a massive opportunity for some organizations. But for us, it is a good, solid opportunity. But it is the same opportunity as, for example, when they refreshed Olympic Park in Sydney or when they did the Sydney Football Stadium, where we did all the networking technology behind that rebuild, for example. So we have an equal opportunity with that, and we certainly are pursuing that. So it is a good opportunity, but it is not a shoot the lights out sort of opportunity that you may think it could be.
The other dimension to that, I suppose, is whilst everyone is focused on trying to get a seat in the Olympics, there is plenty of other opportunities outside the Olympics as well. Any other questions from the room? Any questions online, Hayley?
No, Chair.
Thanks, Hayley. This item of business doesn't require a vote by shareholders. We'll now move to the next item of business. Second item of business is to adopt the remuneration report for the financial year ended 30 June 2026. Please note that the vote on this resolution is advisory only and does not bind the directors or the company. However, when reviewing the company's remuneration policies each year, the board considers the level of shareholder support received and matters raised by shareholders. Voting exclusions apply to this resolution as set out in the notice of meeting. As in previous years, targets have been established to produce earnings growth, and the management team's remuneration is structured in line with these targets, with a significant proportion comprised of short-term and long-term incentives. These are awarded based on the achievement of appropriate financial and operational targets.
We measure remuneration against industry benchmarks on a regular basis, generally every three years, to ensure it is set competitively. The last independent review of non-executive and executive remuneration was undertaken in 2024. Consistent with our recent practice, we're undertaking an independent review of remuneration in FY 2027. Invitations for proposals have recently been issued to selected parties, and we expect to appoint a consultant in the near future. Any changes arising from this review will be introduced from FY 2028. Shareholders are also being asked separately today to approve an increase in the non-executive director fee pool, which is dealt with under item five. I'd now like to invite questions for this item of business. Are there any comments or questions from shareholders attending in person? Again, please state your name very clearly for the record. No questions from the room. Any questions online, Hayley?
No, Chair.
Thank you. The proxy votes received in relation to this resolution are now shown on the presentation slide. Shareholders may wish to cast their votes for Resolution 1 now. Item 3 of today's business is to approve by ordinary resolution that Mr. Alan Mark Gray, who retires by rotation in accordance with Rule 18.4(b) of the company's constitution, and being eligible, be re-elected as a director of the company. As this resolution relates to my own re-election, I will now hand over to Diana Eilert, Chair of the People, Remuneration, and Nomination Committee, to conduct this item of business.
Thank you, Mark. Mark Gray has served as a non-executive director of Data#3 since August 2017, and he was last re-elected at the 2023 AGM. His qualifications, experience, and responsibilities are summarized in the explanatory statement which forms part of the notice of meeting. From November 2023, Mark has chaired the board, and also chairs the nomination responsibility of the People, Remuneration, and Nomination Committee, and is a member of the Audit and Risk Committee. The board considers that Mr. Gray will, if re-elected, continue to qualify as an independent director. The directors, with Mark Gray abstaining, recommend that shareholders vote in favor of the resolution. I would now like to invite Mark to address the meeting.
Thank you, Diana. As Diana mentioned, I have had the pleasure of serving on your board since August 2017, and as Chair since November 2023. I am standing for re-election today. Over my time on the board, Data#3 has continued to deliver consistent growth in sales and earnings, in line with a clear, coherent, and credible strategy. In FY 2025, under my chairmanship, the board completed a renewal process which had extended over several years, and which strengthened our mix of skills, industry experience, and strategic perspective. Additionally, in recent years, we have successfully navigated the significant transition of key executive roles in the business with no disruption to our momentum. My focus as Chair is to oversee the shaping and execution of strategy that delivers sustained long-term value for shareholders, disciplined governance, effective capital management, and orderly board succession.
I have over 30 years’ experience as a non-executive director on a range of corporate government and not-for-profit entities. I currently serve on the boards of the Australian Retirement Trust, CleanCo Queensland, and the Royal Flying Doctor Service of Queensland. I also have extensive experience in financial services and management, infrastructure, public policy, and governance, including senior executive roles as Under Treasurer of the Queensland Treasury Department, Chief Executive Officer of the Queensland Competition Authority, Queensland Office Head of Macquarie Group, and Executive Director with BDO. I have the capacity and the commitment to continue in this role, and if re-elected, I look forward to working with my fellow directors and the Data#3 team to build on the company's track record. It is my firm intention to maintain the legacy of a calm, steady hand, which was the hallmark of Richard Anderson's stewardship of the Data#3 Board.
Thank you for your consideration. Back to you, Diana.
Thank you, Mark. I would now like to invite questions for this item of business. Any questions on the phone?
No, Diana.
Thank you. Hayley, the proxy votes received in relation to this resolution are shown on the presentation slide. Shareholders may now wish to cast their votes for Resolution 2. I will hand to you, Mark.
Thank you, Diana. Item 4 of today's business is to approve by ordinary resolution for the purposes of ASX Listing Rule 10.14 and for all other purposes, the grant of a maximum of 46,695 performance rights to Mr. Bradley Colledge or his nominee. Mr. Bradley Colledge is Managing Director and Chief Executive Officer of the company, and a related party of the company by virtue of him being a director, and so is within the category of persons in ASX Listing Rule 10.14.1. The board has decided to grant these rights in two components as part of Bradley Colledge's remuneration package and in recognition of his contribution to the company. For the first component, the company has attributed a value of AUD 350,000 to the on-target LTI opportunity. That's on target. For the second component, the company has attributed a value of AUD 175,000 to the overperformance component of the LTI opportunity.
The rights will be issued under the terms of the company's long-term incentive plan and will vest on a straight-line proportional basis based on cumulative earnings before interest and tax per share over the three-year period ending 30 June 2029, compared to a target determined by the board. As you would expect, the overperformance LTI can only be earned once the on-target LTI has been exceeded. Details are contained in the explanatory statement, which forms part of the notice of meeting. The directors have abstained from making a recommendation in relation to this resolution in the interests of good corporate governance. I'd now like to invite questions for this item of business. Are there any questions from the floor? Any questions from online?
There is, Chair. We have a question from [Alzaz Kabiev], who's in Melbourne today.
Yes.
Yesterday he attended JuiceIT, and spoke directly with some of the team there.
Okay. That's great.
What stood out to [Alzaz] was that he met staff with 20 - 30 years of tenure, mirroring Brad's 31-year journey, and it was noted that we have a strong culture that clearly drives these results. His question was in two parts, but the first one was probably answered when Steve asked his question about our people and our culture.
Yes.
His second question is, what is Data#3's ultimate competitive moat today?
Competitive moat?
Moat.
Well, that is an interesting one. Brad might have some comments on this. This often comes up in discussions. Again, a bit like culture, it is sort of a bit of an elusive thing that is not one single factor. It is a range of factors that come together. I like to use sporting analogies, and it is like a successful sporting team. There is a lot of factors that come together for a successful sporting team. There is a lot of factors that come together for a successful business like this. There are competitive advantages in various areas. The one I like to focus on, I suppose, is we are not out there at the bleeding edge. We are not the Microsoft and the Anthropic and that, as Brad said before. We are not taking big bets on infrastructure.
What we are doing is we are leveraging the opportunity of our vendor relationships with the likes of the Microsoft and the Cisco and the HP. I like to think where we have been successful and beat our competitors is we are a fast follower of the trends that are established by the big vendors. We do that better than others. That is a continuing battle to maintain that competitive edge. We cannot be complacent about it. We cannot assume it is going to go on forever. We need to continue to build and maintain and strengthen those relationships which gives us the leverage for that competitive advantage. Did you want to add to that?
You did well, Mark. There is a slide that we typically incorporate into some of our end of year results or half-year results, and it covers a lot of the areas that Mark just covered. Mark spoke to our agility, and that is a key part of our operational, I guess, competitiveness, both from an operational perspective, but also from a go-to-market perspective. I think you all saw that with the change in the Microsoft channel incentive changes over the last 18 months, two years. That was the biggest change that Microsoft had made in over 20 years, and we pivoted. We pivoted very quickly, and we got the result that we needed through that agility. Just reinforcing the areas that we typically talk to are our people, and I spoke about that before.
That ranges from the quality of the people, but also the certifications that we put our people through. Our vendor partners, and typically with our vendor partners, again, we invest very heavily in those. We are typically number one or number two with those partners in the markets in which we operate, and that means that we get very good support from those vendors. Also the customers recognize us as being good at what we do in those areas. Then, of course, there are other areas that can sometimes be overlooked, but our financial stability is absolutely key, particularly with a number of our public sector customers, and also our brand. Data#3 has been around for nearly 50 years now, and have created an excellent brand in market, and that is through the hard work and the credibility that we have been able to drive in market over many years.
They become our overall competitive advantages and our moat.
Our moat. There is a third part to the question?
Yeah.
That is all.
No, that is it.
Can I just add one more? As an outsider and someone who has worked with a lot of sales organizations, I think probably people here sometimes take it for granted, but I think there is a real culture of sales excellence and operational excellence. There is a real focus on detail, which Brad probably does not take for granted. Takes for granted because he has been here for so long, but it is such an extraordinary focus on detail in a good way, where there is real follow-through and delivery at both the sales and the operational level, which is why customers are so happy with us as well, I think.
Thanks, Diana.
Sorry to jump back in from the floor. [Greg Spedding], investor and Teaminvest member. It is not a question, it is a compliment, Chair. I really appreciated that response that you are not resting on your laurels. It sort of touches on what Steve said before about hubris and sort of getting comfortable. But it was really comforting to hear that you have still got the hunger and still chasing whether it be the sales or the latest trends. That was really comforting. Thank you.
Thank you. The last thing we can afford to do is get complacent in an industry that is so fast-moving as this. There is a lot of talk about AI, obviously, and AI changes by the day, so we have continually got to be on top of that. I think that is the reason why we do not get complacent. That is it. I think we are covered for questions there. The proxy votes received in relation to this resolution are shown on the presentation slide. Shareholders may now wish to cast their votes for Resolution 3.
Item 5 of today's business is to approve by ordinary resolution that, in accordance with Rules 18.6(a) of the company's constitution and ASX Listing Rule 10.17, the aggregate maximum amount of fees available to be paid to non-executive directors each financial year, inclusive of superannuation, be increased to AUD 1.2 million per financial year, an increase of AUD 300,000 per year. The current maximum aggregate fee pool of AUD 900,000 was approved at the 2022 annual general meeting. Since then, the size and complexity of the company has grown, and fees paid to non-executive directors have been increased annually in response to economic conditions. In the 2026 financial year, on an annualized basis, board and committee fees paid to non-executive directors were AUD 796,767 of the current pool.
The board is of the view that the proposed increase in the pool is reasonable compared with similar ASX-listed companies, and is necessary to attract and retain suitably qualified non-executive directors. It provides headroom for market movements in NED remuneration over the next few years. It will also provide capacity for orderly board succession planning and any additional appointments the board may consider necessary. Voting exclusions apply to this resolution as set out in the notice of meeting, and the directors abstain from making a recommendation in the interest of good corporate governance. I'd now like to invite questions for this item of business. Are there any questions from the floor?
Maybe more of a comment than a question. Very happy to support this resolution, and my view is that we're modestly compensated at board level for the performance of the business and the size of the business. Looking at some of the proxy votes today, I'm assuming we've got some proxy advisors that are not happy with us not checking a few boxes, and I'd just encourage the board not to significantly expand your size, if that's some of the pressure that you might be getting. We love that it's a small, competent board with deep industry expertise, and we'd love it to stay like that.
Happy to remunerate all of you in an increasing way at this level, but hopefully we're not increasing the fee pool with the idea to significantly expand the board.
Thanks for those comments, Steve. They are appreciated, and as I said before, the board takes into consideration comments from shareholders and others during the course of the year. As I indicated, we will be undertaking an independent review of Rem during the course of the year. We will be standing here next year advising you of the outcome of that. But look, it does give us capacity to increase the size, and that is an open question. We have always got an open mind on that, but we have no specific agenda to do that at this point in time.
[Noel Johnson].
[Noel].
I am a member of Value3, and I have been a shareholder for many years.
Great, [Noel]. Thank you.
I am commenting, not questioning the board. I would like to say that the board only has to look at the fact that we have had record earnings this year. Our total shareholder return has peaked this year. For years, we never passed AUD 10, and now we have shot to AUD 15. So do not worry about what other people are thinking. If Steve is right and the proxy advisors are the reason you have had a few votes against resolutions, get rid of the proxy advisors. As a shareholder, I would like to point out I have a deep hatred of two things that the establishment considers normal. One is turn over the board regularly. Bring in fresh blood. Like Steve, Laurence, yourself, Brad, you know this company well. You are doing the right thing, so do not listen to them.
The other thing, they seem to have this idea that you should turn over your CEOs every five years or so because they get stale or whatnot. The best companies I have invested in have had CEOs who have stayed for years, and they know the business and they know it well. So although the advisors think they know what they are doing, please ignore some of their suggestions. You are doing well. Continue doing well, and we will continue being shareholders. My standard approach to any voting in any company is I vote against everything, unless the board can convince me otherwise. I do not think I have voted against any Data#3 resolutions in the last 10 years.
That is an indication of how high a standing I hold the board and the management of this company, and I still cannot understand how you can pay out 90% and still run the company so well. But please keep doing it. Thank you.
Thanks for those comments, [Noel]. Are there any questions online?
No, Chair.
Okay. Proxy votes received in relation to this resolution are shown on the presentation slide. Shareholders may now wish to cast their votes for Resolution 4. Before we close the meeting, are there any general questions from the floor that haven't already been asked, or general comments that you wish to make? I think [Noel]'s comments are a good way to end up.
One online, Chair.
We got one online? Yep.
Yes, Chair. We have one last question from [Kelly]. [Kelly] would like to know, it is a good way to end, what would you consider the biggest risk to Data#3's business?
Oh. That is a AUD 64 million question. I suppose the risk that the board always has uppermost in its mind, and it is a risk that is embedded in the business model, is the risk of disintermediation. By that, I mean that the Microsoft or the HP and the Cisco go direct to our customers and cut us out. That is the biggest risk, and we continue to keep that in our minds. We have moved into the middle market to address that and to diversify our business, but I will get Brad to comment in a bit more detail. He might have a different view on the main risk.
Yeah. That can be complex. I think what has worked well for us is the customer relationships, and if we have got the customer relationships, then it does not matter what the vendor does, to a degree. Most of the solutions that we implement for customers are multi-vendor solutions. So a vendor cannot disintermediate Data#3 if it is a multi-vendor solution. So I guess that it certainly is a risk. We have those risks, but we also have mitigations against that as we have proven to be able to manage in the past. On page 20 of the annual report is our business risks that list various risks, including the vendor and supply chains challenges and probably just that macro environment with regards to supply chain can be somewhat challenging. Again, how we manage that is through having multiple vendors with multiple supply chains.
That also our vendors learned a few things through COVID and have distributed their supply chains a bit more differently now as well. In addition to, I guess, just the vendor programs and supply chain would probably be the two main ones. But yeah, as I say, we have got very good strategies for managing both of those.
Anything further, Hayley?
No, Chair.
That is it. Okay. With each item of business at this meeting now having been dealt with, I declare the polls in respect of each resolution will be closed five minutes after this meeting ends, and formally ask MUFG Corporate Markets to count the votes following the expiry of that period. For those that have not, please finalize your votes for each resolution put to the meeting, and click on the Submit Vote button at the bottom of your voting card if you are voting online. For those of you here in person, if you need any assistance, a representative from our share registry, MUFG, will be on hand to help. They will also collect your voting cards at the end of the meeting. If you require assistance to submit your vote online, please call the helpline number displayed at the top of your screen.
I propose now to bring today's proceedings to an end. The results of this meeting will be released through the ASX as soon as possible, and will also be displayed on our website, including the video recording of this AGM. On behalf of the board and management, thank you to everyone for attending Data#3's 2026 AGM. Ladies and gentlemen, I now declare the 2026 AGM closed, and I would like to invite you to stay on for some of our hospitality. Thank you very much.