CPT GLOBAL LIMITED — Management Reports 2005

Dec 5, 2005

Attention ASX Company Announcements Platform Lodgement of Open Briefing^®

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CPT Global Limited Level I 4 Riverside Quay Southbank, Victoria 3006

Date of lodgement: 06-Dec-2005

Title: Open Briefing^®. CPT Global. MD on Business Model & Strategy

Record of interview:

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CPT Global Limited reported a 27 percent increase in normalised core operating profit after tax to \$2.3 million for FY05. What market conditions are you currently encountering and what is the outlook for this financial year?

MD Gerry Tuddenham

Demand in Australia is strengthening as many companies are beginning to review their IT systems. We see Australian demand being strong over the next two years as many of the billion dollar contracts negotiated ten years ago are due for tender over the next two years. External consulting, advisory, measuring and testing services will be in increasing demand during this period. Also, we are getting positive traction in overseas markets which will underpin revenue growth.

Margin growth, however, is a higher priority for us than revenue growth, and we expect our margins to edge higher as the business mix moves away from the lower margin time and materials pricing model into service solutions where we can leverage our IP.

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In FY05 CPT Global revenue was flat at \$29 million, but within that, offshore revenue grew by 35 percent to \$4.7 million. Will you sustain higher growth rates offshore?

MD Gerry Tuddenham

Longer term, we see stronger growth rates being sustained offshore as our offshore sales strategy evolves. The Australian market is relatively quite small, representing only 1.7 percent of the world's mainframe processing power. Over the last few years our offshore revenue has risen from 6 percent to 16 percent of total and all costs associated with this international expansion were expensed. Our emerging offshore success reflects our work with the local branches of multinational corporations and our success in winning referrals to their international head offices.

But, we also have opportunities to grow in Australia. We have a significant opportunity to grow our revenue base in New South Wales which is only a fraction of our Victorian revenue.

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Do you anticipate growth in your Australian revenue base in FY06?

MD Gerry Tuddenham

Yes. We already have 63 percent of Australian FY06 annual revenue budget already contracted.

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In FY05 you paid an annual dividend of 5.5 cents on a reported EPS of 5.3 cents. Will you maintain a high pay out ratio?

MD Gerry Tuddenham

Yes. Our operations are self funding. There are no acquisitions currently being considered and we have no debt. Our expansion will be organic, building the business by growing consultants and clients.

Beyond organic growth the introduction of AIFRS is most likely to lift the dividend payout to shareholders in FY06, subject to cashflow requirements at that time. By way of example, reported EPS in FY05 under AIFRS would have been 6.7 cents, after deleting amortisation, compared with the actual EPS in FY05 of 5.3 cents. We intend to continue to maintain dividend growth consistent with growth in reported EPS.

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What factors are driving demand for IT services?

Executive Director Peter Wright

Independence and outsourcing are key drivers of demand for services from both sides of our business; cost reduction and IT governance and systems project management. There is an emerging pattern of organisations moving from single to multiple source suppliers. When contracts were signed in the mid-to-late 1990's it was typical to outsource from one supplier, to say IBM or EDS. When these contracts come up for renewal organisations are now splitting their business specialist suppliers with systems from one between supplier and telecommunications from Telstra and software from other specialists. Purchasers of IT services want to reclaim some control over their IT environment and

strategy. That's creating growing demand for our services to help them manage multi-sourcing, purchasing, integration and testing. If they want to resume some functions in-house we can assess their skills and educate their staff where required. The testing function assumes greater significance when components are sourced from offshore, such as India.

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How has growth in ecommerce affected demand for your Management Consulting Services and Technology Services businesses?

Executive Director Peter Wright

The internet is another accelerating business driver for us. As organisations increasingly rely on internet services for bill paying, retail sales and account transactions demand for technical services to maintain the integrity, capacity and reliability of systems are growing strongly.

Internet banking has generated demand for our technical services in stress volume and performance testing and also capacity planning on the internet applications side and we also redo the capacity planning for the mainframes which are subject to much greater and growing volumes during peak periods. It's critical that the system can support the concurrent number of users expected before it goes live so the banks need to use capacity planning and performance management experts. We've been called in by the major banks, and overseas banks as well, when they've had troubles with their banking systems. Our technical services consultants go in and fix the problem and we generally maintain a presence to ensure consistent operation. We often suggest that the client brings in our Management Consulting services to identify the root cause, implement capacity planning and better management processes.

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What's the CPT Global business model and what differentiates you from others in the IT sector?

MD Gerry Tuddenham

Ours is a unique independent, client-side consulting service model aimed at reducing the cost of mainframe and mid-range IT system by managing consumption of user pays services, such as a fixed price access contracts or on-line software. We have no competitors in the service sector in which we operate. We provide the expert interface with the client and the systems vendors and/or outsourced service suppliers to cut IT costs and deliver high availability infrastructure and systems.

Our model has two business streams that are complementary and overlap to create unique solutions for clients. Management Consulting works on the client demand side and Technical Services works on the client supply side. Our revenue split is 21 percent Management Consulting and 79 percent Technical Services.

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Given you are a small player in the global market what is your competitive edge?

Executive Director Peter Wright

Independence is the key to our model. This makes us unique in the IT services marketplace. We don't develop systems; we're not an IBM or EDS, and we don't sell software, such as Hogan, Peoplesoft or SAP. As an independent service provider we don't want to create a conflict of interest by developing systems or software. We aim to work with our clients on ensuring they get what they want and achieve efficiencies and cost reductions. Many delivery side service providers have no incentive to operate efficiently and reduce usage unless they have experts like CPT providing an independent view.

Another key differentiator is that we have the best people and a culture of consultant care. We have a book of close to 200 mature IT experts with business skills who have held senior roles in the IT departments of leading organisations. They've had to manage the same IT issues facing our clients. Because we offer clients solutions, rather than selling them people for a certain period, we can call on the most suitable consultants for various components of a job in the domestic or offshore market. Consequently we can offer our consultants a stimulating variety of projects and international locations.

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Your clients are major organisations in the public and private sectors. Where is your market focus?

Executive Director Peter Wright

As we specialise in mainframe and mid-range platforms and services, our clients are many of Australia's largest IT users and also major international companies. There's not a tier one Australian headquartered organisation that's not a client of ours.

We've consciously chosen a public and private sector mix because they have different investment cycles. While the public and private sectors can both be up at the same time, they're never down at the same time, as the government IT budgets tend to increase when private sector IT investment is down. While government accounts for 20 percent of revenue, that is spread across some 27 Federal departments, and also numerous state departments and authorities. We're recognised as the market leader in selective sourcing strategies with appointments to a number of Federal and State Agencies.

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What sectors do you target?

Executive Director Peter Wright

Our strategy is to maintain a spread of industry exposure with a continued focus on the banking, government and telecommunications sector. We have a lot of experience in these sectors and know best practice in each industry. We can work with competing organisations within a sector because we're experts in IT which is universal across all market sectors. For instance, Banking and Finance accounts for 35 percent of total revenue and we work with all four Australian majors and several international banks with no conflict of interest.

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Historically Telstra has been your largest client. How dependent are you today on Telstra and what has been the growth in your core long term client base?

MD Gerry Tuddenham

While Telstra remains an important client it now accounts for less than 20 percent of revenue compared with over 52.5 percent when we listed in FY01 and 23 percent in FY04. Also, our relationship within Telstra is diversified. Currently we have a dozen or so contracts with different divisions.

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You've introduced a Risk/Reward model of pricing for your services. How does it differ from the traditional pricing model for IT consulting services and how it is benefiting your business?

MD Gerry Tuddenham

Under the Risk/Reward pricing model for mainframe and mid-range cost reduction services the customer pays us a relatively modest retainer and a percentage of cost savings achieved. Cost savings can be substantial. In many cases we've reduced clients' MIPS (million instructions per second) by 25 percent, saving millions of dollars annually. In the finance industry you'd call it a success fee. This model is helping us grow offshore as upfront pricing is not a deterrent. The model will deliver higher margins compared with our traditional time and materials pricing model.

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What specifically are the services your businesses deliver?

MD Gerry Tuddenham

Within Management Consulting Services 12 percent of total group revenue is generated by Information, Communications and Technology project and program management and nine percent is from Management Consulting and Strategic These services define the client's business requirements, advise on Sourcing. system sourcing strategies, contract negotiating and management. Once the client's system is in place, our Technology Services apply our capacity, stress and volume testings services to ensure performance to specifications. Frequently, Technical Services also manages the software and infrastructure supplied by the Management Consultants on a retainer basis.

Management Consulting services include assisting clients introduce IT governance. We're running workshops to assist clients, such as the major banks, set up their IT governance to comply with global protocols, including ITIL (Information Technology Infrastructure Library), a set of best practices standards for information technology service management. Other services are outsource contract services reviews, systems integration management, information management planning, records and data management, ebusiness planning and implementation.

Technical Consulting Services' core competence is the ability to assess an organisation's computer systems from the top-down and use our diagnostic ability and organisation skills to optimise performance. Mainframe performance tuning and maintenance and functional testing and automation account for over 60 percent of total revenue. We use proprietary diagnostic, performance tuning and testing tools which slash our service time gives us an efficiency advantage over inhouse IT services.

Other technical services include cost of running reports and models, database and system administration, data warehouse solutions and architecture services. We provide performance tuning for many widely used applications, including Oracle Financials, Hogan, SAP and Peoplesoft. By optimising mainframe systems performance our clients can defer upgrades, whilst continuing to meet rising For example, we reduced process time for an Australian service levels. government agency from 12 hours to 20 minutes and assisted in its establishment of a performance testing capability for Web based applications.

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Thank you Gerry and Peter.

For more information about CPT Global, visit www.eptglobal.com or contact Mark Carroll, Company Secretary and Chief Financial Officer, on 03 9690 3911

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