Thank you for standing by, and welcome to the Dicker Data Limited full year 2022 results update. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the one on your telephone keypad. I would now like to hand the conference over to David Dicker, Chairman and CEO. Please go ahead. My name's David Dicker. I'm the Founder, CEO, and Chairman of Dicker Data, and we're gonna give our results for last financial year today. Before I hand over to Mary, I'll just make a few comments on the results and on the overall situation because we didn't get, b eing completely honest, we didn't get quite the result we would have liked to have got, but we were affected by forces that are completely out of our control and for which we actually can't get a remedy. I'm talking about inflation to some extent, but principally interest rates, because we don't control the interest rates. No company controls the interest rates, and if the interest rates go up, conceptually, your results are gonna go down to some extent, and it's impossible. You might say, "Well, let's make some changes in other areas," but the issue with that is that those changes are not actually linked to the interest rates. We haven't got any coupling with interest rates, and there's nothing we can actually do in that regard that we couldn't do regardless. It's a situation where all companies are basically affected. That's the way it goes. In fact, the old saying, a rising tide lifts all boats. Well, when the tide goes out, all the boats end up on the mud. That's the way it is. Doesn't mean that we can't get good results, I still feel that last year's result was pretty good, all things considered. We're certainly full speed ahead for this year, but sometimes things aren't exactly the way you'd want them, and we've been in this business for a long time, and sometimes you just gotta ride the ups and downs. Details on the result, I'll hand over to our CFO, Mary, who will give you all the numbers, and then Vlad, who will give you an update of the overall position and the market position. Thanks very much. Over to you, Mary. Thanks, David, and thank you everyone for joining us on this call. We're pleased to be presenting our results for the FY 2022 year. Sort of to reiterate what David said, it was a bit of a challenging year with a number of initiatives and plus the wider macroeconomic environment. What I'm referring to, as a business, we undertook a couple of acquisitions, 2021 and 2022, and a lot of work was put in place in FY 2022 to actually integrate and consolidate and start working towards de-delivering the synergies that we expect from this business. Sorry. I was hearing back. Working towards de-delivering. Sorry, guys. There's a back. I can hear it back. Apologies for that, everyone. Where we ended up for the year, it was AUD 3.1 billion (Australian Dollar) revenue, an increase of 25%. Strong EBITDA number as well. All things considered, it was also an increase of 9.4%. It was pleasing to see our recurring revenue increase to AUD 743.9 million (Australian Dollar), an increase of 42.5%. Where we were impacted was the delivery of net profit after tax, which was down 0.7%, relatively flat on last year. In the circumstances of one-off expenses, inflationary environment, and rising interest rates, we feel that was a solid result taking into account those elements. If we have a look at the financial trends, the delivery of gross profit margin was in line with how we expected it, and you can see that normalizing from the FY 2020 and FY 2021 year, where we had a unique circumstances around demand, allowing additional delivery of margins. Where we delivered in FY 2022 is in line with expectations. Continuing growth trajectories for both revenue and EBITDA, where we were delivering in 19% and 18% or more so 19%, and that's taking into account that we allocated expenses in FY 2022 as we worked through our integration. Looking at the FY 2022 consolidated group results, operating costs excluding one-off costs increased by 32.4%, which is impacting the delivery of the operating profit before tax. This was predominantly around increases in salary and headcount costs. With the two acquisitions of Exeed and Hills, we added over close to 250 people in terms of our headcount numbers and in terms of looking how retaining the resources in an environment in terms of the market around labor constraints and requirement for people to keep delivering on the revenue growth that we were heading towards. We saw that cost increase close to 29%. Again, as the company continues to grow, we should see an improvement in leverage from our cost line and also as we synergize the operating costs from both the Exeed and Hills acquisition. Included in the operating cost number is also about AUD 4.5 million (Australian Dollar) in amortization of customer contracts, ending up with operating profit before tax, posting a slight increase on the prior year. We break that down a bit further, if we look at country by country, which is probably more relevant in terms of trying to understand the dynamics of where we were working toward in terms of profitability. You know, Australia delivered a very solid result. This is in the context of the Australian business being a very mature business with a lot of established strong relationships with vendors and in segments of the market that we participate in. Even bringing in the DAS business relative to the underlying business, it's a much smaller pie and, whilst it didn't necessarily deliver in terms of profitability metrics, it is there as a strategy in terms of increasing our market share in a different segment of the market. For Australia, revenue grew over 18%. Gross profit margins actually increased. This is a testament to the type of segments we are now participating in. The DAS business, AV, and some other improvements in margin with the different categories of business that Vlad will be able to elaborate on in the business update. As David said at the start of the call, the biggest impact in terms of profitability was the increase in interest costs. We do fund our working capital via debt facilities. It's sort of been the core way that we've managed the business. Whilst we did forecast for some interest rate increases, I think the speed at which the rates were increasing month in, month out, was probably the part that was more unpredictable than the concept that there was gonna be rate rises. Even having said that, the Australian business still delivered net profit after tax number increase on the prior year of an increase of 3.3%. If we look at the New Zealand business, the significant revenue growth was delivered with the integration of the Exeed business, giving us access to a whole division of a market we didn't participate in before being consumer retail. Being a larger proportion of our overall New Zealand business, the impact on margins was quite evident, as that business tends to operate in a lower margin environment. It's still profitable business, but not quite the metrics in terms of how we generally are looking to deliver and the size relative to the commercial business, impacting overall average margins. The strategy we feel is still correct. We're looking to grow our commercial business and having access to new vendors that we acquired with that acquisition, particularly the HP relationship, being one of the larger vendors in the New Zealand market. Starting to now work on some more synergies across the Australian vendor portfolio to be able to grow our commercial business and start increasing the delivery on margins in that business. New Zealand also, we had over NZD 2 million (New Zealand Dollar) or around NZD 2 million (New Zealand Dollar) of amortization of intangibles. I'll just point out that these numbers are in NZD and slightly vary to the AUD conversion of the New Zealand business, but it still gives a good concept of where we sit in the New Zealand market. There's a bit of work to be done in FY 2023. We acknowledge that around the New Zealand business, and that's gonna be our key focus because we still see it as a major opportunity in terms of bringing up the profitability metrics to the Australian business. Turning our view to the balance sheet. The FY 2022 year was challenging from a working capital investment perspective. The acquisition of Exeed and Hills were predominantly hardware vendors, which meant additional investments in inventory. There was also a period of supply chain disruption which didn't give us a lot of predictability on deliveries and we couldn't rely on vendor ETAs. There was, you know, our teams responded in a way that you would expect around ensuring we had sufficient inventory to meet the channel needs by carrying higher levels. We saw our inventory investment increase by about AUD 60 million (Australian Dollar). Even more so, we saw an increase in our receivables book as we supported credit in the channel. This is one of our core competencies or core expectations of distribution is to support trade credit within the channel and the type of customers and that came with the acquisitions changed slightly the profile of our customer mix, meaning that we've got extended days, whether it's they were the existing terms that operated with the from the Exeed and Hills businesses. Plus, there was a, you know, requests from customers on extended terms, particularly where there was supply chain disruption, and we couldn't complete orders in their entirety. That's meant that our overall working capital dollars have increased, you know, significantly. This was funded via a combination of increase in debt levels. We did do a capital raise, which predominantly was for the building of our new warehouse. In the first instance, we applied it against our debt levels and have drawn on it throughout the year to fund part of the working capital requirements. From a debt to equity scenario with the leverage has been maintained relatively. With the increase in interest rates, we've seen the Debt Service Coverage Ratio come off from where we were at 2021. Definitely all well, well within any kind of covenants that we need to cover. From a cash flow perspective, just as I've said earlier, predominantly has gone into increases in working capital. The acquisition of Hills was predominantly inventory, so the combination of the two represents the increase in our working capital investments. The company has had a strong dividend policy in terms of paying quarterly dividends, and this wasn't any different for FY 2022. The only caveat or the variation is that we tried to smooth out the dividends, and we're a lot more optimistic on what we thought the final net profit after-tax number is likely to be. The interim dividends were set higher than they probably should have been, resulting in a lower final dividend, but comparatively was in total the same, similar dividends cents per share being paid in for the FY 2022 year as we did in FY 2021. The dividend policy has sort of been an underlying feature of the company, and we don't see that changing. I know there's different views, in respect of that. The we are looking to maintain, the 100% dividend policy and still pay the interim dividends. We will have to rethink the dividend per share, per each quarter. If we look at sort of what's next, in terms of the business, I just want to give you an update on the warehouse extension. We completed our current facility, in 2021. We felt that we would have that space for a period of time. With the growth experienced in the revenue number, it was quite evident that we had to press the button on the extension piece. We commenced the second stage of the warehouse build late last year. That will provide a further almost 17,000 square meters in warehouse space. It's currently on track to be completed in the first half of this year. Hopefully, we'll be in a position where we might even be able to be in there June, July of this year because we are running out of space as we have closed the Hills warehouse and moved a lot of the Hills inventory in at our Kurnell location. The cost of construction is estimated to be about the AUD 15 million (Australian Dollar) mark, AUD 12 million (Australian Dollar) for the build and AUD 3 million (Australian Dollar) for estimated fit-out. Currently, it's tracking on time and on budget. Now, Vlad will give you a more detailed update on the Hills strategy and the access and surveillance market. Just wanted to give you an update in terms of where we landed. We paid AUD 21.7 million (Australian Dollar) for Hills, of which predominantly, close to AUD 20 million (Australian Dollar)of it was inventory. We inherited a number of branch sites which added costs that weren't in our forecasting. The work that's been put in place over FY 2022 was to refit some of those branches. There's been investments made in the look and feel and setting up the business to start delivering the profitability metrics in the FY 2023 year. There was costs incurred that were also duplicated as a result of running the extra warehouse whilst we were looking to integrate this business. That work has now been done, and the branches have, we've reduced some of those branch costs by exiting some of those sites and re-signing new leases for new sites that are more suitable for the operations and also sets us up for having the right sort of strategy around the DAS business. That's the update from myself. I will hand it over to Vlad now to provide the business update. Excellent. Thank you, Mary. Good morning, everyone, and thank you, David, for the opening. I just wanted to start with that last year was a very, very challenging year, very emotional year. There was a lot of things that came into last year. This was very unpredictable, but also a lot of really, really good things happened last year. It was incredibly successful year for us. We've executed number of very, very important strategies. I think last year I would probably summarize as we're getting out of that unpredictability. We're setting ourselves and putting ourselves in a fantastic position to take advantage of all that hard work that the company and our organization put last year. Looking at some of those market challenges, I think they were, you know, not dissimilar to the year before but started to change a little bit. Obviously, as the supply chain started to normalize, we would start to taking some of the inventory lines in place, because the unpredictability of ETAs and deliveries was still very much there, and therefore it start tightening some of our working capitals. The ETAs and supply chain is starting to show some real clear sign of improvement. In fact, I'm very certain, I have a very good feeling that by end of this year we will get back into the complete normality because I could see that supply is getting better, factories are getting built, they produce more. Demand is getting slightly adjusted into the certain areas, supply is catching up. That's going to actually work really well, and we go slowly business as usual in 2023. The exactly the same situation with ship shortages, which kind of one result one in the other, and logistic constraints as well. Everything was as a consequence of things that's been happening last year, which it was incredibly hard to predict. When we walked from 2021 into 2022, obviously 2021 was a really strong year for us, close to 30% growth in top line and bottom line, gave us a good headwind. Going in 2023, we didn't forecast things like, you know, war starting in Ukraine, in Europe, which in effect influence the energy prices, the inflation rates, which our business is incredibly dependent on. I mean, we are ultimately a distributor and a logistic company. The energy cost and freight charges and all that sort of stuff incredibly relevant to us. We had to go through acquisition and normalize operational status of acquisition of two companies. We welcomed 300 new employees into the business and the back of Exeed and Hills distribution. There was a lot of things to go through, and I'm really, really happy the way we've handled it, the way we've showed resilience and still delivered a very strong number. That's the market challenges. Let's go to the next slide. What you call IT and market, and strategy. I wanted to show you our market share and how we're actually doing because ultimately certain things we can control, certain things we can't control. We can't control macroeconomics influences environment. What we can control is how well we go against our competitors. How is the market sees us? From our immediate markets, our reseller partners, our suppliers, our vendors, how do we perform? I'm so happy to report that we did really well. If you look at the Australian market, I have removed consumer part of the pie because, I mean, we have in Australia a very tiny, small consumer division. In order to make the comparison more fair, I think if we just look at the corporate commercial enterprise business only, because that's where 98% of Dicker Data Australian business coming from. We sit at 35%, which is double the Synnex, double the Ingram. In fact, if you put both Synnex and Ingram together, we're still a larger and much stronger distributor. We've established ourselves as a strong player in this environment. If we look further and segment the business, and we look at what we call a mid-market and SMB market segments, we hold even more market share. There won't be a vendor where we hold less than 40%-45% market share. From this perspective, we continue to service our partners exceptionally well. We continue to grow revenue. We're walking into the new market segments. We're opening up new opportunities. From our vendor point of view, our market share is growing. From our partners' point of view, our partners are spending more with us than with our competitors. That bit is working really well. If we look at New Zealand market, I've left consumer and retail piece in there because obviously our New Zealand business have a large portion with acquisition of Exeed piece, large portion of a consumer business. We're comparing basically the entire distribution available market. We are putting ourselves in a very strong number two position with 29% market share. Again, even within a very challenging and tough operationally integration year in New Zealand, we've managed to grow our top line substantially. 1 + 1 did not = 2. It actually equal 2.5. Which is really, really good. Some of the areas that we wanted to grow and go a little bit harder in New Zealand didn't happen. Some of the operational leverages and some cost base of New Zealand people we've been very cautious with. I think now as all operations are done, we've moved the warehouse, we've moved the office, we've established our partner base, we've completely structured our business in New Zealand. I think now this is the time where we go deeper and fighting those operational leverages and driving that net profit margin opportunities in New Zealand. In terms of our market share with the leading vendors like HP, Dell Tech, Microsoft, Apple, and a few others, we're solid. Very, very strong and performing really good as well. Again, that's why we call out. Look, I'm gonna name names. In New Zealand was probably one of the biggest challenges in 2022. It will result in being the biggest opportunity for us in 2023. That's how we see it internally here within our business and where you can obviously sense things where a lot of focus and a lot of energy is going to go in 2023. If we go to the next slide, this is just demonstrating a number of portfolios. A lot of investors would ask me about what's the right number of vendors. I don't think there is a clear answer here. It's all about are we delivering the right value to those vendors? Are we doing what those vendors you know, want us to do in this particular region? Vice versa. Are they relevant to us? Are they a strategic vendor? Are they complementary vendor? What sort of return in investment this vendor brings into Dicker Data? Again, you know, maybe 10, 15 years ago, we didn't have this luxury. Now we can actually assess the relevancy of the partnership. How is that going to change within five years and 10 years? What's the long-term relation? This year, we've started this process. Sorry, last year in 2022, we started this process. We're gonna continue with this process in 2023 of actually assessing a lot of vendor relevancies. Which are the gaps we have? What are the new vendors we need to bring in? Maybe perhaps what the vendors in our portfolio don't make a lot of sense. We're starting that process already. Again, it was a very challenging year, yet it's just again the testament of a success that us, an organization, keep achieving. You look at the various industry recognition trophies that we received. Again, there was an Australian business and New Zealand business. There was APJ recognition. Dell Technologies, one of our fastest-growing vendor, and probably still has one of the biggest growth opportunities, awarded us with the distributor of the year at the APJ level. Similar thing we've had with Lenovo. Similar thing with Juniper Networks and so forth. We've had couple of really good software vendor recognitions. We've had Veritas, after awarding us with a best distributor of that region, which is APJ region, the next thing it led into them appointing us as their exclusive distributor in this region, which is fantastic. We have won our diversity and inclusion champions at a WIICTA ceremony run by ARN. On the tenth year in a row, we've become a hardware distributor of the year, and we've become a software distributor of the year in New Zealand. I think it's phenomenal. Just shows the culture that we have, the quality of people that we have, and level of success and resilience that these people is just driving, which just makes us all incredibly proud. Next slide, we go into the 2022 vendor additions. Obviously, we've got a lot of new vendors came from acquisition of the Exeed business and Hills business. Also we've been working adding organically a lot of new vendors. Philips came on board to add to our AV strategy. Cloudflare came on board to add our cybersecurity presence in the market. By the way, Cloudflare came as an exclusive vendor as well. That was a very significant win by our software team. We have Eaton power distribution vendor came in. WatchGuard, and a few other new vendors that came in on board. That is now become a function of day-to-day thing of myself and my executive team, leadership team. We assess the new vendors, we assess the new technologies. We're looking at what our market requires, and we're bringing those vendors on board. That work will continue to happen. If you look at the next slide number 18, as a long-term vendor relationships and diversification, again, a great picture, a great testimony of our well-executed plan. It's always a balance between a volume and value business. We are a hybrid business. We drive both really successfully well. When it comes to the top five vendors, which is the biggest probably top five vendors in the world, when it comes to the channel and distribution, Microsoft, Cisco, Dell Technologies, Lenovo, Hewlett Packard Enterprise. I wanted to make sure that when my reseller partner and one of my 10,000 partners contact and get service by Dicker Data, they get exactly the same service level as they would deal with the vendor itself. For that, I need to build a very competent, skillful, and very strong culturally business units within the organization. That top five, representing about 50% of the business, is exactly what we want to achieve. That's what exactly we've been achieving, especially in the last three years. Also, we need to make sure that the vendor diversification is very strong. We don't want a particular one vendor to hold a big portion. That's more of a risk mitigation strategy. Our top vendor, ANZ, which is Microsoft, it holds just over 11% of the overall share within Dicker Data ANZ. If you look at the independent territories, Australia and New Zealand, again, it will be a very similar kind of percentage. In Australia, Cisco is still the largest vendor, but in New Zealand, it's actually Apple is the largest vendor. Overall in ANZ, it's actually Microsoft who is holding the top position. Saying all that, I think we achieved a nice, good balance between the minutes, and we're continually driving the vendor diversification strategy. Next slide, if we go to the revenue category. Where is our growth came from? AUD 3.1 billion (Australian Dollar). First of all, what a magnificent milestone for the organization to get over AUD 3 billion (Australian Dollar). We've had 36.7% growth in our software business. We've had over 20% growth in our hardware business. Interestingly enough, both acquisitions with the Hills security distribution and Exeed group predominantly brought a lot of hardware vendors on board. We had a full year realization of Exeed business in New Zealand. We've had a six or seven months realization of the hardware business. Good growth on both assets. Software is doing exceptionally well. Recurring revenue grown 42.5%. It's now AUD 745 million (Australian Dollar). We're trying to get to a billion-dollar mark within the next 18 months. I think it's going to happen. We have some exciting new programs that we're driving. Existing and new vendors bringing a lot more subscription type of revenue, product sets and opportunities to us. I think software is going to be a big dominant growth in 2023 as well. If I look at the hardware pie on the left, every single category has grown. The least growth was coming from PCs. We've called it out in the beginning. We've called it out that PCs is going to get softer. It's flatlining. A lot of industry experts were saying that the software will be declining. Some of the industry research analysts were saying that PCs will be declining up to 20% year-on-year. Obviously, we haven't seen it in our business. We still delivered a slight growth. I do believe the tendency of that flat line in PC business gonna continue in 2023. Looking back at January and February pretty much is over, and I'm looking my open orders and the activity levels and open quotes. PCs... commercial and enterprise PCs are still very, very, very solid. Absolutely no, I have full confidence in that line is gonna continue to do either flatlining or maybe a slight, a slight increase in 2023. The networking started to do better. We started to get a little bit better stock in. We started to ship some of our backlog that we brought in from the beginning of 2022. Server and storage component, data center infrastructure went into the growth. If you believe last year it was a decline. Again, we're having that mid-market and SMB started to get a little bit more livelier and doing more projects in. I feel this year we're probably gonna start seeing some bigger projects dropping between 2020 and 2021, and even majority of 2022, we. A lot of larger scale projects were kind of frozen. We definitely see a lot of opportunities and we're quoting on a lot more opportunities right now. In fact, if I have a quick mention about our open orders and our open quoting. Currently, whether it's hardware or software, we're experiencing 30% increase in our quoting activity. As you can see, there's absolutely no slowdown in the way we're going to the market and quote. If I look at our open orders, it's holding just under AUD 300 million (Australian Dollar), it's back from under AUD 400 million (Australian Dollar). You could see that supply chain is getting better, but it's nowhere near my AUD 150 million (Australian Dollar) that it's supposed to be. We still probably have double amount of backlog that we need to ship. By the way, as the supply chain gonna improve, this AUD 150 million (Australian Dollar) will be invoiced and shipped on top of all the regular business activities. That probably will give us a slight upside this year as I start seeing it improving. Look, looking at all the other categories as well, consumer peripherals, obviously with Exeed and Apple type of business coming in, huge increase there. AV/UC has continued to growth and we continue seeing a good upside there. You know, I'm quite enthusiastic given all the macroeconomic circumstances, given all the unpredictability last year, we've learned, we understood, going in 2023, we're a lot better equipped. We're putting ourselves in a more predictable type of environment. We've budgeted a lot of things. We know there will be probably a couple of more interest rate rises, so everything is in the budget now. Okay, going into opportunities. I think I've touched base on some of the key opportunities, but again, cybersecurity, a big talking opportunity growth. We're gonna go after this very aggressively, both Australia and New Zealand. Software you've seen. 30% growth. We're expecting another very, very strong growth this year. Anything to do with Hybrid IT and multi-cloud is a big incentive for us to go after this business. Look, you can read it for yourself. Everything here represents a great opportunity. I always say within my experience, my personal experience, my, I mean, over 20 years being in this industry, I know that tech is always finds the way to benefit whether the market conditions are good or bad. When market conditions are bad and businesses looking how to make themselves more resilient, stronger, more efficient and effective, the first thing that comes to their mind is how I can digitize, how I can make my business more effective operationally, how I can bring more smart into the business so that I can survive. In that sense, everybody will start looking at how they can bring more solutions and technology. If the macro environment is very strong and good and positive, then people would think, "What's the next thing for me? How do I go even further in driving my multi-cloud or Hybrid IT strategies? How do I prepare myself for those tough times to come later? In either way, we find a good opportunity to find our customer. Obviously you could see, even if you look at the last 15 years of Dicker Data's performance and growth, you could find we did exceptionally well in the best times and in the worst times, in unpredictable times. Last year was very heavy in terms of so many things happen at once. This year gonna go more in business as usual and taking advantage of all that hard work that we've done last year. That's how we position ourselves. Now, where is that growth is gonna come from? I mean, I've mentioned New Zealand many times already, I think David mentioned it, and Mary mentioned it. New Zealand is a big opportunity for us. Over AUD 600 million (Australian Dollar) business, very strong market share. We still have some really good opportunities to bring more new vendors on board. Obviously, it's not a secret. The obvious opportunity for us is to get and to bring our net profit margins in line with an Australian business. That, to me, is the biggest opportunity this business have right now from 2023. Second biggest opportunity is obviously our task business. We're thinking of doubling our business this year. In this business, we've put so much hard work, all the branches refurbished, businesses is coming in. New vendors is being established. We've had the gap in New Zealand with DAS. Now we have made a small acquisition of CSP business, Connected Security Products business. That's going to give us the footprint of fantastic customer base and product sets in New Zealand, which result also in some upside in Australia. We're lining that business really, really nicely to take opportunity of that as well. DAS business, both New Zealand and Australia is a great opportunity. Why we're highlighting it as an opportunity, I just want you to remember DAS business operates at least the double margins that IT business operates. In some instances, three times. For us, if we go from an AUD 75 million (Australian Dollar) business to an AUD 150 million (Australian Dollar) business, and then a year after into an AUD 250 million (Australian Dollar) business at margins of 20%+, in some instances 25%+, you can do the maths. It's a very attractive and very good business for us to focus on. So far what I've seen in the last six months, it's just going from strength to strength. Another two points is the cybersecurity. I think I've mentioned to you before, I've been focusing on this area. I mean, I'm looking at our own business. Lots of things we did with our own business at Dicker Data last year is actually improving our cybersecurity internally, putting the double and triple multifunction, multifaceted authentication systems in place, increasing our security, dropping our vulnerability. We've been tested by some of the industry-leading security analysts, internally as Dicker Data of how we position. We position ourselves incredibly well against the threats and so forth. It's something that all organizations, big or small, is going through that now. That space is becoming very, very saturated with so many different players. We as a distributor, we bring the best of abilities, best of the cybersecurity vendor portfolios. We pack them in the solutions, and we making sure that our customers knows about it. The market convergence, of course, it's we believe in this. We're seeing it working. Look at the professional AV market. Look at the electrical market, operational technologies market. If you look at the top 10 customers who's buying those products now, it's all IT customers and IT integrators. Exactly the same thing is going to happen with the physical security and the DAS business. Again, a big opportunities for us to open up a brand-new market, brand-new segment. Like that DAS acquisition of Hills gave us 3,000 new partners. Interesting stats, in the last six months, over 600 of our traditional IT resellers were buying DAS products. Were buying products from the from the Hills distribution. Again, you could see how it's all, how it's all playing out. All right. I think my section is done, and now I believe we are the question time. Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star then two. If you're using a speakerphone, please pick up the handset to ask your question. The first question today comes from Bob Chen from JP Morgan. Please go ahead. Morning, guys. Just a few questions from me. Firstly just on working capital, obviously saw a bit of pressure on that over FY 2022. Can you talk a little bit about how you're thinking about this going forward? It looks like most of the cap raise has been reinvested now. Do you expect to see some of this unwinding this year? I'll- Bob, yep. Yeah. Go Vlad. Okay. I'll just quickly take my view and then Mary can add as well. Bob, yeah, absolutely, 100%. We're already starting to show good signs of reduction. As soon as we will start to see at and get confidence in ETAs and deliveries, it'll naturally gonna come down. It's a very simple mathematical equation. Our vendors give us targets. They want us to hit those targets. We wanted to make sure that we don't miss an opportunity, but on the other hand, we wanted to make sure that we have the right inventory in stock. Our biggest challenge with hitting the targets and getting the right inventory was inability to do that last year. This is as simple as that. You need to buy AUD 10 million (Australian Dollar) in order to receive, you know, a couple of% rebates. We have to buy AUD 10 million (Australian Dollar). We cannot buy what we want to buy. We can only buy what vendors have available for us to buy. When you're in this environment, it's naturally when your warehouse builds up with stock, it's then getting, you know, harder to sell. We're moving more and more into environments where we can get anything we want. With PC vendors, it's done. Now we're going into the mode of how do we reduce those lines that we brought six months ago. If you look at the aging inventory, it's also quite high. The great thing is all our vendors working with us, they're giving us money in order to liquidate it. We've just chosen not to go too aggressive because obviously we're trying to maximize our margins. But ultimately, it's, it's the function of the business, how aggressive we want to go in liquidating and stuff. To answer your question, the further we go through this year, the more confidence we're gonna gain in supply and ETAs. The inventory level is gonna come down, the cash will free up. I do believe that starting somewhere around July, August this year, we're gonna go in more of a normalized business as usual environment. We're bringing our inventory down to the normal sort of a four to five weeks of inventory levels and so forth. Yeah. Just in terms of the receivables piece, because we couldn't complete orders in their entirety, we also found the Days Sales Outstanding increasing with customers taking a lot longer to pay or where they couldn't complete their own orders, requesting extended terms. The type of customers we onboarded with the Hills business, there was established practices of longer terms, and we're starting to bring some of those back as well. I think from a receivables perspective, some of it is gonna be slightly more days, and part of it was contributed by the fact that orders weren't completed in total and customers were holding off paying, which really pushed out those days and the increase in receivables investments. Okay, great. Just on the comments earlier around the quoting activity, so 30% increase, can you just clarify, is that the 30% increase on sort of normal levels that or more normalized level that you're expecting? Yes, 30% increase on normalized levels. It's actually 30% increase on 2022 levels. When I looked at about a week ago, I've done a comparison of open quotes that we've done January 2023 versus January 2022. It's about 30% increase in quoting open quotes right now. Okay, great. Like, how should we think about how that sort of flows into sort of the revenue mix this year or the revenue build for this year? Obviously, look, the top line have increased, right? I mean, we've grown at 25%. You kind of expect the quoting activities increase as well. This is more to demonstrate that, you know, a lot of people find this market tough, and a lot of people find it very challenging, and how is it going to affect us as an organization. When I look at those metrics as a open quoting activities, it just gives me the good sense. I go and slice it further and segment it further as well. Software, hardware, different areas, cybersecurity, Microsoft. I could clearly see where there is an activity is happening, what's the market do, you know, what is driving that demand and increase in quoting activities. To me, right now, as we speak, I don't see any signs of reduced, you know, reduced quoting activities and a normal demand into the business. Obviously, it gives me a good, a good confidence level going into 2023. Okay, great. Just the final one on DAS. You sort of given some color on the gross margin expectation, but just on the PBT margin for that business, like how does that compare to your core business? Exactly the same. It's the double, it's the double gross profit margins, we would eventually expect a double NPBT. Again, NPBT may take a little bit longer because there was a lot of investments done, and it's still very, you know, very heavily operated business. We are rationalizing a lot of things. We're finding the way to operationally find a lot of efficiencies in our internal trades, external trades, servicing the partners. Yeah, I think it'll definitely drive a larger NPBT compared to the, to the normalized IT business. Great. Thanks, guys. Thank you. The next question comes from Chris Gawler from Goldman Sachs. Please go ahead. Hey, David, Mary inside. Can you hear me okay? Yes, Chris. Yep. Yep. Awesome. I just want to ask firstly, just on early payment discounts. I mean, you made a comment that you sort of missed out on some of that in 2022. I mean, how much are you sort of missing out on at the moment versus typically due to working capital? Do you mind just outlining the financial impact of that? Yes, for sure. There's a couple of vendors where the settlement discounts can be quite lucrative. It's in the vicinity of AUD 2 million (Australian Dollar) that we missed out in FY 2022. The opportunity is predominantly with HP and LG. We have to make like strategic decisions around utilizing that capital, which we're in previous years, we have fully utilized, settling HP on effectively COD for a settlement discount that's around 1.5%. We did take advantage of it during FY 2022 at various points. It's just not to the full potential that we could have. Do you expect this year as working capital unwinds, that you'll be able to take full advantage of that again? That's the plan, yes. Yep. Okay. Maybe just on the gross margin dynamic, I mean, conscious there's quite a few, like competing factors at the moment. You know, you've got mix between software and hardware. You know, within hardware you've got, you know, obviously DAS growing and different factors as well, with PCs maybe a bit softer. Do you mind just sort of giving us your thoughts on where you see gross margins heading into 2023, maybe versus 2022? I think we've always been guiding the market on our gross margins at about 9%. I think we've delivered that on our guidance because that's kind of within our control. We know how to control it. We could either go a little bit more aggressive on top line and probably get lower our gross margins. Actually talking about the high inventory, we probably could have gone in a little bit more aggressive mode in liquidating some inventory that then it would be to the expense of the gross margin, you know, a gross profit margin percentage, which we've chosen not to because we knew that our vendors. The thing is, we know that our vendors is supporting us, and we know that the money is coming. It's maybe not coming as fast as we want it to come, but it is coming. That's why we kind of balanced that approach last year. We're probably gonna go in a little bit more aggressive sort of inventory reduction strategies this year and still maintaining our 9% gross margin. The guidance has continued to be the same. We're probably looking at 9% this year. Yeah. Perfect. Maybe just another one on margins. I mean, obviously heading down to P&L, you're impacted by some inflation pressures, you know, freight and wages and things like that. I mean, how are they tracking year to date versus last year? Could that sort of start to become a tailwind through 2023 to PBT margin? Well, we would start seeing some leverage from the cost base. You could also remember in FY 2022, we were carrying duplicate costs as well. We were running four different locations in New Zealand in terms of warehouse and office that got consolidated about September, sort of the later part of the year. Similarly, with the DAS business, it was more around sort of consolidating and setting our footprint and mark within that business. We did spend some time investing in new branches, but we've closed the large warehouse that was adding a significant cost to impacting that business profit margins. Overall, on from our underlying business, our core business, there was a lot of work done towards the late part of 2022 around overall cost structure. I would expect to get some leverage from that cost base in FY 2023, taking into account all those different elements. Great. Just last one from me. Just a comment that you made around how, you know, you're expecting enterprise and government, some of these bigger projects to drive demand in 2023, while maybe SMB is a bit softer. I mean, are you able to give us any sense for anything that you're doing differently this year to capitalize on that versus previous years? This is actually more a function of the market. We've seen a good strong performance from the mid-market and SMB last year. I think obviously the whole economic environment and so forth, while it brings a lot of opportunities, it may also mean that some of the very, very small businesses which we support and service a lot, they may go into little bit more and more into must buy rather than want to buy or wish to buy. We do feel it could potentially, b y the way, I don't see that impact right now. I just wanted to make it very clear, but logically speaking, it will come. On the other hand, what I do see right now is increased quoting activities for the larger, bigger enterprise type of projects. Again, this is something that I have forecasted for this year because I know that government will step in and support a lot of large enterprise customers like Qantas, for example. Qantas couldn't really do much in the last couple of years. Qantas is now actively doing a lot of data center refreshment, things and stuff. Telstra is coming back and a few other things, and a few other larger enterprise customers that we have is showing a good strong degree of activities. I think, we will, yeah, we will start seeing some of those. I mean, enterprise projects is normally as a longer sales cycle opportunities, but we will definitely start seeing some dropping by mid and end of this year. Perfect. Thanks, guys. That's all from me. Thank you. The next question comes from Ed Woodgate from CCZ. Please go ahead. Hi, guys. Thanks for taking my question. Or guys and Mary, I should say. just trying to get just like some extra color on the gross profit margin guidance. You did 9.4% in the second half, if I backed out your GP margins correctly. Is there any reason that you wouldn't maintain these into the full year? Just thinking that fourth quarter's a bit stronger from retail perspective. Are you just being conservative or might you have to discount some stock to move it? I think, Ed, it's all about the balance, which, I think, we've been talking about, around balancing revenue growth with margin. Ultimately we look to deliver around that 9%. The selling through some of the inventory that we've built up is going to impact that. Mary answered perfectly. I just wanted to add a little bit more color to this. Ed, the way we look at it is very simple. Does business growing and doubling this business is going to have a very favorable effect on this 9.4%, right? Improving New Zealand business, driving more commercial and corporate business, versus the fulfillment retail business is going to improve and have a very favorable impact on this 9.4%. However, getting our working capital quicker into the way that we can reinvest it, liquidating some stock a little bit quicker, getting that help from vendors and adding a little bit from ourselves just to speed it up a little bit quicker, will probably have a negative impact. Balancing those three and making sure that we're achieving the objectives and goals for the organization would be the trick, especially in the next two quarters. I think from Q3 and Q4, it'll be a lot more stable condition. Our working capital will be in line where we need it to be. Hopefully, the New Zealand business will start performing at a higher, at already you know, like a business' usual margins. We're probably just going to see where there will be an opportunity to uplift it. At this stage, we're still very much focusing on getting that balance around 9%. Okay. I mean, 9% is still a great gross profit margins. Just wanna make sure I understand correctly. Would it be fair to say that maybe you'd have slightly weaker gross profit margins in the first half and better in the second half? Is that the right way to think about it? It's hard to say. Yes, but probably yes. Second half probably going to be higher. Yep. The first half is probably going to be slightly lower. We'll, we'll see. We'll try to balance it nicely throughout the year. Okay. Just on the 30% increase in quoting activity. Sorry to focus on that. I know you've talked about it a lot already. That's just, it's very positive. Just trying to get a sense of how much that translate to sales growth. Is that. You might have touched on this already. This is a bit bad line here for me. Does that give us some color about your win rates and how they vary year to year? Or is it possible that customers are sourcing more quotes? Yeah. From various distributors to manage inflation? Or- Yeah. Is there any other factors out there that we should think about? Sure. I've looked at our win rates, and our win rates has remained constant. You're absolutely right. Your question is, has a full merit. I mean, are we quoting more but we're winning less? No. We're quoting more, we're winning the same. Great. It's the rate of between 15%-16%. That's what normal conversion rate is. We're not dropping it. It's just a number of activities. Look, don't forget, our business has grown, right? We are not AUD 2.5 billion (Australian Dollar) business anymore. We're AUD 3.1 billion (Australian Dollar) business. We're going to continue to grow this year. It's obviously, it's a natural to expect from more vendors, more partners, bigger quoting activity. What I'm trying to demonstrate here, that at the moment, business does not see any slowdown in activities. In fact, we're incredibly optimistic. My team is very optimistic. That's to that point. Okay. That makes sense. Just on your covenants, I mean, doesn't seem like you're in any danger of hitting them. Just so that we know and we understand, can you just provide some color around or remind us what they are exactly? That's correct. Ed, Being predominantly a receivable facility that's funding working capital, it's really just an EBITDA to debt covenant and a Debt Service Coverage Ratio, and both are well within the range. Are you able to tell us what the number is, like the actual, the lockup or the? There's two different facilities, so I'd prefer not to. Okay. All right. Just one more for me. Very pleasing, strong networking services, service and storage growth in the second half. Just trying to get a sense of, like, how to think about this, given you're probably supported by the backlog being drawn down a bit, but everything we're hearing is that that's a strong area of growth. Yeah. Would you say that second half? Absolutely. That's the new normal or? Go on. Yeah, look, you do remember, Ed, as well. I mean, I've called it out all along last year. I was saying that data center infrastructure, anything to do with solution, complex solution selling is going to dominate the market. It started well. I agree with you. I think if you know, supply is getting better. We started to get a few things. We started shipping a lot of backlog. By the way, the backlog on data center infrastructure is still, like, under $300 million. It's still very healthy. That's gonna continue to invoice and ship this year. What's very pleasing to see, like you've said and what you're hearing in the market, that area is actually a growth area. Increase in quoting activities and other stuff is actually coming a lot from this area. We're very hopeful that those enterprise networking and data center infrastructure vendors, including software, I think is going to be our flagship growth, product segments this year. Okay. Well, thanks very much for taking the questions. Yeah, it's been a challenging environment. It looks like you've done a good job despite it all. Thanks very much. Thank you. Thank you. Thank you once again. To ask a question, please press star one on your phone. The next question comes from Aryan Norozi from Barrenjoey. Please go ahead. Hi, team. Hope you're well. First one for me, please. Can you just give us an idea of what your revenue split is between SMBs and enterprise and gov? 'Cause the outlook commentary did suggest, I mean, the outlook for SMB is obviously softer, but the enterprise business is stronger. Can you just talk to what the relative magnitude of revenue contribution is for your business, please? It's remained about 25%-75% throughout 2022. The truth is, it's a bit unknown for 2023. I do believe it's probably gonna go 30% enterprise and 70% mid-market SMB. Obviously, given the growth areas and net new areas of opportunities and net new growth, I think it's, you're probably gonna rebalance it back into the 75%-25% because a lot of new markets where we're opening, it's actually more into the SMB area. Like, for example, I'll give you an example. DAS business, predominantly most of the business is done in that mid-market and SMB. This is the 90% of the business, and we're expecting for that to grow. It's not the market growth, but Dicker Data is going to take share and grow in this segment. Our internal books will probably remain about 25%, 75%. Perfect. If I just look at your PBT margins in calendar 2019, which is probably the best reference point 'cause there's a lot of volatility during COVID, but you were tracking about 3.6%. This half, you did about 3.4%. How do we think about, given all the comments you made around duplicated costs and gross margins remaining flat around that 9% mark, how do we think about PBT margins into calendar 2023 and 2024, like sustainable levels for your business? Well- Um- It's a very simple answer. Back in 2018 and 2019, we didn't have a NZD 600 million (New Zealand Dollar) New Zealand business. Which at this stage is driving our NPBT down. If you look at Australia, we actually delivered 4% NPBT last year. We just need to continue to drive better outcomes and on NPBT outcomes in New Zealand, and that's gonna give us a really confident and good platform to continue to retain that sort of somewhere between 3.5%-4%, we're very comfortable with, given that we find that improvement in New Zealand. Okay. How much of the New Zealand margin drag is New Zealand being underlying weaker because of retail in terms of PBT margins? From a group perspective, how much of it is, like, duplicated costs? I mean, like your cost stepped up quite significantly in the second half. Can you just quantify what the cost, duplicated costs were in this half? That's the first part. The second part, how much of it is New Zealand just being at a structurally lower margin because of retail, if that's the case? The retail business in New Zealand was somewhere so NZD 200 million (New Zealand Dollar), and that operates on much lower margins somewhere in terms of the profitability. What would you say, Vlad? Yeah, NPBT. About one- NPBT on that particularly. About one- is about 1%. Yeah, about one, I would say. In terms of costs, it was particularly around warehouse logistics duplication, we had four properties. In terms of quantum, in the first. It would be more so the first half, though, 'cause some of that was worked through into the second half. We had interest rate increases, and we had a facility that we put in place that to fund the working capital in New Zealand, which was driving the increase in overall costs, and that happened in June. Included in the New Zealand number is also, which isn't available for the whole of the previous year, only a proportion is amortization of intangibles as well, somewhere around that NZD 2 million (New Zealand Dollar) mark. If I look at just cash cost in our business, 'cause interest costs we're aware of, DNA we're aware of, but your cash cost in our business was about AUD 85 million (Australian Dollar) in this half, second half 2022. Is that then your cost base, or would that cost, that AUD 85 million (Australian Dollar) step down into the first half of 2023 and second half of 2023? It sounds like there's costs in this half in that AUD 85 million (Australian Dollar). Are you talking about New Zealand or just? No, just the group. Just the group. Yeah. It was AUD 85 million (Australian Dollar) for this half and AUD 154 million (Australian Dollar) for the full year, cash cost of own business, so excluding- Yes. -depreciation and interest. Does that AUD 85 million (Australian Dollar) for the second half step down? By what magnitude? That's sort of basically what I'm trying to get at is what the cost impulse within this half that won't repeat next year. It's a hard one to sort of gauge specifically because the biggest increase was around headcount and delivery on metrics within separate business units and therefore performance-based payments being relative to those outcomes. It's a difficult one to say, Aryan, without having further dissecting it. Okay. Last one, just around the debt profile. Like, is it fair to assume net debt improved slightly in first half calendar 2023 and then second half 2023 it improves materially? Will it remain elevated at these levels for this next six months and then as these backlogs and supply chain issues formally or fully gets resolved, it'll step down materially then? How are we thinking about cash conversion, please? I think, in terms of debt, the working capital is still gonna be funded via debt. Whilst we step down working capital on sort of the existing volume, we are gonna look at growing the business. There is a reinvestment element as well. In terms of total debt, I would say it would remain around the same. Okay. net debt, the debt minus cash for 2023 shouldn't really fall that much. It's just your existing business working capital will improve. basically net debt is- Then reinvest. Yeah. Yeah. It's around AUD 270 million (Australian Dollar) will continue into calendar 2023, basically, is what you're saying. Yes. Okay. Has anything in your payables, in your receivables and inventory days structurally changed versus pre-COVID? like, if your inventory days are running. Not so much inventory is running higher, but that has got to do with a type of inventory we're holding in the supply chain unpredictability, which some of that's gonna get addressed. In terms of the receivables, part of the increase is possibly structural around the type of customers, the retailers who tend to pay a little bit longer days and the security integrators who had existing legacy terms that were longer. But the element of our receivables book that had extended terms due to incomplete orders or not being able to fulfill complete orders and therefore extending payment terms, we're expecting that to come back and we should see an improvement in that in the debtor days. Okay. Not improvement in net debt. Like, that'll be pretty, yeah. Well, I mean, we're looking at growing top line again, and further investing in other lines of inventory. In terms of quantum of dollars, you know, there's still gonna be a requirement to reinvest in these new business segments. Great. Really appreciate it, guys. Thanks very much. Thank you. The next question comes from Gabriel Correa, Private Investor. Please go ahead. Yeah, just continuing on the theme of receivables. The trend actually goes back closer to 2016 to 2017, where receivables, excuse me, are increasing at an increasing rate relative to revenue. I was just wondering about the competitive position and the incentives you're offering to your customers, and yeah, the payment terms that are present there. Thank you. Actually, Gabriel, that's a very valid point because it's also in that environment where our competitors are offering extended terms, and part of that in terms of that structural piece is that to remain competitive in the market, the offer of terms outside of standard terms. Our standard terms are 30 days, end of month predominantly, but we've had some key, Sort of new partner acquisitions, where terms are operating between 45 and 60 days. Often they've matched with support from the vendors in terms of extended terms, whether it was a result of supply chain disruption or whether it was very deal based and some of that's been supported with the vendors providing that. We just have to assess where the market's at as well. That's a factor that plays into sort of where we ultimately land on, receivable days. Okay. Just to clarify, are the terms part and parcel of the core business, or are they increasing as you've done acquisitions and those are the terms, the structural, the structural terms of the various businesses you're morphing into? Those businesses that we've acquired, had customer bases with terms that were at higher than where we would have traditionally as an IT business, operated at. Some of those, we're having active conversations with customers on bringing some of those back. The competitive environment sometimes dictates what that might look like. There'll be an element of that this year in terms of winning new business, might require a supportive terms that go outside of our normal terms. Okay. Thank you for answering my questions. Thank you. The next question is a follow-up from Aryan Norozi from Barrenjoey. Please go ahead. Sorry, guys, for asking the question. Just very quickly, to what extent, if any, did gross margins benefit from FX fluctuation? Obviously you hold inventory at cost, but if there's an Aussie dollar that's falling relative to the U.S. as price increases go through, like in the second half, to what extent did that benefit the margin, please? Aryan, it would have fed into the margin, but if in terms of other income, that represents FX revaluations realized and unrealized, and the reduction in other income is a function of that mark-to-market where because of these extended ETA dates and the general hedging policy, we had open POs from prior periods for some U.S. vendors, reflected at higher rates. When those goods came in, were booked in at a more favorable cost. The off-offset to that is the FX other income piece. You can see in the other income line that's come off significantly. Got it. Thanks, guys. Thank you. At this time, we're showing no further questions. I'll hand the conference back to Vlad for any closing remarks. Well, just quickly summarize 2022 as a very operationally heavy year. Lots of unpredictability in the markets. I feel that our agility and our flexibility and our strong organizational culture have made us to deal with the best possible ways we could. I think it was a lot on. It was very, very busy. I think the stress levels within organizations were very hard, and I'm so proud of organization to actually handle it and show once again a great resilience. We've done so much hard yards and hard work, especially on operation like, you know, in consolidating our New Zealand business, bringing DAS business, getting great platforms internally. We also went out into the market last year as well. We did a big TechX roadshow, which is a flagship of the industry show. Over 3,000 people attended. It's just been a lot on. I think we're all looking forward for 2023 for what I call a business as usual year. Just get down to basics, get down to right metrics. Once again, it's AUD 3.1 billion (Australian Dollar) moving into a more growth. The opportunity in front of us is exceptional. I think it's probably one of the more, like in my, in my memory, one of the most enthusiastic ways to look at it when I look at how much opportunities there is within the business. That would be my closing remarks. Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect your lines.