DTI GROUP LTD — AGM Information 2018

Nov 19, 2018

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DTI GROUP LTD

2018 Annual General Meeting

DTI GROUP LTD 2017 Interim Results Presentation [_] February 2017

20 November 2018

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AGENDA

• Introduction

• Notice of Meeting

• Meeting Procedure

• Chairperson’s Address

• Resolutions

• Closure of Formal Meeting

• CEO Presentation

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FINANCIAL STATEMENTS

To receive and consider the Financial Statements of the Company for the year ended 30 June 2018, consisting of the Income Statements, Statement of Financial Position, Statement of Changes in Equity, Statements of Cash Flows, the Directors’ Report, the Directors’ Declaration and the Auditor’s Report.

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RESOLUTION 1

As an ordinary resolution

▪ That Mr Neil Goodey, who retires in accordance with clause 13.2(a) of the Company’s Constitution and being eligible for election, is re-elected as a Director of the Company.

For	Against	Open	Abstain
129,364,387	56,714	103,164	5,195

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RESOLUTION 2

As an ordinary resolution

▪ That Mr Greg Purdy, who was appointed by the Board in accordance with clause 13.4 of the Company’s Constitution and being eligible for election, is elected as a Director of the Company.

For	Against	Open	Abstain
129,118,473	295,650	100,142	15,195

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RESOLUTION 3

As an ordinary resolution

▪ That Mr Steve Gallagher, who was appointed by the Board in accordance with clause 13.4 of the Company’s Constitution and being eligible for election, is elected as a Director of the Company.

For Against Open Abstain 129,097,409 316,714 100,142 15,195

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RESOLUTION 4

As an ordinary resolution

▪ That Mr Andrew Lewis, who was appointed by the Board in accordance with clause 13.4 of the Company’s Constitution and being eligible for election, is elected as a Director of the Company.

For Against Open Abstain 129,107,187 316,714 90,364 15,195

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RESOLUTION 5

As an ordinary resolution ▪ That for the purposes of ASX Listing Rule 7.2, exception 9 and all other the issue of purposes, performance rights, options and restricted shares under the DTI Group Limited Equity Plan (and the issue of the underlying securities that are the subject of those performance rights and options), as described in the Explanatory Statement accompanying and forming part of this Notice of Meeting be approved.

For	Against	Open	Abstain
129,112,403	134,720	73,364	208,973

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RESOLUTION 6

As an ordinary resolution

▪ That the Remuneration Report, as set out in the Company’s 2018 Annual Report, is adopted.

For	Against	Open	Abstain
62,344,581	1,115,609	90,364	65,137,562

• The vote on this resolution is advisory only and does not bind the Directors’ or the Company.

• Votes cast by shareholders that are identified as key management personnel or a closely related party are excluded.

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RESOLUTION 7

As a special resolution

▪ That the issue of equity securities up to 10 per cent of the issued capital of DTI Group Limited (at the time of the issue) calculated in accordance with the formula prescribed in ASX Listing Rule 7.1A.2 is approved

For	Against	Open	Abstain
122,177,599	7,246,524	73,364	31,973

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RESOLUTION 8

As an ordinary resolution

▪ That, for the purposes of ASX Listing Rule 10.14 and for all other purposes, the issue of up to 300,000 unlisted performance rights to Peter Tazewell under the DTI Group Limited Equity Plan is approved

For Against Open Abstain 127,116,901 1,367,211 1,013,375 31,973

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CLOSURE

Any other business which may be brought forward in accordance with the Company’s Constitution and the Corporations Act 2001 Close of meeting – Mr Neil Goodey, Chairperson

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CEO PRESENTATION

Mr Peter Tazewell

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WHAT WE DO . . .

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Overview – FY18

Financial

• Revenue of $19.1 million, 20 per cent increase on FY17; in line with guidance

• EBITDA adversely impacted by impairment costs, but positive in 2H (pre-impairment)

• Working capital reduced by $2.8 million, despite increased revenue

• $0.3 million negative cash flow from Operations compared with $3.6 million negative cash flow pcp

Operating

• New major contracts awarded including Metro Trains Melbourne, Oman Bus Project and exercise of Dallas Transit options

• Operating cost base restructured

• Commenced Northern Line retrofit

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Outlook
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• Contracted order book[1] of $35.9 million at 31 October 2018

• Opportunity Pipeline currently $329 million with potential for >$24 million to be awarded within six months

• Contracted revenue of $19.2 million – expected in FY19

• Ongoing interest in DTI Passenger Information Systems

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IRIS Certification

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• IRIS Certification achieved

• Critical for ongoing participation in rail industry

• Also satisfies DTI’s requirements for ISO accreditation

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FY18 FINANCIAL RESULTS

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Key Financial Metrics

	FY18 FY17 19.1 15.9 (10.1) (3.0) (2.7) 0.5 (11.4) (5.8) (4.30) (5.20) Nil Nil 0.1 0.5 5.0 2.7 8.4 11.3 (0.3) (3.6) 54 89 37.4 29.9 • Revenue increased 20.4 per cent pcp • Significant impairment charges recorded • Positive 2H EBITDA (pre-impairment) • Nil term debt • Net trade working capital reduced • Headcount reduced • Growing Order Book
Revenue $m EBITDA $m Underlying EBITDA $m Net profit/(loss) after tax $m Earnings per share ¢ Dividends per share ¢
Gross debt $m Net cash/(debt) $m Net working capital $m Operating cash flow $m
Employees FTE Contracted Order Book $m

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Balance sheet

$m	FY18 FY17
Cash Trade receivables Other receivables Inventory	5.1 3.2
	6.0 9.0
	1.4 3.1
	8.0 8.0
Property, plant & equip Intangible assets Other assets	1.1 1.0
	0.3 5.6
	0.1 0.2
Total Assets	22.0 30.1
Trade payables Financial liabilities Provisions Tax liability	5.5 5.8
	0.1 0.5
	1.2 1.1
	0.1 1.8
Total Liabilities	6.9 9.2
Total Equity	15.1 20.9
Net cash/(debt) Net trade working capital	5.0 2.7
	8.4 11.2

• Rail projects continue to be working capital intensive – but net working capital reduced • Negligible bank debt

• Capitalised development impaired

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FY19 TRADING UPDATE

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TRADING UPDATE

• 1H FY18 Revenue expected to exceed 1H FY17

• Contracted revenue forecast to be invoiced in FY18 of $19.2 million

• Strong pipeline of projects that DTI is bidding. Major markets continue to be EMEA and North America

• Operating Cash flow continues to be challenged by:

• Working capital associated with rail projects

• Development effort associated with rail projects

• Delays in project awards

• Net Working Capital has reduced since 30 June 2017 from $11.2 million to $10.4 million at 31 October

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IMPAIRMENT

• During FY18 DTI recorded impairment of $7.6 million

• Impairment of capitalised R&D expenditure ($5.2 million) is not reflective of the future value to be derived from this investment

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Recurring
R&D Marketing Prospects Contracts
Revenue
Year 0–1 Year 0–1 Years 0–2 Years 1–3 Years 5+
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• Future depreciation and amortisation will be reduced

• Strong tendering activity based on products that have been developed

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COMMERCIAL ACTIVITIES

• Product deliveries for Sydney Metro ahead of schedule and supply chain regularised. Initial 22 trainset order completed with potential for 37 trainset extension

• DART Options (US$7 million) were awarded to DTI (Dec 2017) and due for completion in April 2019

• Northern Line (London Underground) installations commenced; completion by June 2019

• Equipment trial ongoing with major US transit authority. Due for completion in January 2019

• FY18 Maintenance and Recurring revenue comparable with FY17 at ~ 40 per cent

• Continued in-field support required for new products

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ORDER BOOK AND PIPELINE

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ORDER BOOK

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• Sustained strong Contracted Order Book

• Strong growth in rail sector with global infrastructure spend

• Order book does not include anticipated recurring work until PO is issued

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OPPORTUNITY PIPELINE

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• Significant identified long term pipeline of approx. $329 million

• EMEA continues as strongest region with Australasian opportunities growing with increased investment

• Market continues to be dominated by rail which generally has higher specifications and engineering effort

• Growth drivers include

legislation/evidence standards, public infrastructure spending and potential to reduce insurance and maintenance costs

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STRATEGIES

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SHORT TERM

Grow Revenue Base	Production Cost Efficiencies	Cost Down Strategy	Overhead Reduction	Overhead Reduction
• Increased order book1 by 25% (over FY18) • Conversion of opportunity pipeline • R&D cycle complete providing new leading edge product solutions	• Product design finished leading to stable production runs • Migrate production to lower cost manufacturer	• Review supply chain to reduce component costs • Implement design efficiencies • Target margin improvements via competitive product sourcing	• Tight control of costs and working capital • Improved inventory management processes established • Focus on project execution and margin management
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MEDIUM AND LONG TERM

Medium-term

• Demonstrate continued profitability

• Ongoing monetisation of past R&D investment

• Long-term

• • Continue to leverage R&D investment in new market-leading technology platform

• Target continued increased in maintenance and recurring revenue to underpin revenue growth

• Staging of contracted revenue provides support for future revenue growth

• Product suite developed drives leading turnkey solutions

• Develop DTI hardware as platform for multiple technology applications

• Expand strong OEM relationships to create stronger maintenance and recurring revenue and position DTI as preferred technology provider

• Build contracted footprint globally to position DTI in all major markets

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DEMONSTRATION

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PANTOGRAPH HEIGHT AND STAGGER

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360⁰ CAMERA DEWARPING

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OUTLOOK

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OUTLOOK

• Contracted order book[1] of approx. $35.9 million

• Gibela/PRASA contract provides strong market entry opportunity for South Africa

• Identified Opportunity Pipeline of $329 million

• Strong investment across all markets

• Global market for mobile surveillance and PIS experiencing strong growth

• DTI has developed a strong technical reputation for developing leading edge products and solutions

• Following the end of product development cycle, focus is to increase revenue from new product suite

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1 Includes LoI/LoA

DISCLAIMER

Reliance on third party information

The information and views expressed in this presentation were prepared by DTI Group Ltd (the Company) and may contain information that has been derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. No responsibility or liability is accepted by the Company, its officers, employees, agents or contractors for any errors, misstatements in or omissions from this presentation.

Presentation is a summary only

This presentation is information in a summary form only and does not purport to be complete. It should be read in conjunction with the Company’s 2018 Annual Report. Any information or opinions expressed in this presentation are subject to change without notice and the Company is not under any obligation to update or keep current the information contained within this presentation.

Not investment advice

This presentation is not intended and should not be considered to be the giving of investment advice by the Company or any of its shareholders, directors, officers, agents, employees or advisers. The information provided in this presentation has been prepared without taking into account the recipient’s investment objectives, financial circumstances or particular needs. Each party to whom this presentation is made available must make its own independent assessment of the Company after making such investigations and taking such advice as may be deemed necessary.

No offer of securities

Nothing in this presentation should be construed as either an offer to sell or a solicitation of an offer to buy or sell Company securities in any jurisdiction.

Forward looking statements

This presentation may include forward-looking statements. Although the Company believes the expectations expressed in such forwardlooking statements are based on reasonable assumptions, these statements are not guarantees or predictions of future performance, and involve both known and unknown risks, uncertainties and other factors, many of which are beyond the Company’s control. As a result, actual results or developments may differ materially from those expressed in the statements contained in this presentation. Investors are cautioned that statements contained in the presentation are not guarantees or projections of future performance and actual results or developments may differ materially from those projected in forward-looking statements.

No liability

To the maximum extent permitted by law, neither the Company nor its related bodies corporate, directors, employees or agents, nor any other person, accepts any liability, including without limitation any liability arising from fault or negligence, for any direct, indirect or consequential loss arising from the use of this presentation or its contents or otherwise arising in connection with it.

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