DTI GROUP LTD — Annual Report 2016

Aug 29, 2016

� Record number of project wins to deliver revenue growth in FY17 � Increased R&D & marketing drives prospects and growth

2016 Financial Year Presentation

FY2016 Financial Metrics

Sales $16.2m up $1.5m, 10%increase	Recurring revenue*55% of sales, up from 38% at HY	EBITDA $3.6m up140%from $1.5m
FY17 contracted & recurring revenue$15.0m, up39%from $10.8m for FY16		Marketing and business development expenses up 11%
R&D $5.9m, up56%from $3.8m	Positive operating cash flow $193k	Prospects $400m, up 100%from $200m

• Recurring revenue includes maintenance agreements & ongoing monthly sales to vehicle manufacturers and transit authorities

2

Key Drivers

• �Increased investment in R&D and marketing intended to deliver double-digit revenue growth for DTI

• �R&D and marketing investment up by over 47% on previous year

• �Focus on rail sector and broader product offering across all sectors of Intelligent Transport Solutions

• �Strategic expansion into rail passenger communications systems

• �Result of R&D and marketing initiative is prospects up 100% in 12 months to $400 million

• �Growing global demand for surveillance systems across all forms of public transport

• �Five wins out of five in the UK demonstrates DTI’s technology strengths and market acceptance

3

Passenger Communication Systems (PCS)

• �First contract awarded by Alstom for the Sydney Northwest Rail Link

• $5.3 million value ̶ 82% PCS, 18% surveillance

• �Investment in specialist equipment for software & hardware testing

• Significant savings in time and development costs

�High-calibre development team

• 20 engineers build the PCS solution

==> picture [577 x 168] intentionally omitted <==

4

Significant Milestones

• �Strong start to FY17 with contracted and expected revenue at $15.0 million, up 39% from $10.8 million for FY16

�Awarded $5.3 million Alstom contract

• 22 new trains for the Sydney Northwest Rail Link

�Awarded $3.4 million Dallas contract

• 48 light rail vehicles for Dallas Area Rapid Transit

• Options for an additional 115 light rail vehicles valued at $8.2 million

�Awarded $1.5 million London Underground contract

• 106 trains for the Northern Line

• �Awarded $220,000 Cape Town Police contract for 27 police vehicles

• Options for 300 plus a further 600 police cars

• �Record number of new contracts secured

• Sydney, Dallas, London underground, Philadelphia, Cape Town Police, Dallas, Irish Rail, MerseyRail, Wright Bus

==> picture [275 x 197] intentionally omitted <==

5

Financial Performance Highlights

$m	FY2015	FY2016
Sales	14.71	16.22	�Growth in Americas sales.
Other income	1.34	3.58	�Increased R&D grant income due to increased R&D expenditure.
Cost of goods sold	(7.00)	(7.46)	�1.6% improvement in gross margin.
			�Sales increase with minimal increase in
Employee benefits expense	(4.82)	(4.66)	employee expense.
Depreciation & amortisation	(0.88)	(1.06)	�Increased amortisation of certain R&D projects now in revenue generating stage.
Admin expenses	(0.99)	(1.73)	�Full year as a listed company. Higher professional fees due to increased, tenders, contracts and R&D claims.
Marketing expenses	(1.03)	(1.14)	�Increased marketing efforts. Significant increase to identified prospects and tenders.
			�Increased international travel to broaden market
Other expenses	(0.63)	(1.04)	coverage. Gearing up for planned business expansion.
Profit before tax	0.69	2.72	�2.93 times increase in profit before tax.
			�Tax effect of R&D incentives.
Tax expense	0.58	2.68
Profit after tax	0.11	0.03
EBITDA	1.53	3.64	�$2.1 million increase in EBITDA.

6

Balance Sheet

	$m	FY2015	FY2016 � Cash decrease due to investment in R&D, WIP and capital expenditure. � Other receivables increase due to R&D grant income. � Increase of WIP & stock for awarded projects. � Specialist equipment purchased. � Intangible assets increase due to in-house development of passenger communication system & MDR-6. � Asset finance facility arranged. � Asset finance facility arranged. 0.63 0.00 8.66 5.84 0.13 15.27 1.09 4.37 0.39 5.85 21.12 4.02 0.19 0.86 5.06 0.31 0.03 1.02 1.36 6.42 14.69 13.72 (0.09) 1.06 14.69
	Current Assets
	Cash and cash equivalents	3.84
	Other financial assets	0.40
	Trade and other receivables	6.31
	Inventories	4.61
	Other current assets	0.13
	Total current assets	15.29
	Non-current Assets
	Plant and equipment	0.57
	Intangible assets	2.52
	Other receivables	0.53
	Total non-current assets	3.62
	Total assets	18.91
	Current Liabilities
	Trade and otherpayables	3.72
	Borrowings	0.02
	Provisions	0.51
	Total current liabilities	3.74
	Non-current Liabilities
	Borrowings	0.05
	Provisions	0.07
	Deferred tax liabilities	0.38
	Total non-current liabilities	0.50
	Total liabilities	4.24
	NET ASSETS	14.68
	Equity
	Contributed equity	13.72
	Reserves	(0.08)
	Accumulatedprofits	1.03
	Total equity	14.68

Cash Flow

�Positive operating cash flow

• $0.19 million, tax payment of $0.22 million

�Purchased $0.85 million plant and equipment

• Including specialist equipment for software and hardware testing

�Capitalised $3.4 million expenditure on R&D

• Enhance existing intellectual property and the commencement of the new rail PCS

�Bank Facilities strengthened

• Increased overdraft facility

• Asset purchase facility

• Increased guarantees & bonding facility

==> picture [317 x 205] intentionally omitted <==

8

Identified Prospects - $400 million

Region

==> picture [307 x 170] intentionally omitted <==

----- Start of picture text -----

13%
$52m 30%
$121m
$227m
57%
----- End of picture text -----

Sector

3% 21%

Australasia EMEA Americas

Note :

Factors influencing decisions on prospects proceeding and timing of delivery are unknown and outside the control of DTI. However, DTI is well positioned with a number of these prospects.

==> picture [29 x 12] intentionally omitted <==

----- Start of picture text -----

76%
----- End of picture text -----

Bus Rail Other

9

Year-on-year Prospect Growth

Building a strong base for future growth

==> picture [721 x 332] intentionally omitted <==

----- Start of picture text -----

$m
400
350
126%
300
Other
250
Bus
200
Rail
Total
150
48%
100
50
0
30.6.15 30.6.16
----- End of picture text -----

10

Record Number of key project wins in FY2016

==> picture [721 x 477] intentionally omitted <==

----- Start of picture text -----

� Mersey Rail
� 8 trains with automatic Bus
passenger counting �� Irish Rail168 rail cars with surveillance Rail/Light Rail
Police
� Wright Bus
� 80 buses with surveillance
� Alstom London Underground
� 106 trains with surveillance
� Dallas
� 48 trains with surveillance
� Options for further 115
� Utrecht
� Trams with surveillance
� Brisbane
� 137 buses with
surveillance
� Cape Town
� France Framework Agreement � 27 Police cars with surveillance and ANPR
� 172 potential operators with surveillance � Options for further 900
� Marseille
� � 36 trains with surveillance and PCS � Alstom Sydney
Philadelphia
� 231 trains with surveillance � 22 trains with surveillance & PCS
11
----- End of picture text -----

Highlights & Achievements - Americas

• �Sales of $6.46 million, up 66% from $3.89 million in prior period

• �Contract awarded for Dallas Area Rapid Transit

• 48 light rail vehicles worth $3.4m. Options worth $8.2m

• 531 firms requested tenders, 4 submitted, only DTI compliant

• �DTI’s surveillance solution specified in a bus procurement tender issued by SEPTA

• (South Eastern Pennsylvania Transport Authority) in Philadelphia

• Procurement tender involves manufacture of 525 new buses over a five-year period. Now commenced

• Similar deal to the surveillance solution which DTI won in July 2014 for 454 new buses over a five-year period for San Francisco MTA. Now commenced

• �DTI’s surveillance solution, specified for SEPTA’s next procurement of 44 Silverliner rail cars

• �Appointed an additional business development and marketing consultant for large rail projects

==> picture [263 x 197] intentionally omitted <==

==> picture [265 x 155] intentionally omitted <==

12

Highlights & Achievements - Australasia

• �Sales of $8.34 million, up from $7.88 million in prior period

• �Maintained strong market position with sales to wide range of customers

• �Signed a key $5.3 million contract with Alstom for 22 driverless trains for Sydney to provide:

• an advanced digital video surveillance system with 24 internal and 2 forward-facing high-definition IP rail rated cameras

• an IP-based audio communications system comprising public address with hearing aid loops, plus an automated voice announcement system and passenger emergency intercom

• external LED driven destination indication signs, 48” wide-screen LCD route displays, and internal passenger information displays

• a driver display screen which provides status information which also provides low latency live views from all cameras in the train plus a second 6 car coupled train

• deliveries to commence first half FY2017 for a two-year period

• �Bus and rail contracts in Perth, Brisbane, Sydney, Melbourne and Adelaide

==> picture [345 x 123] intentionally omitted <==

==> picture [351 x 123] intentionally omitted <==

13

Alstom Trains, Sydney

Highlights & Achievements - EMEA

• �Sales of $1.42 million, down from $2.93 million due to delay in contract awards

• �United Kingdom, Merseyrail. Advanced automatic passenger counting on trains in the Liverpool area

• �United Kingdom, London Underground. 106 trains to be fitted with surveillance on the Northern Line with Alstom

• �France, AGIP

• DTI’s French partner awarded a five-year agreement to supply surveillance systems for AGIR – an association of 172 independent transport providers in France. First order received from City of Niort

• Order from Marseilles Metro for 36 passenger communication systems to outfit all of the Marseille Metro trains which follows order in 2014 for surveillance systems

• �Holland, Stadler. Trial order from VisiOn ISP to supply surveillance systems

• �Ireland, Irish Rail. 168 rail cars to be fitted with surveillance

• �Northern Ireland, Wright Bus. 80 new buses for Dublin

• �South Africa, Cape Town Police. 27 Police cars with surveillance and ANPR and options for 900 cars

==> picture [235 x 125] intentionally omitted <==

----- Start of picture text -----

Merseyrail
----- End of picture text -----

==> picture [234 x 131] intentionally omitted <==

----- Start of picture text -----

Stadler
----- End of picture text -----

==> picture [234 x 140] intentionally omitted <==

----- Start of picture text -----

London Underground
----- End of picture text -----

14

Key Strengths

• �Strong market position and capability

• �Exposure to attractive high-growth mobile security market and passenger communications systems

• �Growing recurring revenue stream

• �Scalable business model

• �Strong customer relationships

• �Strong business partners

• �Global terrorism driving increasing customer demand

• �Cash at bank, minimal debt and undrawn facilities

15

Outlook

�New recurring revenue projects building on existing recurring revenue

• Siemens (up to 13 years with options)

• NewFlyer for San Francisco MTA (5 years)

• Specified in tender for SEPTA Buses (5 years)

�Successful rail strategy now poised to deliver returns

• Rail lead times long but high value projects

• High value Passenger Communication System added to DTI product range

�Outlook for DTI in core markets remains strong

• Prospects valued at $400 million

• Significant opportunities across rail, bus and law enforcement vehicles

�Continued investment in R&D

• Maintain market leading suite of technology offerings

�Currently undertaking 11 trials in various cities worldwide

• Including United States, Sweden, France, Australia and Poland which are expected to lead to adoption of DTI solutions

16

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 2016. 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

• �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.

17