CPT GLOBAL LIMITED — Management Reports 2002

Nov 26, 2002

Good Morning

It will be no surprise for any of you that the business conditions encountered in our markets were the toughest that the company has experienced since it was founded in 1993.

I would like to draw your attention to some particular aspects of these conditions that impacted on our business:

• The development and rollout of new IT based business solutions is typically a major driver of the demand for IT services. The level of activity in this area was severely depressed. Even though this is not a core service offering of CPT it has driven the downturn experienced in the industry.
• This downturn has resulted in reduced IT budgets and retrenchments of IT staff by clients.
• Client focus has shifted from product development to cost reduction. IT cost reviews have most likely featured in the board agendas of all major Australian companies with management trying to quantify the value of IT to the business.
• The consequences of the reduction of IT budgets has included the rationalisation of IT industry players, reduction in remuneration of IT staff, shortening of contract values and duration. There has been a shift away from major outsourcing projects to selective insourcing.
• The demand for technical IT services provided by CPT remained relatively robust although curtailed by the reduction in IT budgets and industry wide rate reductions.
• The impact of all these factors was particularly severe on CPT 's emerging client base in the UK, Ireland and Germany. In these emerging markets, two of our clients in the global securities and banking sectors substantially reduced their demand for IT services.

CPT Global's Performance

In response to the difficult market CPT undertook a concerted effort to maintain its existing client base as well as gain new clients. The winning of new client work has enabled CPT to maintain its revenue by offsetting the reduction in the IT spend of existing clients.

A detailed summary of our performance is provided in the "Year in Review" section of our 2002 Annual Report.

Some points that I would particularly like to draw your attention to:

• CPT has continued to maintain year on year client growth.
• New clients have been established across all sectors with this growth in client numbers continuing during the current financial year.

• The 2002 revenue analysis demonstrates the broadening of CPT Global's client base.

• The 2002 geographic revenue analysis shows that our UK $\&$ European operations have contributed 6% of total revenue. CPT has recognized that Australia is only a small percentage of the global IT market and as such is committed to continuing the expansion Internationally. Given the present exchange rate differences CPT can return revenue of 2.5 times that which can be achieved if the consultant was working in Australia.

• High retention levels of our team of IT professionals.
• Internal cost rationalisation which featured an across the board reduction in consultant and executive remuneration.
• Expansion of our mainframe base cost reduction and risk reward services.
• Development of our midrange based cost reduction services.
• First deployment to clients of performance based remuneration contracts.
• Expansion in the public sector client base. This has featured the deployment of "Management of IT" services. These services assist clients to increase productivity via the alignment of IT services with their business objectives.
• Restructuring and strengthening of CPT's operations in the UK and Europe including a $\bullet$ marketing program initially aimed at mainframe based risk reward services.

Financial highlights

• Total revenue was \$28.7 million. This was \$0.2 million greater than the revenue achieved in the year ended 30 June 2001.
• Operating profit after tax was $$0.848$ million. This was \$1.498 million lower than the previous financial year. The lower operation margin achieved is a reflection of the tough market conditions that were experienced.
• Fully franked dividends of 2.5 cents per share were declared.
• The company's financial position at 30 June 2002 was sound with net assets of \$13.5 million, including cash assets of \$3.8 million.

Outlook

Business Conditions

In the short to medium term CPT expects market conditions throughout the IT industry to remain tough with clients continuing to focus on ways to reduce IT budgets. Clients can be expected to remain focused on obtaining maximum value from existing applications and delaying where possible expenditure on new software and hardware.

In the long term however the outlook for the IT industry can be expected to improve as major IT users such as financial institutions, telecommunications and Government continue to embrace IT as a key driver in the development of business productivity and enhanced service delivery.

The increased utilisation by clients of Internet enabled systems has lead to increased pressure on the existing IT systems. This has created opportunities for CPT in both existing and new clients in capacity planning, performance tuning and stress $\&$ volume testing.

Whilst the demand for CPT's core IT services continues to strengthen, the level of demand for these services will be effected by the overall business conditions and the level of IT budgets.

Business Strategy

CPT will continue to develop and expand its cost reduction services in both the mainframe and midrange environments.

Priority will be given to marketing of those services that return the maximum profit and open doors for future CPT opportunities - Namely the Risk Reward and Cost Reduction services.

Targeting of clients within the Commonwealth and State Government will continue to be a key focus of CPT.

CPT will maintain a focus on internal cost reduction whilst striving to improve quality of service delivery.

Our overseas strategy will include leveraging off successfully completed Australian assignments.

CPT recognises the importance of our Australian Government Endorsed Supplier status and will continue to pursue similar status internationally.

Operation and financial performance

Based on unaudited management accounts for the first four months of this financial year, the trend of improved profitability that was evident in the last quarter of the year ended 30 June 2002 is continuing.

Demand for CPT's core IT services has improved and new clients have been secured in both the Government and Private sectors. Successful deployment of Risk Reward and cost reduction services has been undertaken in UK, Germany, Ireland and Australia.

The continuation of CPT 's improved performance is obviously subject to general economic conditions as well as the overall strength of the IT markets in which we operate.

CPT has to date weathered the downturn in the IT industry. We continue to improve our market position and corporate capabilities. Credit for this is primarily attributable to the skill and dedication of our global team of IT professionals, management and staff.

Thank you.