Hello, welcome to the Data#3 Limited Fiscal Year 2023 Results Briefing. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star one on your telephone keypad. I will now turn the conference over to Mr. Laurence Baynham. Please go ahead. Okay. Thank you very much, good morning, everyone. I'm joined by Cherie O'Riordan, CFO. Thank you very much for joining us for this FY2023 results briefing. I'm pleased to report that this was another strong year for Data#3, with yet another record financial performance. This continues our trend of sustained profit growth and our leadership in the sector. Our revenue growth was 3X faster than the wider IT sector as we continue to capture market share. Our profit growth was substantially above our peers, locally and globally. Let's begin with the financial highlights, move on to slide 2. Revenues were up 16.9% to AUD 2.5 billion. Gross profit was up 14.9%, which flowed through to the net profit before tax growth of 20.7%. Net profit after tax was up 22.4%. The profit increase is reflected in the earnings per share growth of 22.2%. From this result, the board's pleased to announce a record total dividend of, for FY2023, of AUD 0.219 per share, which is up by 22.3%, and represents a payout ratio of 91.4%. Move on to slide three, and the, the agenda is relatively simple for this morning. I'll start with the Data#3 overview and then lead on to an operational overview. Cherie O'Riordan, who's now several, several months into the role, will take you through our financial performance, and I'll close out with a look at our strategy and outlook. We'll open for questions. If we move on to slide five now. What's driving this growth? Well, firstly, we're operating within a growth market for information technology, for large corporates and government customers. We've seen a continual improvement in the supply chain, and we're pleased to see global chip shortage and supply chain constraints and delay, and delays eased further in the second half of this financial year. The supply chain generally is returning to the pre-pandemic normal. We're also making strategic progress, focusing on growth in our services and software solutions business to support our recurring business, which is at two-thirds of our total revenue. We continue to see demand for large IT integration projects, and our pipeline remains solid. These projects extend across our solutions portfolio and include infrastructure, software, and services. Such projects typically span multiple financial years. It's also gratifying to see that our success with our customers continues to be reflected with several global and national awards from vendors such as Microsoft and Cisco, which I'll cover later in the presentation. Awards continue to be an important factor in attracting customers and helping us win business. Data#3 is now over 1,400 employees, with 100 new people joining us in FY2023. The majority of the new hires have been in our services business, which is in line with our strategy. At the same time as improving the solutions and financial performance of the company, we're pleased to report that we made progress in making Data#3 a better company with our ESG activities, including defining and improving our net zero strategy and delivering on the first Phase of our Reconciliation Action Plan. From slide six, now the operational highlights. From an operational perspective, FY2023 had many high points, and we continue to drive transformation for our customers. We're seeing rapid product development incorporating multi-cloud solutions with plenty of upside around services as we provide customers with more work in the cloud. Security continues to be our fastest-growing area and a top priority for customers as they respond to the ever-evolving and increasing threat of cyber breaches, seen by many as their number one business and risk management imperative. As I mentioned, one of our strategic imperatives is to drive growth in high-margin consulting and managed services to improve future gross margins. We, yeah, increased investments into this business area, primarily in our people, and then onboarded many new customers during the year. We were pleased with the revenue growth achieved in both of these businesses, and margin growth is heading in the right direction. Importantly, our global vendor partners are increasingly shifting their incentive programs to align with services solutions. This year saw many significant contract wins, several of which were in managed services and are typically five years in duration. One notable example was a multi-year contract with a Future Fund Management Agency to manage their entire IT environment, including providing services remotely and providing a growing team on-site in their Melbourne offices. Customer experience continues to be a significant focus as we invest further in our systems and people, as well as our data and analytics, to measure every customer touchpoint and help improve the overall experience. We work jointly with our vendors to embed our data analysis into customer contracts and service level agreements. Our strategy for FY2023 was to grow more rapidly in the two largest Australian IT markets. I'm pleased to say that we saw solid growth of 13% and 15% respectively in Victoria and New South Wales as we continue to grow our market share. Moving on to slide seven now. Digital transformation is the primary driver of growth in our industry. Every one of our customers, whether public sector or larger commercial customers, has a digital transformation agenda, and increasingly, their digital strategies are the same as their business strategies. We're still in the early days of digital transformation, with plenty of headroom for growth. Data#3's role in digital transformation journey is to provide the foundation layer of cloud, modern workplace, data analytics, connectivity, and security. This platform enables some of the cool new innovations in technology to emerge, such as robotics, 3D printing, and extended reality. Each one of these solutions has many service offerings that provides competitive differentiation. There are very few, any other organizations in Australia that have the breadth and depth of these solutions and services. Our strategy is to build around each solution and to provide a full life cycle of services, from consulting to design and implementation, through to support. For example, growing our security consulting, security solution design and implementation, and our security support services. Let's move on to slide eight. Artificial intelligence is becoming a major digital milestone. Satya Nadella, Microsoft's global leader, says that generative AI will be as impactful as cloud or the Internet. Well, moving on to s-- um, slide nine. This year, generative artificial intelligence truly entered the mainstream as a business priority. It is early stages for the industry, and we're assessing the widespread applications across our customers' transformation projects. We're already seeing AI enabling rapid product development, incorporating cloud, hybrid work, security, connectivity, and data analytics. Importantly, we're aligning ourselves with the global market leaders in AI, esplec- especially through our partnership with Microsoft. And so we're at the forefront of this change as our customers' enabling technologies is increasingly AI-driven. We're also looking at opportunities to apply AI within our own business and to further improve our operational efficiencies. On slide ten, we have highlighted our core functional solutions with their associated offerings. Our goal is to build out our services across the life cycle, from consulting through to implementation, through to support services. For example, providing advisory and consulting services on cloud adoption, flowing through to the design and implementation of a cloud platform, and finally, a recurring revenue to support, to support the cloud contract. Also, we do not, we do not need to start with consulting. We often gain support a support contract, and then we provide consulting services. Either way, our solutions are increasing across the life cycle and will be increasingly enabled by AI. On to slide, slide 11 now. One of our greatest points of differentiation is our vendor relationships. We're a leader with each of these vendors, Microsoft, Cisco, HP, and Dell. Leadership can be measured in many different ways. However, in FY2023, we succeeded in winning Cisco Global Security Partner of the Year, selected from 60,000 Cisco partners globally. We also secured two Microsoft Global awards, which is not too bad for a relatively small Australian company. Awards do not have any direct financial benefits, but they do play an important part in attracting and retaining the best talent in the market, and our customers look to awards for validation of our skill sets. In the Australian large corporate and public sector market, we estimate that these vendors represent 70% of customer spend, which is why we focus our investments with market leaders. In addition, we have hundreds of other vendors who we work with and continually evaluate our levels of investment. One of our greatest strengths is to combine the products from multiple vendors to make a tailored and integrated solution for our customers. Moving on to slide 12. To round out this part of the presentation, we've mentioned many domestic and global awards received this year, all of which you can see on our website. In fact, in FY2023, we saw dozens of new vendor awards that reinforce our leadership position in Australia. One non-vendor award is the HRD Employer of Choice Award, which we have managed to secure once again in the category of employers with over 500 people. I'll now hand over to Cherie O'Riordan for a financial summary. Thanks, Laurence. Good morning, everyone. It's my pleasure to review our 2023 financial results in greater detail with you. I'll start with slide 14, which shows a brief summary of our earnings and dividend trends. Our goal remains to deliver sustainable earnings growth. We are very pleased to report that the growth in gross profit and steady internal cost ratio have delivered strong earnings growth this year. As highlighted by Laurence previously, basic earnings per share increased by 22.2%, and total dividends increased by 22.3%, representing a payout ratio of 91.4%. As the charts show, this is clearly the standout result. The fully frank final dividend of AUD 0.119 per share will be paid on the 29th of September, 2023, with a 15th September record date. We've clearly delivered sustained rate revenue growth, as you can see on slide 15, with a compound growth rate of 15.3% over the past five years. Reflecting our strategic focus on growth in services and software. This year's growth was driven by strong customer spend in the higher growth, education, health, and resource sectors. As mentioned by Laurence earlier, approximately 65% of our total revenue is recurring, consistent with the prior period, and derived from software and services contracts with government and large corporate customers. Data#3 comprises a wide portfolio of IT businesses, and the chart on slide 16 breaks the total revenue into three broad functional areas: infrastructure, software, and services. The chart shift clearly shows the change in revenue mix over time, with the strongest growth in software, which is also where most of our multi-cloud revenue is recognized. I'll provide more detail on these areas in the next slide. It's important to remember there are very significant interdependencies between these different business areas, and our solutions typically comprise a combination of infrastructure, software, and services. While revenue growth is obviously important, we place greater emphasis on gross profit. The table on slide 17 expands on the revenue mix, showing the breakdown of revenues by individual business unit within the three broad functional areas and the changes compared to the prior period. It also includes the relative gross margins generated by the various business units, simply rated low, medium, and high in terms of the typical gross margin spectrum. Our main product-related businesses achieved better than expected revenue growth and more than 3X the broader market growth rate. Infrastructure sales increased by 28.6% to AUD 566 million, and software licensing revenues increased by 15% to AUD 1.6 billion. Our combined services revenue increased by 7.7% to AUD 340 million, reflecting a mix of growth rates across the portfolio of businesses as follows: Consulting revenues increased by 25% to AUD 33 million. Project services revenues increased by almost 12% to AUD 74.5 million. Maintenance services revenues decreased by just under 4% to AUD 125 million, following an unusually strong prior period result. Managed services revenues increased by 31% to AUD 39.3 million, and people solutions recruitment revenues increased by 9% to AUD 68 million. Total growth profit increased by nearly 15% to AUD 250.7 million. Total gross margin decreased slightly due to the change in sales mix. Pleasingly, the services growth profit increased by nearly 25%, with gross margin increasing by 5%- 36.4%, reflecting the growth in the higher margin consulting and managed services revenues. You'll note that we're now splitting out managed services and maintenance services for the first time to demonstrate the strong growth we've seen in managed services, albeit from a low base. It's also worth noting that the maintenance services business had some one-off contracts in the prior comparative period that were not repeated in FY2023. We're pleased with the success of our managed services offerings, fueled by our Microsoft Azure Expert Managed Services Provider accreditation. This places Data#3 among the elite ranks of Microsoft Azure managed services providers globally. We onboarded several new customers in FY2023 and expect to realize the benefits of this investment as contracts mature following their initial transition phase, with profitability generally increasing from year two onwards. The product-based growth profit increased by 6.5% to nearly AUD 126 million, with gross margin decreasing slightly to 5.7% due to the relative mix of higher volume, lower margin products, and gradual shift in vendor rebates to services. To reiterate, the company's revenue has seen very strong growth in relatively low gross margin areas in recent years, especially software and multi-cloud, and this has reduced the overall blended gross margin. This is purely a result of the change in revenue mix. The gross margins have remained relatively stable within each individual business unit. Our deliberate strategy to accelerate the growth of services has been successful, and the strong growth in the higher margin areas of consulting and managed services has helped stabilize the overall blended gross margin. A key point we'd like to emphasize is that our objective is to achieve sustained growth in the absolute value of gross profit, and that it is a more important measure of success than the blended gross margin%. We expect to continue to deliver strong growth in services, which will boost the overall gross profit and should in turn increase the blended gross margin over time. You can see our growth in total gross profit on the left-hand chart on slide 18 and the total gross profit trend. We're particularly pleased with the FY2023 performance, which delivered a 14.9% increase in total gross profit. We also manage our internal staff costs and operating expenses very closely. The chart on the right of the slide shows the trends for these costs and how they compare to the total gross profit. Our internal cost ratio, which is staff and operating expenses as a percentage of gross profit, is one of our key measures of operating leverage. The ratio has improved from 88% in FY2016 to 80.3% this year, which is an excellent result. It was slightly up from last year as we continued to invest in the business this year, especially managed services and expenditures such as travel have returned. Longer- term, we expect to continue to drive operating leverage across our business. The next slide, number 19, shows the P&L statement. I've summarized the key points on the slide, on the slide. As Laurence mentioned upfront, our revenue from contracts with customers grew nearly 17%, our pre-tax earnings benefited from interest income of AUD 3.5 million compared to AUD 0.3 million in FY2022, predominantly from higher interest rates earned on deposits. Looking at the expenses section of the P&L, the first four lines represent cost of sales. Deducting those items from the revenue from customers, from contracted customers, gives the total gross profit, which increased by nearly 15% to AUD 250.7 million. The next line, labeled Other Employee and Contractor Costs, comprises our internal staff costs, which increased by 15.7% to just under AUD 177 million. This reflects steady growth in headcount compared to the prior period, predominantly in services, as well as general remuneration increases in line with the market, but less than those experienced in the prior year. The sum of the remaining expenses lines gives the other operating expenses. That total increased from AUD 21.7 million- AUD 24.3 million, with increases in travel as well as amortization of the ERP implemented in the prior year. The balance sheet is shown on slide 20. I'll now run through the key points. We have a strong balance sheet with no borrowings. The traditional fourth quarter revenue spike inflates the current trade receivables and trade payable balances at 30 June, typically generates large temporary cash surpluses at year-end. A key trade receivables measure is average days sales outstanding, and that was 33 days for FY2023, up from 28.1 days in the prior period. This reflects some collection delays caused by the supply chain issues and associated partial shipment of orders. Despite the temporary increase, the days sales outstanding remains at industry best practice levels, and the underlying risk of collection of overdue debtors remains very low. Our inventory holdings are typically relatively low and comprised of allocated stock. That is, products held in our warehousing configuration centers, pending delivery to customers. Our inventory holdings reduced at the end of FY2023 due to the easing of supply chain constraints that Laurence mentioned earlier. The fourth quarter sales spike skews the working capital at year-end, so I've included a working capital analysis on slide 21 to help illustrate this seasonal impact. The chart shows the changes in the working capital components reported at 30 June and 31 December over the last five years. The key point to note is that the underlying working capital position, shown by the black line, remains stable despite the significant seasonal fluctuations between the reported period ends. We have a very efficient working capital model, and the working capital cycle is typically very short or even negative, so our business is effectively self-funding. This is due to our relatively low inventory levels, our short collection cycle, and the favorable trade terms offered by our suppliers. Lastly, slide 22 shows the cash flow statement and summarizes the key points. The sales seasonality has a significant impact on the operating cash flows due to the high volume of sales in May and June each year, and the timing differences in the collections from customers and payments to suppliers around 30 June each year. This causes the typical operating cash outflow in the first half of the next financial year. The net cash inflow from operating activities was AUD 291 million versus outflows of AUD 22.6 million in FY2022. This is primarily the result of a higher number of customers electing to pay early and pre-30 June, combined with the growth in sales in Q4 of FY2023. One point of comparison is the average daily cash balance, which was just under AUD 121 million, compared to AUD 117 million in the prior period. These cash balances typically include sizable temporary surpluses due to the working capital cycle. The increase in the average daily cash balance in FY2023 is attributed to growth in the business. Despite these large balances, it's important to note that underlying free cash is typically around AUD 15 million. However, this was lower in FY2023, as inventory was temporarily inflated by supply chain delays. The other point to note are the relatively low levels of capital expenditure and the high dividend payout ratio of 91%. I hope this information has helped you give you a better understanding of the key drivers of our financial results. Many thanks for joining the briefing. I'll now hand back to Laurence. Okay, thank you, Cherie, great to see those strong numbers again. Before we go into the question and answers, I'd like to confirm our strategic direction and the company outlook. We'll move on to slide 24. Looking forward into FY2024 and beyond, our strategic framework is underpinned by a focus on customer success. The more successful our customers become, the more successful we become in our financial results. The strategy also revolves around having the best people and the most secure and scalable, innovative solutions in the market, plus operating our business efficiently. We've consistently been able to achieve this at a high level, enabling customer success and sustaining financial performance growth. In slide 25, we would like to highlight many new successful customer stories. All of these are on our website with a description of the project and the benefits that the customers derive from their technology investment. One of the largest multi-year projects is the integrated resort development at Queens Wharf in Brisbane. In slide 26, this is one of the Queensland's largest infrastructure projects. To give you an idea of the scale, it consists of four towers, 50 restaurants and bars, a ballroom, 2,000 residential apartments, around 1,000 hotel rooms, a bridge to South Bank, retail areas, and the redevelopment of nearby heritage buildings. Data#3 is designing, building, installing, and supporting the digital network. We're handling over 60,000 items that make up the network, including 2,200 switches, 2,000 wireless access points, 3,000 security cameras, 140 communications rooms throughout the development. It's still a work in progress, and we're nearing completion of the implementation phase. One of the primary reasons we win these large projects is the extensive work that we do with our vendors, such as Cisco, and our track record of successful delivery. With the Brisbane Olympics coming up, we are well-positioned to do more of these large-scale infrastructure projects. On slide 27, on competitive advantages, this leads me to talking about our competitive advantages that when combined, makes us a unique organization in the Australian IT market. We have discussed many of these through our presentation, but we'd like to highlight our agility to respond to changing market dynamics, supported by a strong financial position. With the dawn of generative artificial intelligence, we're also at the forefront of change that is sweeping through the IT industry. This will only continue to enhance our position in the market. On slide 28, our strategy remains focused on increasing customer engagement across the life cycle. The average revenue and gross profit per customer has increased over the years, as we extend engagement across solutions, particularly by focusing on services. After the temporary shift in spending to lower margin products during the pandemic, we're pleased to see average gross profit per customer returning to growth. Importantly, we have over 5,000 active customers, with the largest across public sector accounts in health, education, and the resource sectors. These sectors continue to demonstrate strong growth, which further underpins our positive outlook. Our strategic focus areas for FY2024, moving on to slide 29, are customer experience, security, accelerating services, and ESG. Our growing customer success team works with important data from our customers' use of multi-cloud technologies, where we take a long-term view of our relationship rather than rather than just transactional. This results in improved overall customer experience. Our security business is going from strength to strength, it's still the number one priority for our customers. The continued investment in all our services business units and the associated solution sets is the centerpiece of our strategy. As I mentioned, while focused on improving the solutions and financial performance of the company, we also look to continue to develop our ESG strategy with the support of our team. Across each of these focus areas, we aim to improve our gross margins, provide better value to our customers, capture internal efficiencies, and increase our recurring revenues. Now, on slide 30, on the outlook, we expect technology and specifically digital transformation, to play a leading role in Australia's economic future, underpinned by growing demand for security, multi-cloud solutions, all increasingly enabled by generative artificial intelligence. The growth in our services business aligns with our global vendor incentive programs. We expect to see increasing profitability from many new managed services contracts secured during FY2023 as they mature. In slide 31, we continue to experience a steady increase in the pipeline of large integration project opportunities across our corporate and public sector customers, and are seeing strong revenue growth in our higher margin managed services business, complementing our growing software and infrastructure businesses. With our market-leading position, strong supplier relationships, long-term customer base, and experienced team, we're confident in our outlook as we enter FY2024, despite some of the expected slowdown in general economic activity. The industry is rapidly progressing, and we are well positioned to benefit. Now, thank you, and now we're happy to take questions. Thank you. If you have a question, please press star one on your telephone keypad. Please limit yourself to one question and one follow-up question. You may, you may rejoin the queue if needed. One moment, please, for your first question. Your first question comes from the line of Chris Gawler of Goldman Sachs. Your line is open. Good morning, Laurence and Cherie. Can you hear me okay? Yep. We can. Fine, thanks. Thanks, Chris. Great. Yeah, just a couple of questions for me. Firstly, just wanted to ask a question on the, on the product gross profit margin, in the second half. Interested if, if you could unpack a little bit more the moving parts between mix, rebates, you know, potential discounts to customers that saw the product gross margin come off in the second half sequentially versus the first half? Thanks. Yeah. Yeah. I, I can start, if you like? Sure. Yeah. We, we had a number of, larger corporate and government contracts in the second half, which were probably lower- the lower end of the margin scale, in addition to, an increase in end-user computing deals, which are obviously also lower margin. We're, we're seeing a gradual shift in rebates towards services, so that did have a little bit of an impact on the INS margins as well. Yeah. Just to, probably, echo that, the larger contracts tend to... We're talking substantial, large contracts, because, because we grew the infrastructure business, as you can see, in terms of the revenues. Some of those larger contracts were competitive and highly competitive wins, and the margins that we attracted were not the highest as we secured new business wins. Yep, sure. That makes sense. Just on, just on the cost base and the operating cost ratio, just noting your comments around investing ahead of the curve, particularly in the managed services business, how should we think about OpEx growth and our services gross profit margin into FY2024? Yeah. We, we expect the cost base increase to be consistent in FY2023, as what we saw in sorry, FY2024, as what we saw in FY2023. We'll continue to invest in systems and people. However, we do expect to see some operating leverage off those investments next year, and particularly in managed services. We, as we mentioned, we onboarded a number of new, substantial new customers during the year, and profitability increases with contract maturity in managed services. We're now well placed to service existing and new customers. We, we don't see any dramatic shifts in our operating cost base in FY2024, so as Cherie said, similar, similar to FY2023. Guys, I'll jump back in the queue. Thanks, Chris. Your next question comes from the line of Nick Harris with Morgans. Your line is open. Thank you very much. hi, Cherie and Laurence. Appreciate you taking my questions. a couple of ones from me, please. The first one was just, appreciate, as always, you don't provide guidance for the year ahead. Just as we think about the outlook, obviously, the world's still relatively volatile. I'm just wondering, you know, is there any reason to think that the cadence of growth in 2024 should be particularly different to the last few years? Thanks, Nick, for the, for the question. The, the short answer is, the short answer is no. The prediction for the IT market that we operate in globally and locally in the Australian market is still, between 5%-6% growth. We, we aim, as we have done, I think, for the last 10 years, is to improve on the overall market growth and take market share. We did that in FY2023. We, we grew 3X faster than the market growth. We, we anticipate, probably that the, the market will continue to grow. Despite some of the economic volatility, technology plays a great, an, an increasingly important role, even if customers are, downsizing or consolidating, their spend, they're using technology to do so. Of course, the, the, the other unknown factor and the, the X factor, if you like, or the AI factor, is the AI factor, is the. That's we've, we've. The industry as a whole, and I think the market as a whole, is yet to, to quantify what that actually means. However, what we, what, what is very certain is that we, we will not see any, any decline because of the increased activity with generative artificial intelligence. As we see new projects come on board and Microsoft investing across their portfolio and embedding artificial intelligence across their entire portfolio, we will only see, my belief is, increased activity and therefore increased spend with our customers. That's great. Thank you, Laurence. Just two more questions that are sort of intertwined. Just the, the Queens Wharf, obviously, there's been some construction delays there, publicly announced. Just wondering if that has had much of an impact on Data#3, and it sort of feeds into my third question, which is just that, that staff hires, that ICR ratio. You started to touch on it before, but historically, declined year-on-year, but was a bit flat this year. I'm just wondering, were there some timing kind of issues, as in some of those staff, you expected to be re- revenue generating, but maybe didn't get as much revenue for the year as you hoped? Does that, you know, does that, improve in the year ahead, basically? I think Cherie answered part of that with the managed services stuff, but just want to clarify. Thank you. Sure. Maybe if I answer the first part, and then Cherie, talk about the second. Yeah. The, the first part, just with Queens Wharf, you're quite right. There has been some, some delays in opening. I believe that the opening date is now around six months away, which is probably hardly surprising for a project of, of the, the scale. From a Data#3 perspective, we're, we're not involved in any of the, contractual, issues or delays. Our contract is not with that, the, that particular construction company. Your second question, Nick, I think, was around just a, a further explanation on why the ICR was relatively flat year-on-year. Yeah, and, you know, have you kind of got it to the optimal level, or should it broadly improve a little bit going forward? Sorry, Laurence, just to finish the question, so just so you didn't have any impact from Queen Street Wharf, those delays were not, not an issue for Data#3 at all? No. Thank you. We're not, not seeing that at all. As I said, our, the implementation phase of the project is, is very near completion, from, from our perspective. What we're, we're looking forward to is moving into a support phase, which we've, we've yet to, gain the contract. Yeah. Talking to the cost ratio in FY2023, we continued to enhance the ERP that we implemented in the prior year. We also made a number of investments in managed services, which I spoke to earlier, in terms of investing in people and also, internal and customer-facing systems, so that we could onboard a number of new customers and support the business into the future. In addition, we had a couple of internal projects which are going to add longer- term value, such as our ISO 27001 certification in both the Data#3 business and the managed services business. We expect to see improvements into the future with those investments that were made this year. In addition, we'll continue to make similar investments in future financial years. Thank you, guys. Thank you. Yep. Thanks. Once again, ladies and gentlemen, if you have a question, it is star one on your telephone keypad. Your next question comes from the line of Bob Chen with JPMorgan. Your line is open. Morning, guys. A couple of questions for me. I, I think previously you'd mentioned a bit of a backlog, especially on some of the networking gear because of supply chain issues. Can you give a bit of an update on, yeah, how that's what sort of resolved or where that's sort of sitting at now? Yeah, sure. Morning, Bob Chen. Thanks for the question. The backlog and seems that we've been moving, I think, for the last probably three years, talking about a backlog and the supply chain constraints. The good news, if I start at the highest level, the good news is that the supply chain constraints are very much easing, and we're getting back into almost normals of pre-pandemic in terms of the supply of goods. What we're also seeing, and just in terms of the background, is that that particular part of our business, the infrastructure business, has grown rapidly since pre-pandemic. If we go back into FY2019, it's grown between 40% and 50%. It's a very, very different looking business, and the size of the scale of the business is very different. And you're quite right, Bob. A lot of, a lot of that is around the networking equipment, as we've described before, and Queens Wharf is just, is an example. In terms of the backlog moving into this year, we had a substantial backlog, which we called out at AUD 6 million moving into this financial year. That's has been taken up and been delivered. However, as we grow the business, we continue to have large backlogs. And moving into FY2024, that's, it is no different whatsoever in that we have a very substantial backlog moving into FY2024. What we've decided to do differently this year is not call out the actual number. We, we believe that the number acts as a distraction, and becomes a distraction and discussion points to our, the overall growth of our business. But I do want to absolutely emphasize that the, the carry forward that we've got is, is become a normal part of our business and is a sizable component of our business because our business has grown. Okay, that makes sense. Just on, especially the investment in our services part of the business, you know, the growth is still solid, but it does look like it's sort of slowed down a little bit in that second half. Was there anything that sort of drove that? Maybe you can sort of touch on sort of the broader macro and how that's impacting your pipeline of business that's coming on as well. Yeah, maybe I can talk about the... there, there was nothing in particular that would, that we'd point to in terms of a slowdown, in terms of the second half of our business. As, as we described before, the, we did secure a number of very large new business wins, which were at a lower margin than we would, would have liked, which impacted some of the overall gross margin. However, didn't impact the fact that we've got new, new customers and the ability to sell across our portfolio. We believe that's a, a good thing in the longer- term. The second thing, Cherie, do you want to comment on? Was that on macro factors? Yeah. Any other macro factors. Relating to managed services in particular or just in general? No, just in general- General ... in terms of the, in terms of the environment. Yeah. The one thing that I would, that I would point out, and I've, I highlighted in the, in the presentation, that the sectors generally that we operate in are very strong and remain strong, and that's the healthcare, education, and the resource sectors, and public sector generally. Outside of that, there are sectors, and we're, we're well aware of them, which are not performing as well as those sectors. Their IT spend as a result, has probably reduced in sectors such as retail, in sectors such as some parts of construction industry. There's no great surprises there. There are customers of ours which have reduced their spend. However, the sectors in where, where we've, we focus a great deal of our attention and the bulk of our customers, we're quite satisfied that the sectors in which we're investing in are the, the growth ones. Yeah, I think that's right, Laurence. We're not, we're not seeing any weakening in the, in our growth sectors or the public sector. In just in terms of the managed services, perceived slowdown in the second half, I think it's just a case of timing, as Laurence said, and the onboarding of those new customers. Mm. Okay, perfect. Just a final one, just on, yeah, you touched upon it a little bit earlier, just the opportunity and generative AI. I mean, in terms of your relationship with Microsoft there, you know, they're starting to monetize their, their sort of Copilot offering. I mean, do you get any benefit from incremental take-up from your customers on, on Copilot? ... we, we will do. It's too early for, for that to have any material impact right now. We're, we're, we're seeing that the, the monetization-- we're seeing the trend and the path that Microsoft is setting regarding monetization. As, as Microsoft's largest partner in the region and the provider of all of those subscription licenses, to the bulk of, all public sector organizations in Australia and the, and a lot of the large corporate organizations in Australia, we will see the benefit of that as it flows through. The, the timing of that is, there's, there's a good deal of press, around it right now, as everyone is, is well aware of. The materiality of the, the spend isn't there right now. It's a, it's really a question of when customers will start adopting the new technologies that Microsoft have now integrated into their portfolios and, and how practical it is in terms of the timing of, of rolling that out. It won't be an overnight thing. I'm pretty certain that it won't be an overnight thing. Brilliant. Thanks, guys. Okay. Thank you. Your next question is a follow-up from Chris Gawler of Goldman Sachs. Your line is open. Hey, just had a couple of follow-up questions. Following up on my earlier question about the product, the product gross margin. You said a lot of it was driven by mix with some competitive deals with, you know, very large customers. How do you see the mix within products changing in FY2024? Do you think it will go back to more of a normal, a normal mix, or are there more of these bigger deals that, that you're looking to compete on as well in 2024? I, I guess I'm just trying to get a sense for how to think about product gross margin in, in, in FY2024 versus FY2023. Yeah. We'd, we'd like to think it won't go backwards, Chris. That's certainly not the, not the strategy. You know, we will see, continue to see competitive large deals, so it will as always, depend on the mix. As we've said previously, there is a move to more services-based rebates in particular. What that means in particular for the, not only for the infrastructure business, but also for the software business, is that those rebates are considerable. You know, I think most people on the call are very, very aware that they, they make a large proportion of our business. The shift or the trend from the vendor incentives or the vendor rebates is that increasingly they will be moving towards a services business. We'll be recognizing those rebates within the services business, which will then potentially reflect that the rebates will decrease in the infrastructure and software business. That hasn't had- How do you think- To date, that hasn't had a material impact, but we can, we can absolutely see where the trend is heading. Yeah, that was my next question, was like, how do you think about the timing of that dynamic, where some rebates shifting out of product and into services? Could there be... I mean, are we seeing it now, that there's a little bit of, you know, a shortfall? Oh, we're, we're seeing, we're seeing a little bit now. It's, that's not the whole reason why we, we had a small decline in the second half. That's not, not the single reason. It may have contributed a little bit to it, but I think some of the, the competitive wins that we've, that we've seen, have, yeah, have been at lower margins. That's, it's a, that's just a factor of winning, winning new business in a competitive market. Following up on that, Lawrence, is there anything different that you're seeing in the competitive landscape that's starting to see these lower margins? Or is it more just a case of you bidding on slash winning deals that, that you otherwise, you know, weren't competing on as hard for? Yeah, I think, with our, with our positioning in the market, and I, I stated it in the, in the presentation, we, we've got a, we have a unique value proposition in the market. We, we're not aware of any, and this includes the multinationals, of our, competitors that have the same portfolio as ourselves. Our customers, increasingly are looking to consolidate the number of vendors that they're working with. Our positioning in the market is, I, I think is as strong as, as ever, in the market. As a result of that, some of the larger organizations in the market are rethinking some of their procurement and partnering strategies with suppliers. We are, we are increasingly well positioned. That's, that's a long-winded way of saying, We'll, we'll continue to see, the, the market share growth, but it's probably difficult to actually predict what that impact will have on in terms of the, the mix, in terms of the margins. Yep, that makes sense. Then just one last question for, for you, Cherie. Another comment that you made in the annual report was that you're expecting the first half, second half skew to be a bit less skewed to the second half going forward. Can we expect a similar skew in FY2024 to what you delivered in FY2023? Look, it's difficult to predict, but obviously the aim is to increase recurring revenue and to flatten that SKU as best we can. You know, obviously, as, as we grow the services strategy as well, that will, that will help with that. We see customers moving to as- a- service model, which will again, help with, help with the SKU moving towards, more, more heavily weighted services rebates. All of those, all of those factors are going to help flatten that out. I think we finished the year at maybe a 46/54 split, and we've seen that gradually head towards 50/50 over the last three or four financial years. I would expect it to be similar next year, but, yeah, difficult to predict exactly. Great. Thanks for answering my questions. Thanks, Chris. Your next question comes from the line of Michael Peet with Paradice Investment Management. Your line is open. Yeah, hi there. I wonder if you could just walk us through the change in inventory and the expense line on the slide 19. I just see that it's AUD -13 million for the year. It was AUD +19 million last year, and I believe it was AUD +14 million in the first half. Thanks. We're just pulling up the slides. Inventory. I might have to get back to you on, on that one. We take that one on notice. Can I take that on notice and get back to you? Sure. Thanks. Thank you. Obviously, we saw a huge reduction in the inventory balance in the second half, in particular, with the easing of the supply chain constraints. Presumably it's related, but I'll get back to you. There are no further questions at this time. This will conclude today's conference call. We thank you for joining. You may now disconnect your lines.