DTI GROUP LTD — Annual Report 2015

Aug 27, 2015

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DTI Group Ltd 2015 Financial Year Presentation

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Important notice and disclaimer

This presentation has been prepared by DTI Group Ltd ACN 069 791 091 (“DTI” or the “Company”).

Summary information: This presentation contains summary information about DTI and its activities current as at August 2015. The information in this presentation is of a general nature and does not purport to be complete nor does it contain all of the information that an investor should consider when making an investment decision. It contains information in a summary form and should be read in conjunction with DTI’s other periodic and continuous disclosure announcements to ASX available at: www.asx.com.au, including DTI’s full year audited results filed with ASX on 28 August 2015.

Not an offer: This presentation is not a prospectus or product disclosure statement and does not constitute an offer, invitation or recommendation to subscribe for or purchase any security and neither this presentation nor anything contained in it shall form the basis of any contract or commitment.

Not financial product advice: This presentation does not contain all of the information which an investor may require to make an informed decision about whether to subscribe for or purchase DTI shares. This presentation is not intended to be relied upon as advice to investors or potential investors and has been prepared without taking into account the objectives, financial situation or needs of individual investors. Before making an investment decision, prospective investors should consult their stockbroker, solicitor, accountant or other professional advisor. This presentation does not constitute an offer to issue or sell securities or other financial products in any jurisdiction. The distribution of this presentation outside Australia may be restricted by law.

Past and future performance: Past performance information is given for illustrative purposes only and is not, and should not be relied upon, as an indication of future performance. This presentation also contains certain forward-looking statements with respect to the financial condition, results of operations, projects, contracts and business of DTI and certain plans and objectives of the management of DTI. These forward-looking statements involve known and unknown risks, uncertainties and other factors which are subject to change without notice. Forward-looking statements are provided as a general guide only and there can be no assurance that actual outcomes will not differ materially from these statements. Neither DTI, nor any other person, gives any representation, warranty, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statement will actually occur. In particular, such forward-looking statements are subject to significant uncertainties and contingencies, many of which are outside the control of DTI. Further, none of DTI, its officers, agents or employees, except to the extent permitted by law, accept responsibility for any loss, claim, damages, costs or expenses arising out of or in connection with the information contained in this presentation. Investors should independently satisfy themselves as the accuracy of all information contained herein.

Financial data: All dollar values are in Australian dollars ($ or A$) unless stated otherwise.

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Review of Corporate Activities

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Listed on ASX in early December:

• Previously operated as a public unlisted company for 10.5 years.

• 6.68 million new shares.

• Issue price of $0.30.

• Underwritten by Baillieu Holst.

DTI conducted an IPO to satisfy shareholder spread requirements and to:

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• Provide additional working capital and funding to support future growth.

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• Enhance the Company’s flexibility for possible acquisitions.

• Benefit from increased profile from being a listed entity.

70.9 million shares (77.4%) out of escrow with release of FY2015 audited financial accounts.

Audited FY15 annual report completed before end of August.

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Full Year Review – P&L

Current Historical Key FY15 Observations	Current Historical Key FY15 Observations	Current Historical Key FY15 Observations
$000s FY15	FY14	 Operating revenue and performance is lower than FY14 due to the deferral of tender awards and slower than expected ramp up in the production of new buses in the US.  Service Bureau revenue has increased by 21% from $2.11 million to $2.56 million.  Gross Margin has had a slight increase from 50.0% to 52.4% principally due to increased volume purchases and cost reduction efforts.  Expenditure on marketing has increased from $0.733 million to $1.033 million resulting in an increased prospects pipeline. Other expenses have been reduced.  Depreciation and amortisation has declined and is forecast to decline in FY16.
Revenue from sale of goods 12,146 Revenue from the rendering of services 2,560	17,686 2,112
Operating revenue 14,706	19,798
R&D grant 992 Net foreign exchange gains 295 Other income 0	788 138 1
Non-operating revenue 1,287	927
Total revenue 15,993	20,725
Cost of goods sold (6,999) Employee benefits expense (4,821) Other expenses (2,588)	(9,895) (5,044) (2,709)
EBITDA 1,529	3,077
Depreciation/amortisation (885) EBIT 640 Net interest (expense) income 46 Net profit (loss) before tax 691 Income tax(expense)benefit (577)	(967) 2,110 83 2,193 (1,077)
Netprofit(loss) after tax 114	1,116

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Full Year Review – Balance Sheet

	($000s)	Current 30.6.15	Historical 30.6.14	Key observations
	Current Assets		1,448 400 5,747 2,544 90	 Cash increased due to IPO and exercise of Options  Inventories increased due to increased WIP, adjustment to short lead time requirements in specific markets and bulk purchasing to decrease COGS.  Intangible assets increased due to net capitalisation of development on key products.  Trade and other payables increased as a result of increased inventories coupled with excellent payment terms.
	Cash and cash equivalents	3,840
	Other financial assets	400
	Trade and other receivables	6,310
	Inventories	4,612
	Other current assets	131
	Total current assets	15,293	10,004
	Non-current Assets		652 2,055 452
	Plant and equipment	573
	Intangible assets	2,518
	Other receivables	531
	Total non-current assets	3,622	3,159
	Total assets	18,914	13,388
	Current Liabilities		2,882 13 -
	Trade and otherpayables	3,720
	Borrowings	19
	Provisions	-
	Total current liabilities	3,739	2,895
	Non-current Liabilities		66 48 204
	Borrowings	47
	Provisions	70
	Other financial liabilities	380
	Total non-current liabilities	497	318
	Total liabilities	4,236	3,213
	Net assets	14,678	10,175
	Equity		9,274 1,139 (238)
	Contributed equity	13,724
	Reserves	(79)
	Retained Profits	1,032
	Total equity	14,678	10,175

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Segment Review - Australia

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Sales of $7.88 million, stronger second half, but down from $9.46 million for FY14.

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Maintained strong market position with sales to wide range of customers.

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Signed multi-year maintenance contract with the Dyson Group, 2 year supply with Brisbane City Council, plus 8 pilot cash in transit van systems.

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Signed a supply contract with Yarra Trams.

• C2 Citadis Trams (5), all completed.

• Yarra has 487 trams, approximately 10% have third party CCTV systems which have been supplied with the tram.

• DTI is the first to retrofit a system on a tram which does not have CCTV.

• New Victorian Government has allocated budget for 132 B-Class tram life extension.

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Segment Review - EMEA

Sales of $2.93 million, up from $1.52 million in FY2014.

UK

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• Received order for systems as part of Eversholt Rail Class 321 refurbishment, Total rail cars now over 700 with Eversholt. Majority operate as part of London commuter rail.

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• Received order for 100 systems for new buses built by Alexander Dennis Limited.

• France

• Opened office in July 2014 in Besancon.

• Received orders for 100 systems for buses in Besancon, 66 for SMT Artois-Gohelle.

• Received order for 36 systems to outfit all of the Marseille metro.

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Poland

• Received initial order for 5 systems from PESA for trams in Gdansk.

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• Received order for 30 systems for Lodz and a further 16 systems from Modertrans for Gdansk.

• South Africa

• Received an order for 30 systems for Tshwane Buses in Pretoria, 106 for Cape Town buses.

• Opened an office in South Africa in February 2015.

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Segment Review - Americas

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• Sales of $3.89 million, down from $8.82 million in FY14.

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• Sales delayed due to the delay in the manufacture of buses for a significant customer.

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• DTI is well position in the US market with a number of the largest sites in the US.

• 2,100 systems in one site, over 2,000 in a second site, and 1,200 in a third site.

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• In July 2014, DTI announced that its solution has been specified in a bus procurement tender issued by the San Francisco MTA.

• The procurement tender includes the manufacture of up to 454 buses over 5 years.

• Deliveries have now commenced.

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• In January, DTI created a wholly owned subsidiary in the US.

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• The subsidiary forms an important part of DTI’s growth strategy.

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• Subsidiary an effective structure for DTI to become closer to specific customers in the market. Direct sales commenced in June 2015.

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• Provides slight net source of US funds

• (+ve Revenue and Profit) on declining AUD.

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SOUTH AFRICA
UNITED STATES
Data Recording
Data Recording Units Sold Cameras
Units Sold Cameras DTI Global Installations Customer (DRU / MDR) Sold
Customer (DRU / MDR) Sold
Cape Town – bus 233 –
Various cities – bus 14,359 14,438 UNITED KINGDOM
Cape Town – law 40 –
Various cities – rail 511 – Data Recording enforcement
Units Sold Cameras
Customer (DRU / MDR) Sold Tshwane 30 –
Kratos Defense 1,439 12,951
(San Francisco) – bus National Express 628 5,652 Total 303 –
Birmingham – buses
Total 13,918 22,823
Eversholt Rail Group 366 180 AUSTRALIA
– rail
Data Recording
Total 994 5,832 Units Sold Cameras
Customer (DRU / MDR) Sold
Perth Buses 1,765 12,255
San Francisco Birmingham
London Poland Adelaide Buses 1,007 6,035
Holland
France Belgium Canberra Buses 667 2,668
UNITED ARAB EMIRATES Brisbane Buses 922 7,376
Data Recording Queensland Rail 286 286
Units Sold Cameras
Customer (DRU / MDR) Sold Tasmania Buses 243 1,215
VDL (Dubai Buses) 523 4,184 Ansaldo (driverless 212 424
Dubai
trains and crossings)
Total 523 4,184
Perth Taxis 167 668
TOTAL Victorian Buses 165 857
Data Recording Perth Rail 96 450
Units Sold Cameras
Business Segment (DRU / MDR) Sold Bombardier Rail 83 1,168
Bus 22,241 70,802 NSW Buses 145 1,160
Pretoria
Rail 1,492 4,006 Cape Town Total 5,758 34,562
Taxi 167 668
Brisbane
High-value freight 212 424 Perth
Adelaide
Law enforcement 40 – Sydney New Zealand
Melbourne Canberra
Total 24,152 75,900
Tasmania
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Outlook

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Outlook for DTI in the mobile security market remains strong.

• Record number of prospects, over 100.

• Record prospect value, well over $200 million.

• Prospects vary in size from $24K to $43 million ($43 million will probably be split into 3 or 4).

• Prospects vary in duration from 2 months to 13 years.

• Mix of retrofit and new build.

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Excellent pathfinder projects.

• Yarra Trams, Cash in Transit Vans.

• PESA (rail manufacturer), Modertrans (rail refurbishment), Tarnów (Bus).

• SEPTA (first sales in June 2015).

• Marseille (metro), STM Artois-Gohelle (Bus).

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Numerous trials.

• (UK, Sweden, France, Australia, Poland, Egypt, Turkey).

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Growth strategy

• DTI’s is extending its offering and global reach in key target markets, including its business development drive in the European Union where DTI a new office in France and Poland and won its first projects with business partners Cibest and DTI Polska.

Extend its offering and global reach in key target markets

• Extend the development of market opportunities in the Middle East and South Africa.

• Increased marketing of DTI’s products and solutions to key markets and customers through indirect and direct marketing, such as major transit exhibitions including UITP in Milan, UTP in France, Trako in Poland, and APTA in the US.

• Target rail manufacturers including Alstom, Bombardier, Hitachi, Pesa, Rotem, and Siemens.

• ISO9001 Quality Assurance Certification which is particularly important in Europe and rail.

• Increase capacity to deliver new projects through increasing the Company’s inventory base.

Continue to invest in developing innovative technology

• DTI remains focused on its R&D program and continues to create new or improved products and solutions to improve its customer offering and market position.

• “DTI Central” Software Platform.

• Pantograph (4 Patents registered, 2 now submitted for International Patent Application).

• MDR6 Recording Platform (IP centric).

Expand through additional business partners and acquisition

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• The mass transit security industry remains fragmented with the industry comprising a number of small to mid-size product and service providers that typically focus on a specific region or mode of transit (e.g. bus, rail, law enforcement vehicles).

• DTI sees opportunities by investing in new joint ventures, business partners, or via the acquisition of, or investment in, complementary businesses both within Australia and internationally, particular in North America and Europe.

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Expansive Core Software Capabilities

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Scratch G-Force
Graffiti Driver
Schedule
Vehicle Sensor Behaviour
Adherence
Tracking
CCTV
Passenger
Counting
Bus
Passenger
Lane
Counting
Enforcement
Bus
Signage, PA
Complimentary
CCTV
Static
CCTV Other DTI DTI
Core Core Rail Train Data Recording
Data Law Software Software
Recording Enforcement Pantograph
Vehicle Rail
Tracking Crossings
Taxi
Driverless
CCTV Trains
Driver
Alarm CCTV
Vehicle Vehicle
Interface Tracking
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Key strengths

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Profitable software focused technology Company with world leading reference sites.

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Strong market position and capability.

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Exposure to attractive high-growth mobile security market.

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Innovative customer solutions supported by investment in R&D.

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Significant and growing recurring revenue stream.

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Scalable business model.

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Strong customer relationships.

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Strong business partners.

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Experienced Board and management team.

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Global terrorism driving increasing customer demand.

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Guidance

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2016 Financial Year

• DTI remains confident in its outlook as it seeks to drive growth via its strong pipeline of opportunities.

• The Company's ongoing investment in research and development aims to ensure continued innovation and market leadership of the products and services that DTI offers to the global mass transit industry and other related markets.

• Based on its current assessment of existing and anticipated new orders and projects DTI is aiming to achieve at least a 50% increase in FY16 EBITDA compared to FY15 EBITDA

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