Big change in digital strategies noted

WELLINGTON: The move to introduce digital systems and platforms got faster under the Covid19 pandemic lockdowns, as firms were forced into new ways of operating, according to IT services firm Datacom.

Chief executive Greg Davidson said the company had already invested heavily in those indemand services over the past couple of years, and that was going to continue in the current environment.

Softwareasaservice and intellectual property were two areas where he wanted to spend more.

‘‘We’ve got some quite ambitious capital plans this year, too,’’ he said.

Datacom yesterday lodged its financial statements for the March 2020 year, which showed net profit more than halved to $19 million in the 12 months to the end of March from $40 million a year earlier. That was due to a doubling in its depreciation and amortisation bill to $67 million.

Earnings before interest, tax, depreciation and amortisation were unchanged at $93 million, while revenue crept up to $1.34 billion from $1.3 billion.

However, that period largely predated the pandemic, which Mr Davidson said had triggered the biggest review by Datacom’s customers of how they operated that he had ever seen.

Some were struggling to keep up with the elevated volumes they were facing and at the other end of the spectrum, some were struggling to stay afloat.

‘‘Nearly every customer has had to rely on a digital strategy in order to trade,’’ he said.

That had brought forward some organisations’ plans to adopt digital services, although there was still a reluctance among them to make any longterm decisions.

‘‘People’s horizons have shortened and they’re not wanting to commit to longer programmes,’’ he said.

‘‘We need to be willing to do whatever we need to do to support that customer base.’’

In some cases, that had meant paring down services to what the customer needed. For others it meant scaling up to support the massive increase in demand.

‘‘Ultimately, people will remember how you behaved during times like this. Were you helpful? Able to provide them assistance? Or did you dig in?’’

Mr Davidson was wary of the impact the looming recession would have, saying it was unclear how long it would last.

He was also watching the domestic focus being forced on the Australian and New Zealand economies as both nations dealt with closed borders.

However, the firm’s balance sheet remains strong and the board declared a final dividend of $4 million, or 70c per share, to be paid on August 28, up from $3 million, or 50cps a year earlier.

Datacom is controlled by John Holdworth’s Evander Management. The New Zealand Superannuation Fund also holds a 39% stake. — BusinessDesk