CPT GLOBAL LIMITED — AGM Information 2015

Nov 22, 2015

Independent Experience

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CPT Global Limited 2015 Annual General Meeting November 23, 2015

© 2014 CPT Global Limited

Independent Experience

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CPT Global Managing Director’s Address

© 2014 CPT Global Limited

CPT Global at a Glance

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• Founded in Australia in 1993

• All services target IT cost optimisation

• Approximately 120 industry based expert consultants & scalable service centres

• Global operations in Asia Pacific, Americas and Europe

• Have worked with over 100 blue chip / Fortune 500 clients worldwide

• Multiple winner of the Governor of Victoria Export Award for ICT Services

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Confidential –CPT Global

3

Summary of FY15 Performance

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• Perfect storm as Europe, North America and Australia all suffered declines in revenue and margins

• Net loss after tax of $5.1m

• Australian revenue decreased 21% on FY14

• International revenue decreased 34% on FY14

• Net loss from operations of $1.6m

• Goodwill in Australia impaired by $2.4m

• $1.1m of FX losses recognised on settlement of intercompany debtors and creditors

• Cash reserves reduced to $0.5m from $2.4m

• Net tangible assets of $4.3m, down $2.0m from FY14

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Confidential –CPT Global

4

Summary of FY15 Performance

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• Secured working capital funding from Efic for risk/reward project in Italy

• Drawdowns well below facility limit

• Invoiced revenue YTD exceeds outstanding balance

• Early signs of an increase in IT spend by the federal government and semi-government agencies:

• CPT benefiting in FY16 as 148% of our annual budget for Canberra is contracted

• Project delays experienced in Europe and North America throughout FY15

• European project commenced in late FY15 and will conclude in November 2015

• 3 major projects were delayed in North America:

• 2 underway and will complete in the second half of FY16

• 1 scheduled to commence in January 2016

• Reviewing CPT structure and operations

• Cost base of the group being restructured

• European operations and structure under review

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Confidential –CPT Global

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Vision

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To provide unparalleled IT cost optimisation and end to end delivery assurance services utilising world class consultants, innovative solutions and leading edge technology

• Focus on the global market

• Partnering with world leading technology providers

• Independent client trusted advisor

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Confidential –CPT Global

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CPT Differentiators

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• Industry experts

• Independent from all hardware / software vendors / application developers

• Global market reach & experience

• Leading edge technology and cost reduction methodologies

• Local productivity centres of excellence supporting global reach

• Outstanding client value proposition

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Confidential –CPT Global

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Evolution of the CPT Business

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AUSTRALIA NORTH AMERICA EUROPE ASIA & SOUTH AMERICA
Cost Optimisation / Performance Tuning
Capacity Planning
SERVICES Testing
Technical Services
Management Consulting
Success Fee Based
CONTRACT TYPE
Fixed Price
Time & Materials
Financial Services
Telecommunications
CLIENT
Logistics
Government
Retail
Margin Pressure Emerging from recession Long lead times Growing Economies
MARKET < 2% of global market Long lead times Multi cultural Multicultural
Saturated market Large IT estates Large IT estates Opportunistic
CONDITIONS Offshore client activity
Well Established Gaining reputation Gaining reputation Knowledge of CPT through
CPT GLOBAL Growing client base Growing client base global accounts
Canada expansion Extending reach to new Working with partner
PROFILE European countries companies
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Confidential –CPT Global

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CPT Clients – Australia/New Zealand Commercial

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Confidential – CPT Global
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CPT Clients - Australian Government

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Confidential – CPT Global

CPT Clients – Americas

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Confidential – CPT Global

CPT Clients - Europe

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Confidential – CPT Global

CPT Clients – Asia

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Confidential – CPT Global

FY15 Key Financial Results

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	FY15	FY14	% Movement Prior Year
Revenue	28.2m	38.4m	(34%)
EBITDA	(5.1m)	3.2m	(159%)
NPAT	(5.1m)	2.2m	(335%)
EPS(Basic)	(13.8c)	5.9c	(335%)
Cash	0.5m	2.4m	(79%)
Net Tangible Assets	4.3m	6.3m	(32%)
Fully Franked Dividends (Interim & Final)	0.0c	4.5c	n/a
Dividend Payout Ratio	0%	77%	n/a

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Confidential –CPT Global

14

Balance Sheet

	FY15 ($m)	FY14 ($M)
Cash	0.5	2.4
Debtors	4.5	7.2
Unbilled Revenue (WIP)	4.2	3.1
Current Tax Asset	0.5	-
Other Current Assets	0.4	0.3
Total Current Assets	10.1	13.0
PP+E	0.0	0.0
Deferred Tax Asset	1.7	1.4
Intangibles	5.1	7.5
Total Non-Current Assets	6.8	8.9
Total Assets	16.9	21.9
Current Liabilities 7.0		7.8
Non-Current Liabilities	0.5	0.3
Total Liabilities	7.5	8.1
Net Assets	9.4	13.8

Confidential –CPT Global

15

Cash Flow

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	FY15 ($m)	FY14 ($M)
Receipts	33.1	38.5
Payments	(34.5)	(35.2)
Gross Operating Cash Flow	(1.4)	3.3
EBITDA	(5.1)	3.2
Ratio of GOC / EBITDA	0.27:1	1.03:1
Finance Costs	(0.2)	(0.2)
Income Tax	(1.0)	(0.4)
Net Operating Cash Flow	(2.6)	2.7
Net Investing Cash Flow	0.0	0.0
Net Financing Cash Flow	0.4	(1.1)
Net Cash Movement	(2.2)	1.6
Opening Cash Position	2.4	1.2
Effect of Foreign Exchange	0.3	(0.4)
Closing Cash Position	0.5	2.4

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Confidential –CPT Global

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FY15 Key Business Issues

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International business

• Loss largely incurred in the international business

• delays in commencing projects resulted in significant lost revenue

• sales cycle in Europe and North America is longer than in past years

• decrease in risk/reward revenue to $5.5m (FY14 $9m) as completed projects were not replaced by new projects

• lower margins due to the reduction in risk/reward engagements

• Continued growth in large telecommunications client in Canada. Expected to continue into FY16

• Contract at our largest client in the US has come to an end

• Undertook two more engagements in mainland China

• Efic funding secured for risk/reward project in Italy.

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FY15 Key Business Issues

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Australian business

• Addition of 7 new clients, unfortunately offset by reduction in requirements from three existing clients

• Profitable even with 21% drop in revenue from FY14

• Pressure on rates and margins at Tier 1 clients

• Procurement processes

• Panel rate cards

• Offshoring

• Early signs of growth in IT spend at Tier 1 financial services clients

• Activity increasing in FY16 with CPT seeing revenue growth at these clients in the second half of FY16

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Confidential –CPT Global

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International Business – North America

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North American Revenue

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14m
12m
10m
8m
6m
4m
2m
-
FY'11 FY'12 FY'13 FY'14 FY'15
USD AUD
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• Reduction in revenue disappointing after investment and strong growth in prior years

• Margins in US maintained but Canadian margins down on rate pressure

• Delay in 3 projects hit revenue hard

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Confidential –CPT Global

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International Business - Europe

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• Business lumpy, dependant on mainframe risk/reward contracts and timing of project engagements

European Revenue

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7m
6m engagements
5m
4m •
Significant delays in
3m
commencing risk/reward
2m project experienced
1m
-
•
Operation and structure under
FY'11 FY'12 FY'13 FY'14 FY'15
EUR AUD review
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• Operation and structure under review

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Australian Business

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Australian Revenue

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30m
25m
20m
15m
10m
5m
-
FY'11 FY'12 FY'13 FY'14 FY'15
AUD
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• Significant reduction in IT spend with CPT by 3 major clients

• Margin pressures continuing via procurement processes and budget constraints

• Growth in revenue coming from Tier 1 financial services clients and federal government

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21

CPT Global Strategy

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• Minimise risk from lumpy risk/reward revenue in Europe:

• Pursue time and materials contracts and annuity style income

• Implement a more flexible cost base

• Cross selling testing, capacity planning, production assurance and mid-range cost optimisation services

• Restructuring the cost base of the business across all regions to lower costs and increase flexibility to respond to challenging times

• Stabilise and grow the Australian business by focussing on:

• our key differentiator and core expertise in end to end delivery assurance;

• Tier 1 companies, in particular financial services and government and semigovernment organisations; and

• expand footprint in existing clients.

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CPT Global Strategy

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• Restructure the European business:

• Review of operations and structure underway

• Leveraging strategic alliances with BMC Software, Dynatrace and Compuware in North America and Europe:

• enhanced sales capacity, capability and reach with access to sales force and clients

• contract delivered in London;

• contract signed with US Government agency; and

• strong pipeline.

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Confidential –CPT Global

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Strategic Alliances

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• Deepening relationships with three global Software Vendors (BMC Software (www.bmc.com), Dynatrace (www.dynatrace.com) and Compuware

• (www.compuware.com)) across North & South America, Europe, Australia and Asia

• BMC Software, Dynatrace and Compuware selling CPT services to their Tier 1 clients

• Jointly targeting new clients or expanded offerings in existing clients – gaining competitive advantage through collaboration and partnering

• Maintaining our independence

• Engaging at the most senior levels globally within each respective vendor organisation

• Joint marketing

• Slow start revenue wise but momentum building and the pipeline is strong

• In Asia, partnership with China ETEK (www.ce-service.com/cn/en/), joint sales campaigns in mainland China and three phase 2 proposals submitted

• In South America, working with BMC assisting with identifying opportunities for CPT in the local market

• In Europe, continuing to partner with Tori (www.toriglobal.com) to identify business leads for CPT

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FY16 Opportunities & Challenges

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International

Australia

Opportunities

Opportunities

• Global T&M in financial services

• Strategic alliances providing sales capacity, capability and reach

• IT spend at federal government and semi-government increasing

• End to end delivery assurance consulting services

• Leverage expertise in financial services

Challenges

• Reliance on risk/reward in Europe

• Project delays and sales cycle

• Closing opportunities

Challenges

• Maintaining margins

• Growing non-financial services accounts

• Closing opportunities

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Outlook

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International Business

• Strong growth in Canada in the first half of FY16. Outlook for second half is uncertain due to corporate activity at clients

• Poor first half in the US but improvement in second half expected

• Poor first half in Europe and operations being reviewed

• Opportunities in China in the second half of FY16

• Pipeline is strong but need to close opportunities

Australian Business

• Slow start to FY16 but activity increasing

• $2.1m contract won in Canberra

• Revenue growth at Tier 1 financial services clients

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About CPT Global

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27
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CPT Global is a specialised consultancy with two focus areas. Its Technical Consulting services enhance the control, stability, efficiency and reliability of all technology platforms with core offerings of Capacity Planning, Performance Management and Testing. Its Management Consulting services review and improve the business processes associated with Information Technology, with offerings that include Program and Project Management, IT Governance Reviews, Strategic Sourcing Strategies and Technology Transition Planning.

EUROPE

AUSTRALASIA

AMERICAS

Melbourne

New York

London

Level 1, 4 Riverside Quay Southbank VIC 3006 Telephone +61 3 9684 7900 Facsimile +61 3 9684 7999

410 Park Avenue, 15th Floor, New York NY 10022 Telephone +1 917 210 8668 Facsimile +1 917 210 8182

Parkshot House, 5 Kew Road Richmond, Surrey, TW9 2PR Telephone +44 20 8334 8085 Facsimile +44 20 8334 8541

Sydney

Suite 3, Level 5, 80 Clarence St Sydney, NSW 2000 Telephone +61 2 8234 7400 Facsimile +61 2 8234 7499

Toronto

100 King Street West, Suite 5600 Toronto, Ontario M5X 1C9 Telephone +1 416 642 2886 Facsimile +1 416 644 8801

Munich

Landsberger Str. 302 D-80687 Munich Telephone +49 89 9040 5955 Facsimile +49 89 9040 5965

Canberra

Sao Paulo

Paris

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Level 6, 39 London Circuit Canberra City ACT 2601 Telephone +61 2 6206 9799 Facsimile +61 3 9685 7000

Singapore

10 Anson Road, #32/15 International Plaza, Singapore 079903 Telephone: +65 6226 2555

Al. Europa 1206 – Santana de Parnaiba - SP – CEP 06543-325 Telephone: +55 11 8454-0869

140 bis rue de Rennes 75006 Paris Telephone +33 1 70 38 23 21 Facsimile +33 1 70 38 23 00

Milan

94 Viale Abruzzi, Milan 20131

www.CPTGlobal.com

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