CPT GLOBAL LIMITED — Interim / Quarterly Report 2018

Aug 28, 2018

CPT Global Limited ABN 16 083 090 895 and Controlled Entities

Appendix 4E - Preliminary Final Report for the Year Ended 30 June 2018

RESULTS FOR ANNOUNCEMENT TO THE MARKET

Key Information

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|||||||||
|---|---|---|---|---|---|---|---|
|2018|2017|
|A $000's|A $000's|
|Revenues from ordinary activities|up|14.3%|to|$31,031|$27,159|
|Net Profit (Loss)|before tax|attributable to members|up|193.7%|to|$1,244|($1,327)|
|Net Profit (Loss)|after tax|attributable to members|up|153.1%|to|$780|($1,468)|
|DIVIDENDS PAID AND PROPOSED|Franked Amount per|
|Amount per|Security at 30% of|
|Security|Tax|
|Ordinary Shares:|
|2017 interim and final|0.0 cents|0.0 cents|
|2018 interim|0.0 cents|0.0 cents|
|2018 final|0.25 cents|0.25 cents|
|DIVIDEND DETAILS|
|2018|2017|
|A $000's|A $000's|
|Ordinary Share Capital:|
|-|-|
|Final dividend paid|
|-|-|
|Interim dividend paid|
|Final dividend declared|$93|-|

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DIVIDEND REINVESTMENT PLAN

A dividend reinvestment plan is in operation and will apply to the dividend.

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||||
|---|---|---|
|EARNINGS PER SHARE (EPS)|
|2018|2017|
|Basic EPS|2.09 cents|-3.93 cents|
|Diluted EPS|2.07 cents|-3.93 cents|
|NTA BACKING|
|Net tangible asset backing per ordinary security|$0.03|$0.01|

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COMMENTARY ON THE RESULTS FOR THE PERIOD

Refer to the commentary on the results for the period contained in the "Operating and Financial Review" included within the Managing Directors report.

STATUS OF AUDIT

The accounts are currently in the process of being audited.

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CPT Global Limited

ABN 16 083 090 895

Preliminary Final Report For the year ended 30 June 2018

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+61 3 9684 7900 Info@cptglobal.com www.cptglobal.com

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Contents

Operational Review
-Managing Director’s Review	3
Consolidated Statement of Comprehensive Income	10
Consolidated Statement of Financial Position	11
Consolidated Statement of Changes in Equity	12
Consolidated Statement of Cash Flows	13
Notes to the Preliminary Final Report	14
Compliance Statement	17

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Managing Director’s Review

Dear Fellow Shareholders,

I would like to thank all CPT Global shareholders for your continued support of the Group during the 2018 financial year and during the difficult financial years from 2015 to 2017. I would also like to welcome our new shareholders who have joined us during the year.

It is with great pleasure that I can inform shareholders that CPT Global returned to profit in 2018. The profit before tax of $1.3 million is the culmination of 3 years of hard work stabilising and reinvigorating the business and driving performance.

The profit was achieved with strong growth in revenue in North America and Australia and the benefit of the reduction in the cost base of our business over the last few years. $31.0 million revenue and the net profit before tax is a $2.6 million improvement on 2017. Net tangible assets grew 313% to $1.1 million on the back of the improved performance.

All regions contributed to the 2018 result with growth in segment profit driven by revenue growth, solid margins and lower costs. The exception was the European region where revenue was 1.7% lower than 2017 but the segment profit increased 30.0% due to the reduction in the cost base implemented in 2017.

We are committed to ensuring that the business continues to grow profitably by focussing on strategic clients and opportunities, driving revenue from partnerships and maintaining a disciplined approach to costs. As profits grow and cash flow improves, we will balance the needs of the business to invest for growth with repairing the balance sheet to reduce debt and build cash reserves.

Operating and Financial Review

CPT made a profit after tax of $0.8 million for the full financial year, a $2.2 million improvement on 2017. The profit was driven by a 14% growth in revenue and a reduction in the cost base of the Group.

Our top 10 clients contributed 80% (2017: 80%) of our revenue, grew by 14% compared to the top 10 clients in 2017 and maintained margins in an environment in which pressure to reduce margins is part of the landscape.

Our success at growing within accounts by increasing consultant numbers on projects, expanding the scope of our services and cross selling services was demonstrated by 8 of the top 10 clients in 2017 being top 10 clients in 2018. The 2 new clients in the top 10 were new clients for CPT in 2018 and were the result of a digital consulting engagement with an Australian superannuation fund and a mainframe risk/reward engagement at a global bank based in New York. This shows that our traditional core services and new services are in demand and can grow and co-exist within CPT.

We derived $2.5 million in risk/reward revenue from 2 clients in the USA in 2018. We undertook a 4[th] phase risk/reward engagement at a health care insurance company and continued to expand our services to include time and materials engagements in mainframe capacity planning and midrange application performance. We started a risk/reward engagement in November 2017 at a global bank worth up to US$2.0 million. Both engagements are expected to be completed in the first half of the 2019 financial year.

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Revenue in Australia grew by 5.1% in 2018 (2017: 4.3%) and revenue in North America grew by 47.6% (2017: -18.5%). Europe’s revenue declined by 1.7% in 2018 (2017: -33.3%), however, the cost base has been reduced over the last 2 years which enabled the region to generate a small operating profit before tax, FX and intra group charges.

Table 1

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Revenue by Region - Year on Year
$mil AUD
25
FY16
FY17
20
FY18
15
10
5
0
Australia Europe North America
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Europe

During 2018, Europe was run out of North America as part of the greater Northern Hemisphere region. Our presence within Europe was scaled back and fixed costs were cut to the minimum required to maintain the corporate structure and comply with relevant laws and regulation. Our strategy was to focus on a small number of key accounts and be opportunistic and agile in responding to opportunities.

Execution of the strategy was successful as operating losses in Europe were halted and the reduction in revenue kept to 1.7%.

Whilst revenue is historically low in Europe, we have been able to deploy consultants on projects in North America. This has enabled us to retain key European consultants and quickly scale up delivery in North America to meet demand.

Table 2 shows the reliance Europe has on banking and insurance and the challenges experienced in FY16, FY17 and FY18.

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Table 2

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$mil AUD Revenue by Sector - 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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North America

North America had its best year since 2014 with revenue growing 47.6% on 2017 and segment gross profit before tax growing 40.6% on 2017.

The soft finish to 2017 provided a challenge in the region but the pipeline was quite strong, particularly within existing accounts. Two risk/reward engagements commenced in November and revenue at our largest client in North America grew throughout the first half of the year and finished 2018 41% ahead of 2017 revenue. In February 2018 our presence at a global bank began expanding as we commenced new engagements with monthly revenue increasing 4-fold over the run rate in the previous 8 months. By year end revenue at the client was 118% ahead of 2017 revenue and contracts executed through to December 2018. The last quarter of 2018 was our best quarter for the year with the monthly revenue run rate 1.6 times the run rate of the first 3 quarters.

Four of our top 10 clients are based in North America (2017: 3) and delivered 86% (2017: 85%) of the revenue in the region.

Revenue generated from risk/reward contracts increased $0.5 million over 2017 but as a proportion of revenue decreased from 36% to 29%. Margins in North America moved against the trend in the industry and were generally higher than recent years. This reflects the benefit of high margin risk/reward contracts but also demonstrates that there is demand for consultants with expertise in their domains who can produce high quality delivery and outcomes.

Overall, the turnaround in North America is very encouraging and the strong finish to the year and pipeline of work give us optimism for 2019.

Table 3 shows that revenue is concentrated in three sectors but the mix of revenue varies significantly year on year. CPT’s core strength in North America is mainframe in the banking & finance sector.

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Table 3

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

The banking & finance and government sectors continue to be the growth and revenue engines of the Australian business, see table 4 below. Superannuation is emerging as a growth sector with revenue increasing 469% on 2017 and one superannuation client joining the top 10 global clients in 2018.

Revenue from Federal Government clients grew 27% in 2018 as additional projects and resources were added to existing contracts. A 6 month extension to our contract with our second biggest client takes our contracted work through to December 2018 with an increase in the scope of services and number of consultants engaged.

Growth in the banking & finance sector has been constrained with clients transforming the way they work based on agile at scale methodologies. During the transformation, freezes on head count are often employed while teams are restructured and redundancy programs implemented. We expect these restructures to be completed during the first half of 2019, after which we will be able to assess the ongoing impact on revenue and growth. Growth has been further constrained as tier 1 clients continue to put pressure on margins and rationalise supplier panels. While we have seen 20% growth in revenue at our largest client, an Australian bank, this was partially offset by lower revenues at a second Australian bank.

The drop in revenue in the IT&C sector is due to projects on one national telecommunications client completing and the company going through a restructure. We have maintained existing revenue and growing the account again are a focus for 2019.

Our digital consulting practice generated revenue of $1.0 million in the first full year of operation from a combination of digital strategy consulting and selling partner software and services.

The growth in the Australian business is profitable with margins decreasing slightly in the banking sector but maintained or increased in other sectors despite the general pressure on margins in the industry. Six of our top 10 clients by revenue are based in Australia.

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Table 4

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$mil AUD Revenue by Sector - Australia
14
FY16
FY17
12
FY18
10
8
6
4
2
0
Banking & Government IT&C Other Insurance Healthcare
Finance
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Financial Results

Financial Performance

CPT Global’s revenue for the year ended 30 June 2018 was $31.0 million, a 14.3% increase on 2017’s revenue of $27.2 million. CPT Global’s net profit after tax for the year ended 30 June 2018 was $0.8 million, an improvement of $2.2 million on the 30 June 2017 result. The net profit after tax includes tax expense of $0.5 million, an effective tax rate of 37%. This is higher than the marginal tax rate due to tax losses in Europe that we have not recognised on the balance sheet as deferred tax assets and interest expense that is not deductible in Canada for tax purposes.

The improvement in performance is a result of:

• profitable growth in the North American and Australian regions;

• an operating profit in Europe after several years of losses as the cost base of the region was reduced and the reduction in revenue kept to 1.7% despite the reduced resources; and

• cost control across the Group.

Basic earnings per share amounted to 2.09 cents per share (diluted earnings 2.07 cents per share).

Financial Position

CPT Global’s balance sheet reflected net tangible assets of $1.1 million as at 30 June 2018 (2017: $0.3 million). Net assets are $5.4 million (2017: $4.6 million)

• Unbilled revenue (WIP) has increased by $1.5 million. The increase in 2018 is due to 2 risk/reward contracts in progress in North America at year end with WIP of $1.9 million. At 30 June 2017, the WIP relating to risk/reward contracts was only $0.1 million. The balance of the movement is due to a decrease in the milestone contracts in Australia outstanding at year end.

• Trade and other receivables decreased $0.7 million despite the increase in revenue as the 2017 balance includes 2 overdue debtors with a balance of $1.7 million owing. This was paid

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in July 2018. Without the overdue payment in 2018, trade and other receivables increased in line with the increase in revenue. At 30 June 2018, 5.6% of debtors are in 60 days or greater, all of which have been collected in 2019;

• Trade and other payables increased by $0.7 million as consultant numbers increased with the growth in revenue, particularly in North America during the 4[th] quarter of 2018 and revenue received in advance increased $0.3 million. The percentage increase, 11.6%, is less than the growth in revenue which reflects the lower cost base of the business; and

• Borrowings at year end relate to the loan facility provided by Efic to fund the risk/reward contracts in North America. $1.7 million in undrawn funding from Efic and the debtor funding that was available at year end.

Cash Flow

CPT had $1.4 million in cash at 30 June 2018 ($1.7 million 30 June 2017) and a net cash outflow of $0.2 million for the financial year. We also had access to $1.7 million in additional funding in our facilities.

Our strong cash management processes, Australian debtor funding facility, early payment programs with clients in North America, Efic loan and the increase in revenue in Australia and North America all contributed to CPT being able to manage the cash flow challenges in 2018.

The decrease in cash at 30 June 2018 is due to the revenue locked up in WIP which will convert to cash in 2019 and the payment of our tax obligations in Canada under a payment plan agreed with the Canadian Revenue Authority.

Capital Management

A fully franked dividend of 0.25 cents per share will be paid for 2018.

Our debtor funding facility has a limit of $5.0 million of which there was no outstanding balance at 30 June 2018 and $1.1 million was available to draw on. Our facility with Efic has a limit of $1.2 million of which $0.5 million was drawn down at 30 June 2018 and $0.7 million was available to draw on.

During 2019 our focus will be on growing operating profit and cash flows to reduce our reliance on debtor facilities and the associated costs and repay other debts so that we can rebuild our cash position. We intend to pay dividends consistently and increase the payout ratio as our financial performance allows.

Our People

To CPT’s people I thank you on behalf of the Board of directors and the executive team for the professional way in which you have continued to deliver the high quality of service to our clients and to the business during a difficult couple of years for CPT and a period of transition and transformation to becoming a digital services leader. Returning CPT to profit could not have been achieved without the loyalty and dedication of our employees and consultants.

Strategy

Our clients are operating in an environment in which innovation, disruption, digital transformation, speed to market, quality assurance and cost control are driving strategic and operational decision making. Our digital practice will become a core component of our services and drive new products, services and strategic alliances.

Our offering to our clients is enhanced by our existing partnerships and we continue to investigate opportunities to partner with world class software vendors and service providers.

Our core services of capacity planning, performance and testing will continue to be the backbone of the business with the focus on growing within our existing accounts and targeting a core group of strategic new accounts.

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Customer facing web and mobile applications are driving an increase in transactions on mainframes and the release of the IBM mainframe z14 has seen delivered MIPS grow as clients move through the upgrade cycle faster than expected. A recent survey of CIOs suggests that MIPS have increased as much as 41% as mobile and other new technologies increase transactions on the mainframe. The speed of digital transformation is forcing companies to modernise their mainframe tools and integrate mainframe and non-mainframe DevOps processes. Our mainframe optimisation, tuning and cost reduction services combined with our strategic partners’ modern DevOps toolsets will drive new services, products and opportunities.

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The Outlook

The momentum we have built in North America and with the Federal Government in Australia is expected to continue through the first half of 2019 with major projects contracted and the 2 active risk/reward engagements coming to completion towards the end of the half year. However, we are fully aware that there is still a lot of work to do to shore up the balance sheet, build our cash reserves and continue to grow profit.

The Australian business is expected to continue to grow steadily although this will be concentrated in the Government sector where revenue growth is expected to be strong and exceed the growth of 2018. Margins are expected to decline marginally on higher volumes in the sector. A major contract renewal is due at a government agency in late December, but we are optimistic of a 6 month extension. Revenue growth in the first half in the banking & finance sector is likely to be flat to negative as clients complete their transformations to new ways of working. Until these reorganisations are complete there is uncertainty about the impact on our business.

The momentum and pipeline in North America indicate a strong first half in 2019. With a contract renewal in December at our second biggest client in North America and risk/reward engagements due to complete in the first half, our focus is on locking the contract renewal in and moving the risk/reward engagements into new phases. As Canada starts down the path of introducing a real time payments platform, CPT is well placed to provide expert consulting services given our experience on the New Payments Platform released in Australia in 2018 and our existing relationships with Canada’s major banks. We have started to provide strategic consulting services to two banks in Canada. Our focus in North America is to continue to grow within our existing clients, convert risk/reward clients to long term recurrent revenue and grow our other services at existing and new clients.

In Asia we will continue to use our partner model in the medium term to identify and convert opportunities. The pipeline in Asia is encouraging and projects will continue to be undertaken on an opportunistic basis in the short term.

Europe will continue to be managed as part of the greater Northern Hemisphere region with a scaled back presence and fixed cost base. This will allow us to adjust our strategy quickly as the need arises. Projects will be undertaken on an opportunistic basis in the short term.

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Gerry Tuddenham Managing Director August 29, 2018

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Consolidated Statement of Profit or Loss and Other Comprehensive Income

YEAR ENDED 30 JUNE 2018

Comprehensive Income
YEAR ENDED 30 JUNE 2018 Notes	2018 2017 $’000 $’000
Revenue Other income Salaries and employee benefits expense Consultants benefits expense Depreciation and amortisation expenses Insurance expense Finance costs Occupancy Costs Other expenses Foreign currency (Losses) Gains Goodwill Impairment PROFIT / (LOSS) BEFORE INCOME TAX INCOME TAX EXPENSE PROFIT / (LOSS) AFTER INCOME TAX Other Comprehensive Loss: Items that may be subsequently reclassified to comprehensive income Exchange differences on translating foreign controlled entities Total Other Comprehensive Income for the year, net of tax TOTAL COMPREHENSIVE PROFIT / (LOSS) FOR THE YEAR PROFIT / (LOSS) ATTRIBUTABLE TO MEMBERS OF CPT GLOBAL LIMITED TOTAL COMPREHENSIVE PROFIT / (LOSS) ATTRIBUTABLE TO MEMBERS OF CPT GLOBAL LIMITED Basic earnings per share (cents per share) 3 Diluted earnings per share (cents per share) 3	31,031 27,159 57 70 (3,008) (3,308) (22,549) (21,066) (62) (66) (277) (274) (260) (244) (821) (971) (2,825) (2,433) (42) (194) - -
	1,244 (1,327) (464) (141) 780 (1,468) 41 184
	41 184
	821 (1,284)
	780 (1,468)
	821 (1,284)
	2.09 (3.93) 2.07 (3.93)

The Consolidated Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction with the Notes to the Preliminary Final Report.

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Consolidated Statement of Financial Position

AT 30 JUNE 2018

AT 30 JUNE 2018
	2018 2017 $’000 $’000
CURRENT ASSETS Cash and cash equivalents Trade and other receivables Unbilled revenue Current Tax Asset Other current assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Deferred tax assets Property, plant and equipment Intangible assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Borrowings Current tax liabilities Provisions TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Deferred tax liability Other long term provisions TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Retained earnings TOTAL EQUITY	1,440 1,656 4,843 5,571 2,283 792 - - 240 103
	8,806 8,122 1,259 1,067 17 43 4,302 4,348
	5,578 5,458 14,384 13,580
	6,702 6,007 535 1,640 578 2 810 982
	8,625 8,631 182 233 131 91
	313 324 8,938 8,955
	5,446 4,625
	12,228 12,228 1,480 1,439 (8,262) (9,042) 5,446 4,625

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Consolidated Statement of Changes in Equity

YEAR ENDED 30 JUNE 2018

Balance at 1 July 2016 Comprehensive Income Loss for the year Other comprehensive loss Total comprehensive income/(loss) for the year Transactions with owners, in their capacity as owners Share based payments Dividends paid or provided for Issue of Shares Total transactions with owners, in their capacity as owners Restated Balance at 30 June 2017 Balance at 1 July 2017 Comprehensive Income Loss for the year Other comprehensive loss Total comprehensive income/(loss) for the year Transactions with owners, in their capacity as owners Share based payments Dividends paid or provided for Issue of Shares Total transactions with owners, in their capacity as owners Balance at 30 June 2018	$’000 $’000 $’000 $’000 $’000 Issued capital Retained Equity Foreign Currency Translation Ordinary Earnings Reserve Reserve Total
	12,195 (7,574) 1,691 (436) 5,876 - (1,468) - - (1,468) - - - 184 184
	- (1,468) - 184 (1,284)
	- - - - - - - - - 33 - - - 33
	33 - - - 33
	12,228 (9,042) 1,691 (252) 4,625
	12,228 (9,042) 1,691 (252) 4,625 - 780 - - 780 - - - 41 41
	- 780 - 41 821
	- - - - - - - - - - - - - -
	- - - - -
	12,228 (8,262) 1,691 (211) 5,446

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Consolidated Statement of Cash Flows

YEAR ENDED 30 JUNE 2018

Consolidated Statement of Cash Flows YEAR ENDED 30 JUNE 2018
	2018 2017 $’000 $’000
CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Interest received Finance costs Income tax paid NET CASH FLOWS (USED IN)/FROM OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment, software NET CASH FLOWS (USED IN) INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from share issue Repayments of borrowings Proceeds from borrowings Payment of dividends on ordinary shares NET CASH FLOWS FROM FINANCING ACTIVITIES NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS HELD Add opening cash & cash equivalents brought forward Effects of exchange rate changes on cash and cash equivalents CLOSING CASH AND CASH EQUIVALENTS CARRIED FORWARD	35,979 28,851 (34,660) (31,039) 3 5 (104) (166) (131) 9
	1,087 (2,340)
	10 (2)
	10 (2)
	- - (1,297) - - 735 - -
	(1,297) 735
	(200) (1,607) 1,656 3,034 (16) 229 1,440 1,656

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Notes to the Preliminary Final Report

YEAR ENDED 30 JUNE 2018

1. DIVIDENDS PAID OR PROVIDED FOR ON ORDINARY SHARES

(a) Dividends paid during the year Current year interim Franked dividends (0.0c per share) (2017: 0.0c per share) Previous year final Franked dividends (0.0c per share) (2017: 0.0c per share) (b) Dividends proposed and not recognised as a liability Franked dividends (0.25c per share) (2017 0.0c per share)	2018 2017 $’000 $’000 - - - -
	- -
	93 -

(b) Dividends proposed and not recognised as a liability Franked dividends (0.25c per share) (2017 0.0c per share)

2. EVENTS AFTER THE BALANCE SHEET DATE

(a) On 28[th] August 2018 CPT Global Limited announced its intention to extend the on-market share buy back for a further twelve months until 28[th] August 2019. A maximum of 3,000,000 shares may be bought back during the buy back period, which will run from 28[th] August 2018 until 28[th] August 2019.

3. EARNINGS PER SHARE (a) The following reflects the income and share data used in the calculations of basic and diluted earnings per share: Net profit / (loss) Adjustments: Earnings used in calculating basic and diluted earnings per share Weighted average number of ordinary shares used in calculating basic earnings per share Weighted average number of options outstanding Adjusted weighted average number of ordinary shares used in calculating diluted earnings per share	2018 2017 $’000 $’000 780 (1,468)
	780 (1,468)
	Number of shares Number of shares 37,318,525 37,318,525 300,000 300,000 37,618,525 37,618,525

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4. INTANGIBLE ASSETS

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Goodwill at cost Accumulated impairment losses Total goodwill Intellectual Property at cost Software at cost Disposals Write back of accumulated amortisation on disposals Accumulated amortisation Total software Total intangible assets Year ended 30 June 2017 Balance at the beginning of the year Additions Impairment charge Amortisation charge Year ended 30 June 2018 Balance at the beginning of the year Impairment charge Amortisation charge	Goodwill $’000 4,157 - - -	2018 2017 $’000 $’000 9,659 9,659 (5,502) (5,502) 4,157 4,157 75 75 818 818 (68) - 68 - (680) (702) 70 116 4,302 4,348 Intellectual Property Software $’000 $’000 75 162 - - - - - (46)
	4,157	75 116
	4,157 - -	75 116 - - - 46
	4,157	75 70

Intangible assets other than goodwill and intellectual property have finite useful lives. The current amortisation charges for intangible assets are included under depreciation and amortisation expense per the statement of comprehensive income. Goodwill and intellectual property have indefinite useful lives. These have been assessed as having indefinite useful lives because these intangible assets arose on the acquisition of businesses purchased as going concerns. These businesses continue to be operated within the CPT Global Group and there are no plans to cease any part of these operations.

Goodwill is allocated to cash-generating units, based on the Group’s reporting segment.

Australian Segment	2018 2017 $’000 $’000 4,157 4,157
	4,157 4,157

The recoverable amount of the cash-generating units is determined based on value-in-use calculations. Value-inuse is calculated based on the present value of the projected cash flows from that cash-generating unit over 5 years; periods beyond 5 years have been extrapolated using the terminal value growth rate of 4.0% (2017: 4.0%).

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Key Assumptions

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The following key assumptions were used in determining the recoverable amount of goodwill:

	Discount rate	Discount rate	Gross	Margin	Sales	Growth
	2018	2017	2018	2017	2018	2017
Australian Segment	20.0%	20.0%	25.9%	25.7%	19.2%	9.1%

Management has based the value-in-use calculations on budgets and estimates for the CGU. The value-in-use is most sensitive to the following assumptions:

• Discount rate;

• Gross profit margins;

• Sales growth rates;

• Terminal growth rates; and

• Corporate costs.

Discount rate – the discount rate is a pre-tax rate and reflects the risks associated with a particular segment. Gross profit margins – values assigned reflect past experience, margins on existing contracts and analysis of the market conditions.

Sales growth rates – reflects management’s expectations of revenue growth in the context of the Group’s Australian market strategy.

Terminal growth rates – reflect the managements expectation of revenue and profit growth in the periods beyond the 5 year forecast and are based on expected growth during the forecast period, long term historical growth, operating leverage and level of fixed and variable costs.

Corporate costs – corporate costs are allocated to the CGU based upon the CGU’s proportional contribution to the revenue of the Group.

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Compliance Statement

This preliminary final report has been prepared in accordance with Listing Rule 4.3A and is based on accounts which are in the process of being audited.

This preliminary final report has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards, Australian Accounting Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board as appropriate for profit oriented entities. The preliminary financial report does not include all the notes of the type normally included in an annual financial report.

This report, and the accounts on which it is based, use the same accounting policies which have been consistently applied by the entities in the group and are consistent with those applied in the 30 June 2017 annual report.

The preliminary final report covers the economic entity of CPT Global Limited and Controlled Entities. CPT Global Limited is a listed public company, incorporated and domiciled in Australia.

CPT Global Limited has a formally constituted audit committee.

On behalf of the Board of CPT Global Limited

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Grant Sincock CFO & Company Secretary 29 August 2018

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