CPT GLOBAL LIMITED — Annual Report 2018

Aug 28, 2018

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Investor Update Financial Year Ended 30 June 2018

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Disclaimer

This presentation contains general information about the activities of CPT Global Limited (CPT) which is current as at 29 August 2018. It is in summary form and does not purport to be complete. It presents financial information on both a statutory basis as well as information provided on a non-statutory basis.

This presentation is not a recommendation or advice in relation to CPT or any service offered by CPT and it’s subsidiaries. It is not intended to be relied upon as advice to investors or potential investors, and does not contain all information relevant or necessary for an investment decision. It should be read in conjunction with CPT’s other periodic and continuous disclosure announcements filed with the Australian Securities Exchange, and in particular the Preliminary Results for the year ended 30 June 2018. These are also available at www.cptglobal.com.

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No representation or warranty, express or implied, is made as to the accuracy, adequacy or reliability of any statements, estimates or opinions or other information contained in this presentation. To the maximum extent permitted by law, CPT, its subsidiaries and their respective directors, officers, employees and agents disclaim all liability and responsibility for any direct or indirect loss or damage which may be suffered by any recipient through use of or reliance on anything contained in or omitted with this presentation.

No recommendation is made as to how investors should make an investment decision. Investors must rely on their own examination of CPT, including the merits and risks involved. Investors should consult with their own professional advisors in connection with any acquisition of securities.

The information in this presentation is for general information only. To the extent that certain statements contained in this presentation may constitute “forward-looking statements” or statements about “future matters”, the information reflects CPT’s intent, belief, or expectations as at the date of this presentation. Subject to any continuing obligations under applicable law or any relevant listing rules of the Australian Securities Exchange, CPT disclaims any obligation or undertakings to disseminate any updates or revisions to this information over time.

Any forward-looking statements, including projections, guidance on future revenues, earnings and estimates, are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause CPT’s actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements.

Neither CPT, nor any other person, gives any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forwardlooking statements in this presentation will actually occur. In addition, please note that past performance is no guarantee or indication of future performance. All amounts are in Australian dollars.

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Contents

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• 2018 Highlights

• 2018 Financial Results

• Capital Management

• Outlook & Growth

• Core Values & Capabilities

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2018 Highlights

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2018 Highlights

CPT returns to profit with a $2.2 million turnaround on 2017 net profit after tax. A fully franked dividend of 0.25 cents per share will be paid on 19 November 2018

Statutory results	2018 $'000	2017 $'000	Change	Change
Revenue	31,031	27,159	Up	14%
EBITDA	1,410	- 1,170	Up	221%
Netprofit after tax	780	- 1,468	Up	153%
Earningsper share(Basic)	2.09 cents	-3.93c	Up	136%
Cash	1,440	1,656	Down	-13%
Net cash flow	- 200	- 1,607	Up	88%
Net assets	5,446	4,625	Up	18%
Net tangible assets	1,144	278	Up	312%
Final dividend(per share)	0.25 cents	-	Up	100%

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2018 Highlights

We executed on the core pillars of our strategy culminating in a return to profitability

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GROWING WITHIN ACCOUNTS

DELIVERING FOR OUR CLIENTS

Our top 5 global clients in 2018 are long term clients of CPT and their combined revenue grew by 20% in 2018 and contributed 59% of global revenue (2017: 56%)

CPT’s services are consistently rated highly by our clients with the majority of our work coming from repeat business and engagement extensions.

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GROWING NEW ACCOUNTS

We added 16 new accounts in 2018 across all regions. These accounts contributed 11% of revenue in 2018. Two of these accounts were in our top 10 global accounts in 2018.

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CAPITALISE ON OPPORTUNITIES IN NORTH AMERICA

We invested in 2 new sales resources in North America in 2018 to drive growth and close existing opportunities. Revenue in North America grew 48% in 2018 and segment gross profit grew 41%.

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EXPANDING OFFERINGS THROUGH PARTNERSHIPS

Revenue from digital services and sales of partner software was $1m in 2018, the first full year of operation. Revenue came from digital strategy consulting and the sale of partner software and services.

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2018 Highlights

Revenue growth, cost control and margin protection all contributed to the profit

The highlights of the 2018 result were:

• 14% growth in consolidated revenue:

• North American revenue growing 48%; and

• Australian revenue growing 5%;

• Europe returned a small operating profit after substantial reductions in fixed costs and a laser focus on a small number of client opportunities;

• cost control and reduction across the Group;

• ▪ incremental revenue growth from digital services and partners; and

• launched our new website and logo.

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2018 Financial Performance

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2018 Financial Performance

Significant turnaround from 2017 with NPAT of $780k and EPS of 2.09 cents

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2018 2017
Movement
($'000) ($'000)
Revenue 31,031 27,159 14%
Other income 57 70 -19%
Compensation - 25,557 - 24,374 5%
Insurance - 277 - 274 1%
Occupancy costs - 821 - 971 -15%
Other expenses - 2,825 - 2,435 16%
FX losses - 42 - 194 -78%
Total expenses - 29,522 - 28,246 5%
EBITDA 1,566 - 1,017 254%
- -
Depreciation & Amortisation 62 66 6%
EBIT 1,504 - 1,083 239%
Finance costs - 260 - 244 7%
NPBT 1,244 - 1,327 194%
Tax expense - 464 - 141 229%
NPAT 780 - 1,468 153%
Basic EPS 2.09 cents -3.93 cents
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Commentary

• 14% growth in revenue and percentage margins maintained on T&M and fixed price contracts;

• risk/reward contracts provided a boost to percentage margins;

• the banking & finance sector continues to be our best performing sector with revenue growth of 34%;

• contribution from all regions to our improved financial performance:

• 5% growth in revenue in Australia;

• 48% growth in revenue in North America; and

• Europe profitable before tax, FX and intra group charges;

• Effective tax rate of 37%:

• tax losses not brought to account ~$81k

• Non-deductible interest ~$151k

• Other expenses includes $375k in software costs that were on-charged to clients (2017: nil)

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2018 Financial Position

$1.2m million increase in NTA and a stronger current ratio

	2018 ($'000)	2017 ($'000)
Cash	1,440	1,656
Trade & Other Receivables	4,843	5,571
Unbilled Revenue(WIP)	2,283	792
Other Current Assets	240	103
Total Current Assets	8,806	8,122
PP+E	17	43
Deferred Tax Asset	1,259	1,067
Intangibles	4,302	4,348
Total Non-Current Assets	5,578	5,458
Total Assets	14,384	13,580
Trade & Other Payables	6,702	6,007
Borrowings	535	1,640
Taxprovisions	578	2
Provisions	810	982
Total Current Liabilities	8,625	8,631
Deferred tax liabilities	182	233
Provisions	131	91
Total Non-Current Liabilities	313	324
Total Liabilities	8,938	8,955
Net Assets	5,446	4,625

Commentary

• NTA improved to $1.1 million with the return to profit;

• Current ratio of 1.02 versus 0.94 in 2017;

• Cash is lower than 2017 as WIP has increased $1.5 million with 2 risk/reward engagements underway at year end;

• WIP expected to convert to cash in the first half of 2019;

• Taxable profits made in Australia, Canada and the USA give rise to the tax provision;

• Borrowings has decreased as our debtor funding facility was in a net receivable to CPT at year end. $0.5 million of a facility with Efic was drawn down at year end; and

• We had $1.7 million in available funding year end.

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2018 Cash Flow

Cash flow stabilising with improved performance

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2018 2017
($'000) ($'000)
Receipts 35,979 28,851
Payments - 34,657 - 31,039
Gross Operating Cash Flow 1,322 - 2,188
Finance Costs - 104 - 161
Income Tax - 131 9
Net Operating Cash Flow 1,087 - 2,340
Net Investing Cash Flow 10 - 2
Net Financing Cash Flow - 1,297 735
Net Cash Movement - 200 - 1,607
Opening Cash Position 1,656 3,034
Effect of Foreign Exchange - 16 229
Closing Cash Position 1,440 1,656
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Commentary

• 2018 saw a significant turnaround in operating cash flows on the back of our financial performance;

• the net cash outflow is a result of:

• progressive repayment of the historical Canadian taxes; and

• an increase in WIP of $1.5 million, this will convert to cash post year end.

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2018 Revenue by Sector

Australia

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$mil AUD
14
FY16
FY17
12
FY18
10
8
6
4
2
0
Banking & Government IT&C Other Insurance Healthcare
Finance
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Commentary

• 5% growth in revenue was concentrated in the banking & finance and government sectors:

• 20% growth at our largest client, a Big 4 bank; and

• 27% growth at our 2[nd] largest client, a Federal Government agency;

• and insurance are

• superannuation growing sectors with digital consulting and testing services being in demand;

• growth in banking is currently constrained by transformation programs as the top end of the sector implement agile at scale methodologies. Opportunities may arise as these programs progress;

• the reduction in the IT&C sector is due to the of a with a

• completion significant project national telecommunications company; and

• • margins are stable despite continued pressure across the industry.

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2018 Revenue by Industry

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$mil AUD North America
4.5
FY16
4
FY17
3.5 FY18
3
2.5
2
1.5
1
0.5
0
Banking & IT&C Healthcare Insurance Other Government
Finance
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Commentary

• revenue grew 48% on the back of:

• a new risk/reward contract at a New York based global bank worth up to US$2 million;

• 41% growth at our largest client in North America, a Canadian telecommunications company;

• 118% growth in time & materials engagements at a New York based global bank;

• North America’s best year since 2014.

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$mil AUD Europe
2
FY16
1.8
FY17
1.6
FY18
1.4
1.2
1
0.8
0.6
0.4
0.2
0
Banking & Finance Insurance IT&C Other
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Commentary

• revenue decreased 1.7% in Europe as we incorporated Europe into a greater Northern Hemisphere region run from North America;

• the reduction in revenue was more than offset by the reduction in fixed costs in Europe; and

• European consultants are being deployed on projects in North America.

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2018 Capital Management

In the near term, CPT will focus on balance sheet repair and rebuilding cash reserves. Our intention is to pay dividends consistently and increase the payout ratio as our financial performance allows

Dividends

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A fully franked dividend of 0.25 cents per share has been declared for 2018 and is payable on 19 November 2018. The payout ratio is 11% of earnings per share. The Dividend Reinvestment Plan will apply to the dividend.

Bank Debt

CPT has a debtor funding facility of up to $5 million. At 30 June 2018, there was no drawn balance on the facility and $1.1 million was available to be drawn.

On 23 February 2018 CPT accepted a $1.2m term facility from Efic to fund certain risk/reward contracts in the USA. At 30 June 2018, $0.5 million had been drawn against the facility

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Strategy & Outlook

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Strategy

value for shareholders: our core Creating strategic pillars

• Focus on strategic markets and accounts.

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• to meet client

• Expand digital capabilities emerging demand.

• Position for global growth and expansion.

• Continue to reduce costs and operating margin

• leakage.

• Make CPT an industry leading workplace.

• Create increased value from partnerships.

• Enhance CPT’s brand and global reputation.

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Outlook

Subject to market conditions, the turn around in performance is expected to be maintained

• North American business will maintain its momentum in the first half off the back of a strong pipeline;

• Australia will maintain steady growth, particularly in the Government sector, but there is some softness in the Melbourne market;

• cost takeout and cost control will continue;

• Europe will be pursued strategically with the focus on a small number of clients and a low fixed cost base;

• Asia will be pursued opportunistically with mainframe and digital strategy consulting services;

• margin pressure continues, particularly in testing. The risk will be managed by growing volume and recruitment controls;

o

o

• Leveraging key partner relationships to deliver revenue growth; real time payment systems are being rolled out in various jurisdictions. Our expertise in banking and real time payments is creating opportunities in Canada and Europe;

• new services lines gaining traction in Australia; and 41% increase in global MIPS will see opportunities for mainframe cost reduction.

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CPT Global – Core Values & Capabilities

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CPT Core Services

Our services are consistently rated highly by our clients. The majority of CPT’s work comes from repeat business and engagement extensions.

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DIGITAL TRANSFORMATION

ASSURANCE SERVICES

CPT can help you develop and deploy an effective strategy to transform your organization into an efficient, agile and customer-aligned business, positioned to win against the competitors of the future.

CPT has the expertise to solve the increasing challenges of introducing change into complex production environments and assuring the right business outcomes.

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EXPERT TECHNOLOGY SERVICES

CPT offers expertise in enterprise and solution architecture, performance engineering, consumption reduction/optimization, cost reduction and legacy migration in the mainframe, distributed and cloud space.

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TESTING & DELIVERY SERVICES

CPT’s testing capabilities encompass the full spectrum of testing services as well as test strategy reviews and performance, stress and other NFT testing, test environment management etc.

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STORAGE DESIGN & OPTIMISATION

CPT specialises in different kinds of storage services including architecture, cost reduction, migration strategies, archiving strategies and disk and tape consumption and optimization reviews.

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SOFTWARE OPTIMISATION SERVICES

CPT can conduct software reviews, identify migration candidates (and complexities), benchmark solutions before and after, identify redundant applications and optimize software charges from software vendors.

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Our Practice lines

What do we do?

Technology Optimisation

Assurance

Assured and reliable delivery & operations

Faster, more efficient technology

Consulting and Transformation

Leveraging technology for business success

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Digital Ventures

Build new services and launch joint and new technology-based ventures

Tuning and Optimisation

• Enterprise architecture

• ▪ Mainframe optimisation

• Midrange optimisation

• Monitoring & metrics

• Performance Tuning

• Performance Engineering

• Code Analytics

• Application Portfolio Rationalisation

Technology Planning

• Capacity planning

• Service availability management

• Data centre consolidation & rationalisation

• Cloud strategy, maturity & migration

• XaaS

Delivery Assurance

• Test strategy & implementation

• Test capability & maturity reviews

• Test automation & DevOps

• Testing tools capability & uplift

• Test environment Management

• & optimisation

• Application migration & remediation

• Independent critical program reviews

• Data virtualisation & masking

• Stress & volume testing

Operations Assurance

• Digital fraud prevention

• Digital security

• BCP & DR

• Realtime dashboards

• Command centre & critical incident management

Strategic

• Digital strategy, planning & governance

• Digital transformation

• Application of AI and VR

• Workforce Analytics & Optimisation

• Capability assessments and uplifts

• Board & executive advisory

• Executive workshop facilitation

Solutions

• Digital product design

• Project Services

• Benefits realisation

• Agile and DevOps

• Release Automation

• Process improvement and automation (RPA)

• Solution Architecture

Develop New Capabilities

• Data, Insights & Analytics

• Artificial Intelligence

• Digital Workforce

• Innovation Management

• Emerging technology advisory and insights

Joint Ventures (CPT & Partners)

• Partner identification

• Pilot/proof of concepts

• Commercialisation

New Ventures (CPT)

• Experimentation

• Concept development

• Prototyping

• Incubation & Acceleration

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Our Partner Network

We have critically assessed and brought together a world-class partnership network to help us bring leading technology capabilities to our clients.

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Technology Optimisation

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Assurance

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Digital Transformation

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What makes CPT special

Our deep expertise, track record, trusted relationships and true dedication to client separates us from others

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Global IT Results Trusted
experts obsessed partner
CPT has world class We are obsessed with CPT are a trusted
capacity planning, achieving cost savings partner in navigating
performance tuning and and efficiency gains. companies through
testing experts. We are willing to be complex and critical IT
compensated only by and business events.
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Fortune 500
companies
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We are obsessed with achieving cost savings and efficiency gains. We are willing to be compensated only by results.

We have a proven record of successful engagements with 76 Fortune 500 companies around the world.

CPT has world class capacity planning, performance tuning and testing experts.

Our consultants average 20+ years in the industry.

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A selection of our clients

Australia

Americas

Europe & Asia

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CPT has worked in these countries

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Australia USA Norway Netherlands South Africa New Zealand Denmark
Germany France Chile China Ireland Brazil Switzerland
England Scotland Spain South Korea Turkey Austria Malaysia
Belgium Canada Singapore Portugal Finland Slovakia Sweden
Luxembourg Hong Kong Italy Taiwan India Mexico
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CPT Global

CPT has provided consulting and delivery services to clients in 34 countries around the world. We’ve helped customers improve their IT delivery, speed and capability in industries such as finance, telecommunications, utilities, health, education, government, and logistics.

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American Asian
Offices Offices
New York Singapore
Toronto
Sao Paulo
European Australian
Offices Offices
London Melbourne
Countries
Munich Sydney
CPT has
Paris Canberra
worked in
Milan
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Email Online LinkedIn info@cptglobal.com cptglobal.com cpt-global

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