DTI GROUP LTD — Capital/Financing Update 2014

Nov 9, 2014

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prospectus

For the fully underwritten initial public offering of 6.68 million New Shares at an offer price of $0.30 per Share to raise $2 million

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DTI GROUP LTD ACN 069 791 091

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Corporate Advisor

Underwriter

Contents

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Important Information 2
The Offer 4
Chairman’s Letter 5
1 Investment Overview 6
2 Market Overview 20
3 Company Overview 28
4 Financial Information and Forecasts 51
5 Risk Factors 60
6 Key People, Interests and Benefi ts 64
7 Investigating Accountant’s Report 76
8 Details of the Offer 84
9 Patent Attorney’s Intellectual Property Report 92
10 Additional Information 99
Appendix A – Glossary and Interpretation 109
Appendix B – Relevant Accounting Policies 113
Appendix C – Corporate Directory 118
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Important Information

Offer

The offer contained in this Prospectus is an invitation to acquire fully paid ordinary shares in DTI Group Ltd ACN 069 791 091 (DTI or Company). This Prospectus is issued by the Company.

Prospectus

This Prospectus is dated 31 October 2014 and was lodged with ASIC on that date.

Within seven days of the date of this Prospectus, the Company will apply to ASX for listing of the Company and the official quotation of the Shares on ASX.

Neither ASIC nor ASX (or their respective officers) takes any responsibility for the contents of this Prospectus or the merits of the investment to which the Prospectus relates. No Shares will be issued pursuant to this Prospectus later than 13 months after the date of this Prospectus. Shares issued under this Prospectus will be issued on the terms and conditions set out in this Prospectus.

Not Investment Advice

The information contained in this Prospectus is not financial product advice and has been prepared without taking into account your investment objectives, financial circumstances or particular needs.

Before deciding to invest in the Company, you should read this Prospectus in its entirety. You should take into account all risk factors referred to in this Prospectus (including those in Section 5) and consider whether Shares represent an appropriate investment in view of your personal circumstances. You should carefully consider your particular investment objectives, financial circumstances and investment needs (including financial and taxation issues) and you should seek advice from your professional advisor before deciding whether to invest. You should consider the assumptions underlying the financial forecasts and the risk factors that could affect the financial performance of the Company. There is no guarantee that the Shares offered under this Prospectus will provide a return on capital, lead to payment of dividends or that there will be any increase in the value of the Shares. If you wish to apply for Shares you must do so using the Application Form.

No person is authorised to give any information or to make any representation in connection with the Offer, which is not contained in this Prospectus. Any information or representation in relation to the Offer not contained in this Prospectus may not be relied on as having been authorised in connection with the Offer by the Company or any other person that may have liability for the content of this Prospectus.

Foreign Jurisdictions

The offer made pursuant to this Prospectus is not made in any jurisdiction other than in Australia. This Prospectus does not constitute an offer in any place which, or to any person to whom, it would not be lawful to make such an offer. No action has been taken to qualify the Shares or the Offer, or to otherwise permit a public offering of Shares in any jurisdiction outside Australia. The distribution of the Prospectus (including in electronic form) in a jurisdiction other than Australia may be restricted by law, and persons who come into possession of the Prospectus should seek advice on, and observe, any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws. It is the responsibility of all overseas Applicants to ensure compliance with the laws of any country relevant to

their application for Shares under this Prospectus. Residents of jurisdictions other than Australia should consider using Australian domiciled entities, including nominee companies affiliated with Australian broking firms, if they wish to subscribe for Shares.

Exposure Period

Pursuant to the Corporations Act, this Prospectus is subject to an exposure period of seven days from the date of lodgement with ASIC, which period may be extended by ASIC by a further period of seven days. This period (and extension) is referred to in this Prospectus as the “Exposure Period”.

The Exposure Period enables this Prospectus to be examined by market participants prior to the raising of funds. The examination may result in the identification of deficiencies in the Prospectus. If deficiencies are detected, the Company will either:

• return any Application Monies that the Company has received

• provide each Applicant with a supplementary or replacement Prospectus that corrects the deficiency and gives the Applicant the option to withdraw the Application within one month and be repaid the Application Monies; or

• issue to the Applicant the Shares applied for in the Application Form and provide each Applicant with a supplementary or replacement Prospectus that corrects the deficiency and gives the Applicant the option to withdraw the Application within one month and be repaid the Application Monies.

The Company is prohibited from accepting Applications received during the Exposure Period. Application Forms received prior to the expiration of the Exposure Period will therefore not be processed until after the Exposure Period. Except as otherwise indicated in this Prospectus, no preference will be conferred on Application Forms received during the Exposure Period and all Application Forms received during the Exposure Period will be treated as if they were simultaneously received on the Opening Date.

No Cooling Off Rights

Cooling off rights do not apply to an investment in Shares pursuant to the Offer. This means that, in most circumstances, you cannot withdraw your Application once it has been accepted.

Electronic Prospectus

This Prospectus may be viewed online at .

The offer pursuant to this Prospectus is available to Applicants who have received a copy of this Prospectus within Australia. Any person accessing the electronic version of this Prospectus for the purpose of making an investment in the Company must only access the Prospectus from within Australia. The Company is entitled to refuse an application for Shares under this Prospectus if it believes the Applicant did not receive the Offer in Australia.

Shares to which this Prospectus relates will only be issued on receipt of an Application Form issued together with this Prospectus.

Application must be made by completing a paper copy of the relevant Application Form. There is no facility for online Applications and the Company will not accept Application Forms electronically.

The Corporations Act prohibits any person from passing on to another person the Application Form unless it is attached to a hard copy of this Prospectus or accompanies the complete and unaltered electronic version of this Prospectus (whether printed or remaining in an electronic medium).

2

Prospectus Availability

During the Exposure Period any person may obtain a copy of the Prospectus free of charge by either contacting Baillieu Holst on 03 9602 9222 during normal business hours, or accessing it online at the Company’s website .

Disclaimer

Section 4 sets out in detail the Financial Information referred to in this Prospectus. The basis of preparation of the Financial Information is set out in Section 4. The Historical Financial Information has been prepared in accordance with the recognition and measurement principles prescribed by the Australian Accounting Standards. This Prospectus also includes Forecast Financial Information based on the best-estimate assumptions of the Directors. The basis of presentation and preparation of the Forecast Financial Information, to the extent applicable, is consistent with the basis of presentation and preparation of the Historical Financial Information. The Forecast Financial Information presented in this Prospectus has not been audited.

This Prospectus includes information regarding the past performance of DTI. You should be aware that past performance is not indicative of future performance.

Certain statements in this Prospectus constitute forward-looking statements. These forward-looking statements are identified by words such as “may”, “could”, “between”, “expects”, “estimates” and other similar words that include risks and uncertainties. Investors should note that these statements are inherently subject to uncertainties in that they may be affected by a variety of known and unknown risks, variables and other factors which could cause actual values or results and performance or achievements to differ materially from anticipated results, implied values and performance or achievements expressed, projected or implied in the statements.

This Prospectus, including the market overview in Section 2, uses market data, industry forecasts and projections. The Company has obtained significant portions of the information from market research prepared by third parties. There is no assurance that any of the forecasts contained in reports, surveys and research of such third parties which are referred to in the Prospectus will be achieved. The Company has not independently verified this information. Estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed in the risk factors set out in Section 5.

Privacy

The application form attached to or accompanying this Prospectus requires you to provide information that may be personal information for the purposes of the Privacy Act.

The Company (and the Share Registrar on DTI’s behalf) will collect, hold and use that personal information in order to process your Application, service your needs as an investor, provide the facilities and services that you request, carry out appropriate administration and provide information to you about the Company and its activities.

able to be processed. The Company may disclose your personal information for purposes related to your investment to their agents and service providers, including those listed below, or as otherwise authorised under the Privacy Act:

• the Underwriter in order to assess your Application

• the Share Registrar for ongoing administration of the share register

• the printers and the mailing house for the purposes of preparation and distribution of holding statements and for handling of mail.

Your information may also be used or disclosed from time to time to inform you about DTI’s products or services that the Company thinks may be of interest to you. If you do not want your personal information to be used for this purpose, you should contact the Share Registrar. Under the Privacy Act, you may request access to your personal information held by or on behalf of the Company or the Share Registrar. You can request access to your personal information by writing to the Company or contacting the Share Registrar at:

Computershare Investor Services Pty Limited GPO Box 52 Melbourne Vic 3001 Telephone: 1300 850 505 (within Australia)

You can obtain a copy of the Company’s privacy policy online at the Company’s website.

Investigating Accountant’s Report on the Financial Information and Financial Services Guide

The providers of the Investigating Accountant’s Report on the Financial Information are required to provide Australian retail investors with a financial services guide in relation to the review under the Corporations Act.

The Investigating Accountant’s Report and accompanying financial services guide is provided in Section 7.

Definitions and Abbreviations

Certain terms and abbreviations in this Prospectus have defined meanings that are explained in the glossary to this Prospectus.

Unless otherwise stated or implied, references to time in this Prospectus are to Australian Western Standard Time.

Miscellaneous

Any photographs or diagrams used in this Prospectus that do not have descriptions are for illustration only and should not be interpreted to mean that any person in them endorses this Prospectus or its contents or that the assets shown in them are owned by the Company. Diagrams used in this Prospectus are illustrative only and may not be drawn to scale.

References in this Prospectus to currency are to Australian dollars unless otherwise indicated.

Company and tax laws also require some of the information to be collected in connection with your Application. If you do not provide the information requested, your Application may not be

3

DTI Group Ltd 2014 prospectus

The Offer

Key Offer Statistics

Key Offer Statistics
Total number of New Shares offered through the Offer1	6.68 million
Number of Shares to be held by Existing Shareholders at Completion of the Offer	76.45 million
Total number of Shares on issue at Completion of the Offer	83.13 million
Offer price per Share	$0.30
Market capitalisation at the Offer Price2	$24.94 million
Enterprise value at the Offer Price3	$21.76 million
Enterprise value/EBITDA (forecast FY15)4	5.0 times

• 1 DTI is offering to issue 6.68 million New Shares.

• 2 Calculated by multiplying the Offer Price by the number of Shares on issue at Completion of the Offer. Shares may not trade at the Offer Price after the Listing Date. If Shares trade below the Offer Price after the Listing Date, the market capitalisation will be lower.

• 3 Calculated as market capitalisation at the offer price of $0.30 (refer footnote 2) less net pro forma cash and cash equivalents of $3.173 million as calculated in Section 4.2(a).

• 4 Calculated as enterprise value (refer footnote 3) divided by FY15 forecast EBITDA of $4.393 million as calculated in Section 4.2(a). This valuation multiple represents a valuation metric that may enable investors to assess the valuation of comparable businesses before the impact of different depreciation and amortisation, capital and tax structures.

For more information refer Section 1.7.

Important Dates

Important Dates
Opening date for the Offer	14 November 2014
Closing date for the Offer (last day for you to lodge an Application)	1 December 2014
Issue of New Shares	10 December 2014
Despatch of shareholding statements	10 December 2014
Estimated date for listing on ASX	16 December 2014

Dates may Change

These dates are indicative only and may change without notice. DTI, in consultation with the Underwriter, has the right to vary the dates and times of the Offer, including to extend the Closing Date; to close the Offer early; or to accept late Applications either generally or in particular cases without notice. DTI may withdraw the Offer any time before the issue of New Shares to successful Applicants at its discretion. Investors are encouraged to submit their Applications as soon as possible after the Offer opens.

How to Invest

Applications for New Shares can only be made by completing and lodging the application form attached to and accompanying this Prospectus. Instructions on how to apply for New Shares are set out in Section 8.10 and on the back of the Application Form.

4

Chairman’s Letter

24 October 2014

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Dear Investor

On behalf of my fellow Directors, it is with pleasure that I present you with the opportunity to participate in the ownership and future growth of DTI Group Ltd.

DTI is a specialist provider of integrated video surveillance, passenger information and fleet management solutions for the global mass transit industry and other mobile surveillance applications. DTI has positioned itself as a leading provider of these solutions and other services across Australia and has expanded its activities internationally with bus and rail projects in the European Union, the Middle East, North America and South Africa. To date, DTI has sold over 20,000 mobile recording systems globally and in 2013 over 32,000 cameras were sold.

DTI has an extensive transit product range encompassing digital recording equipment, GPS tracking systems, camera systems, internal and external passenger signage, voice announcement systems, and passenger emergency help points. An advanced software layer integrates this range of products into a multi-application fleet management solution.

Technology design, development, engineering and system integration activities are undertaken from the Company’s Perth office. Manufacturing of high-volume bus, tram and taxi recording equipment is outsourced to a specialist manufacturer. DTI retains an in-house manufacturing capability to supply customised solutions to the rail industry.

Sales, project delivery and support are undertaken directly by DTI and in conjunction with its strategic partner network. Across the United States, a key target market, DTI has partnered with United Technologies in the transit bus market, which commenced in 2006. More recently, DTI has won and completed a contract with Kratos Defense & Security Solutions for the supply of over 1,000 systems for the San Francisco Municipal Transportation Agency. In July 2014, DTI expanded into the French and Polish markets with system orders for buses in the French city of Besançon, with a subsequent order for all of the trains in the Marseille Metro through our French partner Cibest; and tram surveillance systems for the city of Gdańsk in Poland, through the Polish tram manufacturer PESA.

The proceeds of the Offer will provide additional working capital, fund future growth plans for the Company and part pay DTI’s costs associated with the Offer.

Detailed information about the Offer and DTI’s business, as well as the risks of investing in the Company, is set out in this Prospectus which I encourage you to read carefully.

I recommend the Offer to you and look forward to welcoming you as a shareholder of the Company.

Yours faithfully

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Chris Morris Chairman

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DTI Group Ltd 2014 prospectus

Investment Overview

1

1 Investment Overview

1.1 INTRODuCTION

1.1 INTRODuCTION
Topic	Summary
What is DTI?	DTI is a leading provider of integrated surveillance systems and feet management solutions for the
	global mobile security market. DTI’s customers are transit agencies, law enforcement authorities
	and high-value freight operators. The Company offers the following products and services:
	• Surveillance solutions– specialised hardware systems, incorporating video, audio, GPS
	tracking, communications and high-speed recording technology; supported by sophisticated device and data management software to provide a comprehensive, feet-wide, CCTV and
	vehicle management solution.
	• Managed services– back-end control room communications and infrastructure comprising
	wide-area urban surveillance, driver development and risk mitigation, video management,
	vehicle data analysis and monitoring, schedule adherence analysis, IT infrastructure, help desk, technical support and monitoring, and frst line maintenance.
	DTI markets and distributes its product range to customers around the world, both directly and in
	conjunction with a network of integrators and business partners.
	For more information refer Section 3.
What is the Offer?	DTI is offering to issue 6.68 million New Shares which will represent approximately 8.0%
	of the Shares on issue on Completion of the Offer and are being offered at an offer price of
	$0.30 per Share to raise $2 million.
	For more information refer Section 8.1.
What are the rights and	The New Shares are fully paid ordinary shares which rank equally with all Shares on issue on the
liabilities attached to	Listing Date. There is no other class of shares on issue.
the New Shares being offered?	For more information refer Section 8.21.
Why is the Offer being conducted?	The Offer is being conducted to:
	• provide additional working capital and funding to support future growth of the Company
	• enhance DTI’s fexibility to pursue growth opportunities, including possible acquisitions
	• provide DTI with the benefts of an increased profle from being a listed entity
	• provide investors an opportunity to become a shareholder of DTI.
	For more information refer Section 8.2.

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DTI Group Ltd 2014 prospectus

INVESTMENT OVERVIEW

1.2 OvERvIEw OF DTI’S buSINESS

Topic	Summary	Summary
In what markets does	DTI	operates in the mobile security market which is predominantly made up of the following sectors:
DTI operate?	•	mass transit – public bus and school bus
	•	mass transit – subways and trams
	•	mass transit – rail
	•	taxis
	•	law enforcement
	•	high-value freight and logistics
	•	associated markets.
	For	more information refer Section 2 .
How does DTI generate	DTI	generates its revenue from:
revenue and what are DTI’s key costs?	•	primarily the sale of surveillance solutions to the mass transit, private enterprise and government sectors comprising digital recording hardware, associated systems and sensors,
		and software applications
	•	the sale of managed services encompassing video management, vehicle data analysis and
		monitoring, and help desk, technical support and monitoring.
	DTI’s key costs include:
	•	procurement or manufacture of digital recording hardware and associated sensors and systems
	•	design and development of new hardware products and solutions
	•	design and development of system software applications
	•	resourcing of managed services
	•	administration, marketing and management of the solutions, development and services.
	For	more information refer Section 3.3.
Who are DTI’s customers	Customers
and business partners?	DTI	has established strong relationships with its core, high-quality customers. These relationships
	include:
	•	Brisbane City Council (Queensland Government)
	•	Queensland Rail (Queensland Government)
	•	Action Bus (ACT Government)
	•	Metro Tasmania (Tasmanian Government)
	•	Department of Planning, Transport and Infrastructure (South Australian Government)
	•	Public Transport Authority of Western Australia (Western Australian Government)
	•	Bombardier Transportation Australia (manufacturer of trains)
	•	Volgren Australia (manufacturer of buses)
	•	Ansaldo STS Australia (rail technology and systems integrator).
	Business partners
	DTI	has relationships with the following business partners:
	•	Cibest (France)
	•	DTI Polska (Poland)
	•	Eversholt Rail Group (United Kingdom)
	•	Kratos Defense & Security Solutions (United States)
	•	UTC Fire & Security Americas Corporation Inc (United States).
	For	more information refer Sections 3.8(g) and 3.8(h).

8

Topic	Summary	Summary
What is DTI’s growth strategy?	DTI will continue to build on its offering to realise its vision to become a global leader in surveillance systems and feet management solutions for the global mass transit industry and other
	related markets. The key elements of this strategy include:
	•	extending the reach of DTI’s offering to transit operators primarily in bus and rail in North
		America, Europe, the Middle East, Africa and Australia
	•	continuing to invest in the Company’s R&D program to develop new or improved products
		and solutions
	•	continuing to expand DTI’s surveillance solutions and managed services offering by focusing on
		opportunities, particularly in the bus and rail sectors
	•	increasing the marketing of DTI’s products and capabilities across the European and United
		States markets
	•	building stronger relationships with business partners to accelerate growth
	•	assessing opportunities to accelerate growth through strategic acquisitions.
	This strategy is well supported by a strong Board and management team which have extensive
	business and industry experience as outlined in Section 6.
	For	more information refer Section 3.9.

1.3 wHAT ARE DTI’S KEy STRENGTHS?

Demonstrated track	•	DTI has achieved strong historical growth with annual operating revenue increasing from
record of executing its		$0.98 million in 2004 to $20.8 million in FY14.
strategy and achieving	•	DTI’s core technology has been successfully applied and expanded to create a comprehensive
growth		product range covering the rail, bus, taxi, law enforcement and high-value freight sectors.
	•	Concurrent to expanding its product range, DTI has also undertaken geographic expansion.
	For	more information refer Section 3.8(a).
Strong market position	•	DTI considers that it has a strong market position and capability in bus and rail surveillance
and capability		solutions in Australia and bus surveillance solutions in the United States market as a supplier to
		its United States business partners.
	•	DTI considers that it has product superiority over its competitors, offering customers more advanced and effcient solutions.
	For	more information refer Section 3.8(b).
Exposure to the	The mobile security market and associated submarkets are attractive high-growth sectors due to the
attractive high-growth mobile security market	substantial number of transportation infrastructure projects to be rolled out in the coming years, and to the recognition of the signifcant benefts DTI’s technology offers to passengers, drivers, transit industry
	operators and government agencies.
	For	more information refer Section 3.8(c).

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DTI Group Ltd 2014 prospectus

INVESTMENT OVERVIEW

1.3 wHAT ARE DTI’S KEy STRENGTHS? (cont’d)

Topic	Summary	Summary
Innovative customer	•	Custom modifcations to DTI’s product range are carried out by the Company’s in-house
solutions supported by investment in R&D		development team. DTI’s ability to modify both hardware and software, coupled with a close relationship to the end customer, allows for specifc customer requirements to be quickly and
		effectively delivered.
	•	The market is moving towards a higher degree of integration with other systems and DTI’s
		approach and integrated surveillance solutions allow DTI to cater for these requirements.
	•	In addition to custom modifcations, new products and systems are supported through
		innovation and investment back into R&D.
	For	more information refer Section 3.8(d).
Signifcant and growing	•	Recurring revenue from managed services and maintenance represents 10.9% of DTI’s total
recurring revenue		FY15 forecast operating revenue.
stream	•	In addition to managed services and maintenance revenue, a further 47.3% of DTI’s total FY15
		forecast operating revenue is expected based on exisitng orders and ongoing purchases of
		equipment for installation in new vehicles purchased by existing customers.
	For	further information refer Section 3.8(e).
Scalable business model	•	DTI has ensured that its extensive, multi-sector product range utilises a common technology
		platform (in particular its software framework) which enables DTI to easily implement DTI’s software
		enhancements throughout the lifecycle of data recording and surveillance hardware installed.
	•	DTI’s business model is scalable through the use of a subcontract manufacturer and DTI’s
		accumulated engineering and project experience.
	For	more information refer Section 3.8(f).
Strong customer	DTI	has developed strong relationships with its core, high-quality customers in Australia, Europe
relationships	and	the United States.
	For	more information refer Section 3.8(g).
Strong business partners	DTI	has developed strong relationships with its strategic business partners in Europe and the
	United States.
	For	more information refer Section 3.8(h).
Experienced Board and	DTI	has an experienced Board and management team with strong technical, commercial and
management team	corporate knowledge required to manage and oversee DTI’s business.
	For	more information refer Sections 6.2 and 6.3.

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1.4 KEy RISKS

Topic	Summary
Loss of key customers, contracts or revenue	As a usual part of its business, DTI’s customer contracts and projects are subject to tender, variations, additions or reductions. DTI could lose one or more key customers or signifcant
	contracts or projects, including during the forecast period, due to a range of events. Any
	loss of key customers, or loss of funding or a reduction in government budget allocations to key customers, signifcant contracts or projects, may materially and adversely affect DTI’s revenue, proftability or growth.
	For more information refer Section 5.1(a).
Loss of key business	As a usual part of its business, DTI supplies products and services to business partners.
partners	These business partners are under no obligation to purchase DTI’s products and services
	and may decide to purchase products and services from competitors and may develop
	products and services themselves. The UTC Product Purchase Agreement, which is
	summarised in Section 10.5(c), does not require UTC to purchase minimum quantities of
	products or solutions. Limited or no purchase orders by UTC may materially affect DTI’s revenue, proftability and growth.
	For more information refer Section 5.1(b).
Reliance on strategy	DTI’s future success relies heavily on the successful implementation of its strategy of being a provider of integrated surveillance systems and feet management solutions for
	the global mobile security market. Successful execution of this strategy will require DTI to successfully apply its core competencies in the development or modifcation of its
	products and technology. No assurance can be given that DTI will be successful in the
	ongoing implementation of this strategy.
	DTI’s growth strategy relies heavily on market acceptance of its products and services. There
	is a risk that market acceptance of DTI’s products and services will not be as high as the
	Company expects or that market acceptance may take longer than expected to materialise.
	For more information refer Section 5.1(c).
Delivery risk and	DTI’s fnancial performance is dependent on its ability to deliver contracts and projects in
time delays	accordance with contractual obligations. Contractual obligations may include set dates for
	delivery. If delivery is delayed the customer may seek to claim damages from DTI. Disputes which arise in relation to contractual obligations may result in signifcant losses and acute pressure on DTI’s cash fow.
	For more information refer Section 5.1(d).
Tender timelines and	DTI’s fnancial forecasts and performance are often reliant on timelines that are issued to
project schedules	DTI during the tender process, or on project delivery schedules that are determined during the procurement stage, both of which may be infuenced or affected by the performance or
	decisions of third parties. While delay claims may be available for certain projects or situations, delays may still have a material impact on revenue projections and the fnancial performance
	of DTI.
	For more information refer Section 5.1(e).
Technology integration	The Company supplies advanced systems for integrated video surveillance, passenger information and feet management solutions for the global mass transit industry. Some
	tailored systems may involve integration of different technologies in order to provide a total package. As a result there is a risk that integration of different technologies may be diffcult
	or costly or integration is not possible.
	For more information refer Section 5.1(f).

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DTI Group Ltd 2014 prospectus

INVESTMENT OVERVIEW

1.4 KEy RISKS (cont’d)

Topic	Summary
Competition	DTI operates in a competitive industry. DTI competes with some companies that are larger and more fnancially secure, as well as with some companies that beneft from local experience
	and relationships with customers. Increased competition could result in price reductions,
	underutilisation of personnel, reduced operating margins and loss of customers or market share.
	Any of these occurrences in any region in which DTI may operate could adversely affect its operating and fnancial performance.
	For more information refer Section 5.1(g).
Reliance on	DTI depends on the talent and experience of its employees. Whilst every effort is made to retain
key employees	key employees and contractors and to recruit new personnel as the need arises, loss of a number
	of key personnel may adversely affect DTI’s earnings or growth prospects. In addition, strong demand for skilled personnel may limit DTI’s growth and proftability caused by the scarcity of
	professional personnel or by potential increases in compensation costs associated with attracting
	or retaining such personnel.
	For more information refer Section 5.1(h).
Reliance on	DTI relies on subcontracting and outsourcing of certain services, including manufacture and
subcontractors	installation. If any of these third parties fail to perform their services, or cease providing
	services to DTI, there is potential for delay to the completion of projects or new third-party
	arrangements may need to be organised.
	For more information refer Section 5.1(i).
Dependence of suppliers	DTI’s in-house manufacturing and outsourced manufacturing operations are dependent upon the
	delivery of materials and components by outside suppliers in a timely manner. Some components
	are standard items and available from a number of suppliers, while others are manufactured to DTI’s specifcations. The failure to supply, in a timely manner, materials and components at acceptable costs and in the quantities and specifcations required by DTI, could adversely impact on the manufacturing operations, sales and fnancial performance of DTI.
	For more information refer Section 5.1(j).
Intellectual property	DTI’s core products and solutions do not have legal intellectual property protection in the form of registered patents. However, in the feld in which it operates, DTI believes that patents are not a signifcant success factor. Success rather depends on the Company’s know-how, established
	international distribution channels, technical competence, production techniques and the timely
	application of the Company’s technology, together with product quality, customer service and the
	managerial and marketing competence of the Company’s personnel. Refer to Section 9 for a list of
	technology that DTI does hold patents over.
	DTI has the protection of employing an in-house development team for its hardware and software
	R&D. This lowers the risk exposure to loss of intellectual property compared to having an
	outsourced engineering function.
	For more information refer Section 5.1(k).
Foreign exchange risk	Some of the components used in the manufacture of DTI’s products are acquired in foreign
	currencies. Also, some of DTI’s receivables, payables, intercompany transfers and expenses
	are incurred in foreign currencies and some of DTI’s sales occur in foreign currencies. Adverse
	movements in exchange rates for either of DTI’s revenue, expenditure, receivables, payables or intercompany transfers, or cash holdings in foreign currencies may adversely affect the fnancial
	performance of DTI.
	For more information refer Section 5.1(l).

12

Topic	Summary
Release of Shares held	All Existing Shares held by Directors and 90% of Existing Shares held by other Existing
in escrow	Shareholders will be subject to voluntary escrow in respect of all those Existing Shares until after the audited fnancial accounts for FY15 are released to ASX by the Company.
	At the expiration of the Escrow Period, approximately 70.92 million Shares (representing approximately
	85.3% of the Shares on issue at the Completion of the Offer) will be released from escrow.
	These escrow arrangements may impact the level of liquidity for trading in Shares and the prevailing market price for Shares. In particular, in the event that a signifcant number of those
	Existing Shareholders decide to sell some or all of those Existing Shares at the completion of the
	Escrow Period (either collectively or individually), the volume of potential Shares for sale may be signifcant versus DTI’s free foat of Shares. This may have a material adverse effect on the market
	price of Shares potentially leading up to, at the time of and/or post any completed or attempted
	sell down.
	For more information refer Section 5.1(m).
Regulatory risk	Some aspects of the industry in which DTI operates are impacted by government legislation
	and regulations in respect to collection of data, privacy, data protection, freedom of information
	and other matters. The industry may undergo regulatory or legislative change which may create
	opportunities or adversely impact the activities and operations of DTI.
	For more information refer Section 5.1(n).
R&D tax offset	DTI claims the R&D tax offset incentive offered under Australian taxation legislation for the eligible
	R&D expenses incurred by DTI. The tax incentive offered may undergo regulatory or legislative
	change and may be varied or repealed which may adversely impact the Company’s taxation
	liabilities and the amount of tax payable.
	For more information refer Section 5.1(o).
Unforeseen	Expenditure may need to be incurred that has not been taken into account during the
expenditure risk	preparation of this Prospectus. Although DTI is not aware of any such additional expenditure
	requirements, if such expenditure is subsequently incurred this may adversely affect the
	expenditure proposals of DTI.
	For more information refer Section 5.1(p).
Future contracts	As at the date of this Prospectus, DTI is in negotiations with a number of existing and potential
	new customers in relation to the execution of new contracts or purchase orders. DTI has included a number of these potential agreements in its FY15 fnancial forecasts, weighted to refect the likelihood that the agreements are ultimately executed. DTI’s revenue, and FY15 fnancial forecasts,
	will vary depending on whether, and to what extent, the agreements are executed. If some
	agreements are not executed, and the Company is unable to replace the forecast revenue from alternative agreements, there could be a material adverse effect on DTI’s revenue, proftability or
	growth.
	For more information refer Section 5.1(q).

For further information on general risks, refer to Section 5.2.

13

DTI Group Ltd 2014 prospectus

INVESTMENT OVERVIEW

1.5 KEy DETAILS OF THE bOARD AND SENIOR MANAGEMENT

	Director Experience
Who are the Directors of DTI?	Chris Morris Non-Executive Chairman • Appointed as Chairman in June 2011. • Chris has worked across the global securities industry for more than 30 years. • Co-founder of Computershare in 1978 and oversaw its listing on ASX in 1994. • Currently a Non-Executive Chairman of Computershare Limited and Non-Executive Chairman of Smart Parking Limited.
	Richard Johnson Managing Director and Chief Executive Offcer • Richard joined DTI as General Manager in 2005 and commenced the role as Chief Executive Offcer in 2006. • In August 2011 he joined the Board as Managing Director. • Richard has more than 19 years experience in the transit technology sector. He held senior management positions at ERG Limited, a developer and supplier of managed integrated fare collection systems.
	Glyn Denison Non-Executive Director • Glyn was appointed a Director in January 2004 and was formerly an Executive Director of DTI responsible for business development before relinquishing his executive responsibilities in December 2006. • He has over 30 years experience in the development of international distribution of technical products for the public transport industry, including senior roles at ERG Limited. • Glyn is a Non-Executive Director of OBJ Ltd.
	Neil Goodey Non-Executive Director • Neil co-founded DTI in June 1995 and held the position of Managing Director until 2009. • Over the last 25 years Neil has founded and managed a number of successful technology-driven companies. • He created the software-focused vision for DTI and worked directly with the Company’s engineering team to develop DTI’s products and underlying intellectual property.
	Jeremy King Non-Executive Director • Jeremy was appointed a Director in June 2011. • He is a corporate lawyer by background and holds a Bachelor of Laws. Jeremy has over 15 years experience in domestic and international legal, fnancial and corporate matters. • Jeremy is a Director and Company Secretary of Smart Parking Limited, Non-Executive Director of Orca Energy Limited, Non- Executive Director of CEB Resources PLC and Chairman of Continuation Investments Limited. For more information refer Section 6.2.

14

	Executive Experience
Who are the senior management of DTI?	Richard Johnson Managing Director and Chief Executive Offcer Refer to previous page.
	Bruce Mitchell Chief Financial Offcer and Company Secretary • Bruce has been a qualifed Chartered Accountant for almost 20 years and has over 18 years experience in senior fnancial roles. • He joined DTI in 2012 as Chief Financial Offcer and Company Secretary. • Prior to joining DTI, Bruce gained experience working as a fnancial director for several South African-based companies.
	Jean-Michel Florent Chief Operating Offcer • Jean-Michel has over 20 years experience in technology and international business with a focus over the past 9 years in the security industry. • He joined DTI in 2010 as General Manager Asia before being promoted to the Chief Operating Offcer position in 2013. • Prior to joining DTI, Jean-Michel was a key member of the CCTV outsource development teams at EverFocus and GE Security and was Vice President Operations for network security frm Clavister AB.
	Rick Gougeon General Manager Americas • Rick has over 29 years experience in the security and public transit industry. He joined DTI in 2009 as General Manager Americas. • Previously, he was with Insight Video Net (a software developer for mobile law enforcement and video capture) as a key liaison to Panasonic’s law enforcement team. • Rick has also held management positions with GE Security (a former division of General Electric).
	Steve Donnohue General Manager EMEA • Steve has over 14 years experience in the European transport sector. • He joined DTI Group in 2009 as General Manager EMEA. • As a fully qualifed project manager, Steve has been responsible for establishing, recruiting and managing installation and support teams in numerous companies. For more information refer Section 6.3.

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DTI Group Ltd 2014 prospectus

INVESTMENT OVERVIEW

1.6 SIGNIFICANT INTERESTS AND bENEFITS OF KEy PEOPLE

Topic	Summary
What interest does each	Pre-Offer Post-Offer
Director hold in DTI?	Shares %1 Shares	%1	Options2
	Chris Morris 11,200,000 14.7 11,200,000	13.5	11,200,000
	Richard Johnson 435,463 0.6 435,463	0.5	4,445
	Glyn Denison 2,853,802 3.7 2,853,802	3.4	44,905
	Neil Goodey 6,453,888 8.4 6,453,888	7.8	121,310
	Jeremy King 175,000 0.2 175,000	0.2	175,000
	Total 21,118,153 27.6 21,118,153	25.4	11,545,660
	1 The percentages are calculated based on the total number of Shares on issue on a pre-Offer and post-Offer basis.
	2 The terms and conditions of the Options are set out in Section 8.22.
	For more information refer Section 6.4(b)
What are the related-	There are no material related-party transactions between DTI and the Directors. However,
party transactions	there is a transaction between DTI and the Share Registrar in respect of its appointment as
between DTI and	Share Registrar of the Company and the provision of such services. Chris Morris is a director and
Directors?	shareholder of both DTI and the Share Registrar. However, the agreement between DTI and the
	Share Registrar was negotiated on an arm’s length basis without any involvement by Mr		Morris.
	For more information refer Section 10.6.
What is the remuneration	Non-executive Directors are entitled to remuneration on commercial terms.
of non-executive Directors?	For more information refer Section 6.4(d).
What is the remuneration of	The Managing Director and Chief Executive Offcer, Richard Johnson, is entitled to receive a base
the Managing Director and	salary of $240,000 per annum (exclusive of statutory superannuation contributions). Mr		Johnson is
Chief Executive Offcer?	also eligible to receive short- and long-term incentives.
	For more information refer Section 6.5(a).
What fees are to be paid	Advisors and other service providers will be paid the fees for their services in accordance with
to advisors and other	their terms of engagement.
service providers?	For more information refer Section 6.4(a).

16

1.7 KEy OFFER DETAILS

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Topic Summary
What is the Offer? DTI is offering to issue 6.68 million New Shares which will represent approximately 8.0% of
the Shares on issue on Completion of the Offer and are being offered at an offer price of
$0.30 per Share to raise $2 million.
For more information refer Section 8.1.
What are the key Offer Price $0.30 per Share
Offer statistics?
Total number of Shares available under the Offer 6.68 million
Total number of Shares on issue at Completion of the Offer 83.13 million
Total proceeds from the Offer $2.00 million
For more information refer to page 4.
What is the capital Pre-Offer Post-Offer
structure of DTI? Shares % [1] Shares % [1] Options [2]
Directors 21,118,153 27.6 21,118,153 25.4 11,545,660
Other Existing Shareholders 55,332,858 72.4 55,332,858 66.6 825,146
New Shareholders from the Offer – – 6,680,000 8.0 –
Total 76,451,011 100.0 83,131,011 100.0 12,370,806
1 The percentages are calculated based on the total number of Shares on issue on a pre-Offer and post-Offer basis.
2 The terms and conditions of the Options are set out in Section 8.22.
For more information refer Section 8.5.
What are the key Market capitalisation at the Offer Price 24.94 million
investment metrics?
Enterprise value at the Offer Price 21.76 million
Enterprise value/EBITDA (forecast FY15) 5.0 times
Forecast FY15 earnings per Share 3.1 cents
Offer Price/FY15 earnings per Share [1] 9.7 times
Forecast dividend per Share Nil
Pro forma net tangible assets per Share 12.0 cents
Pro forma net cash and cash equivalents $3.18 million
1 The ratio is commonly referred to as a price earnings or PE Ratio. A PE ratio is a ratio of a company’s share price
and its earnings per share.
For more information refer to Section 4.
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DTI Group Ltd 2014 prospectus

INVESTMENT OVERVIEW

1.7 KEy OFFER DETAILS (cont’d)

Topic	Summary
What is DTI’s fnancial performance?	The historical and forecast fnancial performance of the Company at Completion of the Offer is set out below. $000 FY11 Historical FY12 Historical FY13 Historical FY14 Historical FY15 Forecast
	Revenue 16,770 16,420 20,510 20,725 24,133 EBITDA 1,423 133 3,020 3,077 4,390 EBIT 1,034 (512) 2,072 2,110 3,396 NPAT 776 (303) 1,625 1,116 2,583
	For more information refer Section 4.2(a).
What is DTI’s fnancial position?	The pro forma fnancial position of the Company at Completion of the Offer is set out below. $000s Current assets 12,033 Non-current assets 3,219 Total assets 15,252 Current liabilities 2,895 Non-current liabilities 318 Total liabilities 3,213 Shareholders’ equity/net assets 12,039 For more information refer Section 4.2(b).
What are the sources and uses of the Offer Proceeds?	Proceeds of $2,004,000 will be received by DTI from the issue of New Shares and will be applied to: • increasing working capital by $1,804,000 • paying costs of the Offer to be incurred in FY15 of $200,000. The Company incurred costs of the Offer of $115,000 in FY14 which were brought to account in FY14. Refer to Section 10.9 for further details. The above uses of the Offer Proceeds is a statement of current intention as at the date of this Prospectus. As with any budget, intervening events and new circumstances have the potential to affect the manner in which the funds are ultimately applied. The Board reserves the right to alter the way funds are applied on this basis. For more information refer Section 8.4.
What are the escrow provisions of Directors and other Existing Shareholders?	All Existing Shares held by Directors and 90% of Existing Shares held by other Existing Shareholders will be subject to voluntary escrow arrangements in respect of all those Existing Shares until after the audited fnancial accounts for FY15 are released to ASX by the Company. For more information refer Section 8.18.
Will the Shares be listed?	DTI will apply to ASX for admission to the offcial list of ASX and for the quotation of Shares on ASX under the code DTI. For more information refer Section 8.15.
Is the Offer underwritten?	The Offer is fully underwritten by Baillieu Holst. For more information refer Section 8.9.

18

Topic Summary
Am I eligible to The Offer is open to the general public and clients of the Underwriter.
participate in the Offer? For more information refer Section 8.1.
What is DTI’s dividend policy? The Board has yet to establish a dividend policy and no dividends have previously been paid to Shareholders. Whilst the Company continues to expand its business operations, profts should remain in DTI rather than distributing profts in the form of dividends.
For more information refer Section 8.21(c).
What is the The Company, in conjunction with the Underwriter, reserves the right to reject any Application
allocation policy? or to allot a lesser number of New Shares than that applied for. If the number of New Shares
allocated is less than that applied for, the surplus Application Amount will be promptly refunded
without interest. Final allocations will remain subject to the absolute discretion of the Company
in conjunction with the Underwriter. For more information refer Section 8.12.
Is there any brokerage, No brokerage, commission or stamp duty is payable by Applicants on the acquisition of New
commission or stamp duty payable by Applicants? Shares under the Offer. For more information refer Section 8.10.
What are the tax The tax consequences of any investment in the New Shares will depend upon your particular
considerations of circumstances. You may be subject to Australian income tax or withholding tax on any future
investing in New Shares? dividends received by you. You should obtain your own tax advice before deciding to invest.
For more information refer Section 10.12.
How can I apply? You may apply for New Shares by completing a valid Application Form (attached to or
accompanying this Prospectus). To the extent permitted by law, an Application is irrevocable.
For more information refer Section 8.10.
Can the Offer DTI reserves the right not to proceed with the Offer at any time before the issue of New Shares
be withdrawn? to successful Applicants. If the Offer does not proceed, Application Monies will be refunded. No
interest will be paid on any Application Monies refunded as a result of the withdrawal of the Offer.
For more information refer Section 8.14.
Where can I fnd more information about this Prospectus or the Offer? Investor enquiries can be made to: Baillieu Holst Level 26, 360 Collins Street Telephone: 03 9602 9222
Melbourne Vic 3000 Facsimile: 03 9602 2350

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DTI Group Ltd 2014 prospectus

MARKET OVERVIEW

Market Overview

2 20

2 Market Overview

2.1 THE MObILE SECuRITy MARKET

The mobile security market is predominantly made up of the following industry sectors:

• mass transit – public bus and school bus

• mass transit – subways and trams

2.2 OvERvIEw OF THE MASS TRANSIT SECuRITy MARKET

The mass transit security market encompasses the broad range of security products and services that are provided to mass transit operators, such as public bus, subway, ferry, rail and aviation operators, and represents DTI’s largest market sector.

• mass transit – rail

• taxis

• law enforcement

• high-value freight and logistics

• associated markets.

The mobile security market is driven by a number of key factors, namely:

• Liability issues for operators – claims by the public injured on public transport or involved in accidents with public transport vehicles. Insurance companies and police are the parties most interested in operators having video footage of incidents as are the operators to protect themselves against claims.

• Damage and vandalism – operators are forced to spend large sums repairing damage to vehicles and removing graffiti.

The Company offers the following information to assist investors in understanding the current market size and outlook for the sectors in which DTI competes. This Section 2 is supported by information sourced from UK-based, independent research house and media provider, Visiongain Ltd. DTI believes that the inclusion of Visiongain’s research provides investors with independent support for the Company’s view of the global mass transit security market.

Visiongain’s market analysis divides the mass transit security market into three major submarkets: surveillance and screening, infrastructure security, and command and control. While DTI’s products have applications across all three submarkets, the most significant submarket for DTI is surveillance and screening which includes the supply of CCTV systems for transit vehicles. The market segmentation in figure 2.1 describes the submarkets that comprise the mass transit security market.

• Assault and criminal offences – CCTV footage is critical to police in prosecuting assaults and attacks on passengers and drivers on public transport and in taxis.

• Terrorism – CCTV footage is vital in tracking terrorist activity or in apprehending terrorists.

• Customer service – operators can easily check footage for missed bus stops, early or late running, poor behaviour by drivers towards customers and erratic driving.

• Transit-only lane enforcement – through the use of CCTV, public transport authorities can police transit-only lanes so that buses can run efficiently and effectively through city streets and roads.

• Passenger information – automated passenger counting through the use of video analytics software can provide operators with loading information which can then be used for more efficient use of transit vehicles.

• Asset management – CCTV and appropriate analytics software can provide potential fault information of assets.

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DTI Group Ltd 2014 prospectus

MARKET OVERVIEW

2.2 OvERvIEw OF THE MASS TRANSIT SECuRITy MARKET (cont’d)

Figure 2.1: Market segmentation of the global mass transit security market

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

Global Mass Transit
Security Market
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----- Start of picture text -----

Surveillance & Infrastructure Command &
Screening Security Control
Physical Security
CCTV Systems Security Information
Personnel
Management
Cargo Screening Perimeter Security Operation Control
Systems Systems Systems
Passenger &
Access Control Tracking &
Luggage Screening
Systems Monitoring Systems
Systems
Anti-trespass
Devices
----- End of picture text -----

Source: Visiongain

According to Visiongain, the mass transit security market is likely to see growth due to a combination of intense worldwide transport infrastructure investment, the implementation of various national and international security initiatives, and the continued risk of crime and terrorism. The mass transit security market was estimated by Visiongain to be valued at US$7.0 billion in 2013.

Visiongain considers that the mass transit security market possesses a number of key drivers that are presently enabling significant amounts of spending, and likely to ensure growth into the future. Of greatest importance is the substantial number of transportation infrastructure projects that are set to be implemented within the next decade.

According to Visiongain, while China is currently the world’s largest single market with an estimated US$1.3 billion spent on mass transit security in 2013, the North American (US$0.9 billion) and the European Union (US$1.1 billion) regions, in which DTI has an established sales presence, remain significant transit security markets representing 49% of the estimated combined revenue from the world’s 12 leading markets for mass transit security for 2013 (refer to table 2.1).

22

Table 2.1: Estimated combined revenue from the world’s 12 leading markets for mass transit security for 2013

Table 2.1:Estimated co	mbined reve	nue from the world’s	12 leading markets	for mass transit security fo
		European Union	North America	Total European Union
Sales (US$m)	2013	2013	2013	& North America
China	1,270
United States	820		820	820
Russia	270
France	270	270		270
Brazil	250
Italy	230	230		230
Germany	210	210		210
Spain	200	200		200
United Kingdom	150	150		150
Japan	150
India	140
Canada	80		80	80
Subtotal	4,040	1,060	900	1,960
		26%	22%	49%
Rest of world	2,980
Total	7,020

Source: Visiongain

Figure 2.2: Estimated market share among the 12 leading national markets for 2013 (%)

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

3.5% 2.0%
3.7%
China
3.7%
US
5.0% 31.4% Russia
France
5.2% Brazil
Italy
5.7% Germany
Spain
UK
6.2%
Japan
India
6.7% Canada
20.3%
6.7%
----- End of picture text -----

Source: Visiongain

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DTI Group Ltd 2014 prospectus

MARKET OVERVIEW

2.3 OvERvIEw OF THE SuRvEILLANCE AND SCREENING SECuRITy SubMARKET

The surveillance and screening submarket is the dominant submarket within the mass transit security market. Surveillance equipment is highly valued by transit operators and authorities because it is one of the most cost-effective means of providing wide-scale security coverage. Accordingly, a multitude of cameras and related security tools now permeate almost all mass transit platforms, including rail carriages and buses, and also feature strongly at stations, central operating points, and along extensive transit routes. These systems help operators and authorities keep a close watch on the networks that they are running, and in the case of authorities, enable rapid responses or effective follow-up action to instances of crime, terrorism or tragedy.

Visiongain considers the following types of surveillance and screening products as being available to the mass transit security market.

Table 2.2: Surveillance and screening products available to the mass transit security market

Table 2.2:Surveillance and screening pro mass transit security market	ducts available to the
	Does DTI provide
Surveillance and ScreeningProducts	solutions?
Audio surveillance systems	
Cargo screening systems	
CCTV systems	
Communications equipment	
GPS tracking systems	
Passenger screening systems	
Personnel surveillance systems	

As demonstrated in table 2.2, of the seven types of surveillance and screening products within the submarket, DTI provides solutions for the majority of these areas with a specialist focus on mobile solutions; thereby, ensuring it can meet the customer demands within the mass transit security market.

Overall growth in this submarket has remained strong, notwithstanding privacy concerns in the United Kingdom and United States, as well as in several other major European and North American nations, which has somewhat undermined sales of surveillance systems.

Visiongain considers that the constant demand for new surveillance systems in developed countries will fuel growth for the most part, but there will also be considerable activity in South America where countries such as Brazil are very likely to purchase all new mass transit security systems in an effort to bring the safety and security standards of their national transportation infrastructure into line with developed countries.

Visiongain estimates that the surveillance and screening submarket was valued at US$4.4 billion in 2013, as detailed in table 2.3, with this submarket accounting for over 63% of the global mass transit security market, as detailed in figure 2.3.

Table 2.3: Surveillance and screening submarket value for 2013

Table 2.3:Surveillance and screening sub	market value for 20
Market Segment	2013
Total mass transit security market	US$7.0 billion
Surveillance and screening submarket	US$4.4 billion
Source: Visiongain

Figure 2.3: Mass transit security submarkets 2013 (%)

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

23.0%
Surveillance and Screening
Infrastructure Security
Command and Control
14.0%
63.0%
Source: Visiongain
----- End of picture text -----

24

2.4 DRIvERS OF THE MASS TRANSIT SECuRITy MARKET

From the United Kingdom to Brazil, rail networks are set to be transformed as countries invest in upgrading existing transportation infrastructure, or commit to building new rail links entirely from scratch. Visiongain considers many nations, in order to ensure greater economic growth, are investing heavily in high-speed rail platforms and buses to provide more cost-effective and efficient services. Such developments lead to greater mass transit security spending, as with each new station, each new mile of track, each new bus or train carriage, comes the need for surveillance and screening equipment, infrastructure security, and command and control systems.

The significant strides that have been made in recent years in improving the technology available within each of the three submarkets have considerably aided the progression of the overall market. In terms of surveillance security, operators now have access to an immense number of advanced pieces of equipment that offer extraordinary situational awareness capabilities. Many operating transit authorities continue to express their desire to acquire better and more sophisticated joint operating systems that allow them to manage their (sometimes very extensive) security hardware, which more often than not includes obsolete components that do not readily integrate with modern technology supplied by other providers.

Visiongain considers that the wide range of threats and challenges that the majority of customers (transit agencies) face, and will continue to face in the future, means that there will be little degrading of the overall (security) market, particularly as construction picks up and populations increase. If anything, operating authorities are very likely to invest in increasingly sophisticated pieces of equipment, regardless of cost. For along with the constant problem of common crime and public disturbance along public transportation networks—many of which handle millions if not billions of passenger journeys each year—several operators will continue to have to account for suicides, theft, and the constant threat of terrorism. To this end a whole multitude of products and measures are currently required, and will become more essential as time goes on.

2.5 KEy MARKET SNAPSHOTS

The following market snapshots cover regions where DTI has an established sales presence.

(a) United Kingdom

The United Kingdom mass transit security market, a region where DTI has an established base, is estimated by Visiongain to experience strong annual growth rates in the coming years. This expansion will be directly associated with the high level of investment that the United Kingdom is already putting into its transport infrastructure and which is likely to continue in the future. The United Kingdom mass transit market appears to be experiencing an intense surge of development.

In London various projects have been approved, or are in the process of being cleared, that will have distinctive positive knock-on effects for the mass transit security market. The London Underground, for instance, very recently announced that it would run a 24 hour service on key lines from 2015 onwards. This is a pilot scheme that would likely see the inclusion of more lines should it prove successful. Operations on the London Underground late at night have always demanded greater vigilance from security authorities, and this new scheme will only demand more to counter the anticipated rise in onboard crime and antisocial behaviour.

The United Kingdom mass transit security market is also likely to benefit from various upgrades and line extensions of the London Underground, with a possible Northern Line extension to Battersea, as well as a huge “superhub” at Old Oak Common which would link the Crossrail railway line and High Speed 2 (a planned high-speed railway between London Euston and North England) in a large development by 2025. In addition, Visiongain estimates 600 new buses are scheduled to enter service in London by 2016.

(b) South Africa

South Africa, a market where DTI recently established a sales presence and commenced delivery of systems, is perhaps the greatest driver of the African region’s mass transit security market due to development towards building a series of extensive and formidable public transportation systems. Indeed, transportation was one of several key pillars of the country’s 2012 15 year National Infrastructure Plan, which Visiongain estimates will seek to deploy US$430 billion of funding.

Several projects have already come to fruition as a result of this momentum, including the upgrade of the Western Cape Region’s rail network by Thales Group, as well as US$4.8 billion worth of new trains under the Passenger Rail Agency of South Africa’s rolling stock program. In addition to improving passenger service and security, Visiongain estimates this program is set to introduce 7,000 new trains into South African service over the next 20 years as part of a US$12.3 billion investment plan. Such spending should provide new opportunities for security firms, as any fresh endeavours to curtail the country’s rising crime rate will not be feasible without taking transport security into account.

(c) North America

The United States is positioned as the second largest mass transit security market globally, estimated to be worth US$820 million in 2013, according to Visiongain (second to China and followed in third position by Russia).

Despite strong growth being forecast across a number of DTI’s key geographic markets, according to Visiongain, the outlook for growth in the United States mass transit security market is expected to remain subdued in the coming years. The main concern for the United States comes from the fall in spending on infrastructure which is at its lowest level in 20 years. With states and local governments attempting to reign in debt and balance their budgets, the former funding that was available for projects has fallen dramatically.

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DTI Group Ltd 2014 prospectus

MARKET OVERVIEW

2.6 COMPETITIvE LANDSCAPE OF THE MASS TRANSIT SECuRITy MARKET AND DTI’S POSITION

The mass transit security market and its associated submarkets are attractive, high-growth sectors for DTI, driven by the recognised benefits that video surveillance offers to transit passengers, industry operators and government agencies. DTI considers that it has a competitive advantage with which to continue to grow its business across a significant global market, based on the key aspects set out in table 2.4.

Table 2.4: DTI’s position in the mass transit security market

Table 2.4:DTI’s position in th	e mass transit security market
Basis of Competition	DTI’s Position
Domestic market	DTI has established a leading market position in Australia, becoming a major public transit mobile
	surveillance provider in its domestic market. DTI now seeks to grow its business across major
	international markets having established a presence in both the United States and more recently in
	the European Union.
	In FY13, DTI’s revenue from international projects exceeded domestic revenue.
International market	As highlighted in table 2.1, the United States and European markets are leading markets for mass transit security in 2013, with values signifcantly larger than the Australian market.
	DTI’s international expansion strategy delivers a strong opportunity for growth within these
	key markets.
Track record	DTI’s core technology has underpinned the Company’s growth, delivering a competitive advantage
	when tendering and ultimately ensuring projects are delivered successfully.
	The Company’s annual operating revenue has increased signifcantly from $0.98 million in 2004 to
	$20.8 million in FY14 and has been achieved through internal growth and product development.
System integration	The mass transit security market is moving towards a higher degree of on-board system
	integration, and DTI’s approach to its technology platform has ensured that the Company can
	leverage this change.
	Integration provides an opportunity for the Company to extend its product range, expand its
	offering, and to ultimately derive greater revenue from each project and customer. DTI considers that it offers its customers more advanced and effcient solutions which have technical and
	operating superiority over its competitors.
Fragmented submarkets	The public transit security industry at this time remains fragmented with the industry comprising a number of small to mid-size product and service providers that typically focus on a specifc
	geographic region or on a particular mode of transit (eg bus, rail, law enforcement vehicles). DTI
	sees opportunities for the acquisition of, or investment in, complementary businesses both within
	Australia and internationally.

DTI believes the demand for the Company’s customised surveillance solutions and fleet management systems will be underpinned by the factors listed in table 2.4.

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2.7 INDEPENDENT RESEARCH METHODOLOGy

The market commentary provided in this Section has been prepared by the Company with the support of industry data from UK-based, independent research house and media provider, Visiongain.

The research conducted by Visiongain includes a broad range of primary and secondary data on the mass transit security market that has been used to assist with an overview of the overall market condition of the industry.

Visiongain’s market analysis divides the mass transit security market into three major submarkets: surveillance and screening, infrastructure security, and command and control. The submarkets that comprise the mass transit security market are shown in the market segmentation of the global mass transit security market in figure 2.1.

Visiongain estimated the mass transit security market sizes by analysing information gained through a comprehensive list of literature and opinions from industry sources, industry news, articles, industry views, interviews, policy documents, government statements, press releases and contractual announcements, to produce an original analysis. In addition, Visiongain’s research included evaluating each nation’s current security expenditure, followed by examination into the direction of funds towards mass transit security specifically, gathering of relevant equipment and services contracts, and analysis of public domain plans for transport infrastructure investment.

The 2013 data, in the case of the United States, was compiled from reliable data sets available in the public domain, while elsewhere base figures were compiled from Visiongain’s overarching Homeland Security Market report dated July 2012.

Visiongain advises that its research is also supported by the opinions and judgements of independent experts from the industry.

Visiongain has provided its consent to the inclusion of its research in the Prospectus in the form and context in which it appears. The Company believes the inclusion of Visiongain’s research helps provide the Company and investors with an independent overview of the value, drivers and outlook for the global mass transit security market.

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DTI Group Ltd 2014 prospectus

COMPANY OVERVIEW

Company Overview

3 28

3 Company Overview

3.1 COMPANy HISTORy

Founded in 1995 as a private company in Perth, Western Australia, DTI has rapidly expanded its activities servicing mass transit, private enterprise and government sectors both domestically and internationally with projects covering Australia, Europe, the Middle East, North America, South Africa and the United Kingdom.

DTI’s business was restructured as a public company in August 2004. The Board was also reorganised adding greater depth in both corporate and industry experience.

Table 3.1: Company history

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|||
|---|---|
|1995|DTI founded by Neil Goodey and Nino Tufilli. Neil remains a Director.|
|Aug 2004|DTI becomes a public company with a formal board structure. Revenue for the 2004 financial year is $980,000.|
|Jan 2005|Richard Johnson is recruited to join DTI as General Manager and in October 2006 is appointed Chief Executive Officer.|
|Feb 2005|DTI wins the Perth Rail upgrade project – first project in rail surveillance and passenger information.|
|June 2006|DTI wins the Adelaide bus contract – first multi-operator citywide contract.|
|Aug 2006|After a global search of companies to partner with, US-based GE Security signs a contract with DTI to design its|
|next generation equipment for the US market. The contracts are updated in 2009 and 2013 (UTC purchased GE|
|Security in 2010).|
|Oct 2009|DTI wins its largest contract to date worth $10 million with Queensland Rail for surveillance and passenger|
|information solutions. A subsequent contract for $5.6 million is signed to install the project.|
|Dec 2010|DTI announces that it has been successful with UTC in winning a major contract to install 426 buses with video|
|surveillance for a major US city. Option for 1,150 systems subsequently ordered.|
|Oct 2011|DTI announces that it has been successful in providing 326 rail surveillance systems to Eversholt Rail Group which|
|owns one of the largest rail passenger fleets in the UK. The systems are for trains on the East Anglia rail line out of|
|London and are installed on schedule in time for the London Olympics.|
|Jan 2012|DTI announces that it has won three contracts with Bombardier Transportation, the western world’s largest|
|manufacturer of passenger trains, for the supply of DTI’s technology for rail projects in Adelaide and Perth.|
|Dec 2012|DTI is awarded an initial contract with Kratos Defense & Security Solutions to supply the MDR5M bus and light|
|rail systems to the San Francisco Municipal Transportation Agency, with additional options subsequently awarded|
|increasing the number of systems to over 1,000.|
|Dec 2013|DTI announces that it has sold 20,000 mobile recording systems since inception. The total number of camera sales|
|for the 2013 calendar year is over 32,000 units.|
|July 2014|DTI announces its first project in Poland for an initial order of surveillance systems to the Polish tram manufacturer,|
|PESA, for delivery to ZTM Gdańsk, the city’s public transport operator.|
|July 2014|DTI announces its first order in France for the supply of advanced video surveillance equipment for buses in the|
|region of Grand Besançon. This is followed by a second order in France for 36 systems for the Marseille Metro.|

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DTI Group Ltd 2014 prospectus

COMPANY OVERVIEW

3.2 wHAT ARE DTI’S PRODuCTS AND SERvICES?

DTI is a leading provider of integrated surveillance systems and fl eet management solutions for the global mobile security market. The Company’s customers are transit agencies, law enforcement authorities and high-value freight operators. DTI’s specialised surveillance systems and fl eet management solutions for mobile applications integrate on-board equipment with wide-area communications and back-end control room infrastructure.

Figure 3.1: DTI’s mobile integrated solution

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(a) Surveillance solutions

Data recording hardware – on-vehicle recording device, designed to withstand the rigours of transit vehicle usage which records video, audio and GPS locations for comprehensive data management systems and software applications.

Associated systems and sensors – a range of associated onvehicle technologies and systems comprising analogue and IP cameras, accelerometers, passenger counting, driver displays, passenger information displays and voice announcement systems.

Software – a sophisticated software suite manages DTI’s vast array of devices, sensors and recording equipment installed across large transit fleets, integrating video and audio surveillance data with GPS tracking information, to deliver a comprehensive, fleet-wide, CCTV management, vehicle monitoring and route adherence solution.

(b) Managed services

Wide-area urban surveillance – provides urban surveillance to specific users through the collating of forward-facing camera images from suitably equipped transit vehicles. Through the implementation of forward- and rear-facing cameras, each transit vehicle (bus/tram/taxi) becomes a patrolling video surveillance unit capturing street level activities as it roams major city areas up to 24 hours a day, 7 days a week.

Driver development and risk mitigation – provides a detailed and comprehensive analysis service which combines video, GPS mapping, accelerometer and ancillary vehicle data to significantly enhance driver development, improve operating costs and reduce risk. The driver development service also:

• improves fuel consumption by monitoring overly vigorous acceleration

• improves brake wear by monitoring brake overuse

• improves safety by monitoring risk events such as excessive swerving, excessive braking, curb mounting, rough roads etc.

Video management – provides turnkey support for requesting, retrieving, storing, cataloguing and dispatching information. Outsourced video management resolves the need for multiple users of video information, including police, transit operators, insurance companies and homeland security. By outsourcing video management, transit operators can focus on their core transit business of moving people.

Vehicle data analysis and monitoring – enables important vehicle operational and engine management data to be monitored, retrieved, reviewed and reported in conjunction with the surveillance data. Measured data streams are recorded digitally in real-time with respect to date, time, geographical location, speed and heading of the vehicle and are fully

integrated with other associated MDR/DRU modules, including video surveillance and the vehicle location system.

Schedule adherence analysis – combines the GPS-based vehicle location information acquired by DTI’s CCTV system and analyses it against the route schedule database of the operator to deliver comprehensive route performance information. Daily reports detailing route deviations or exceptions are generated providing excellent management information for the operator.

IT infrastructure – includes maintenance services for depot equipment such as servers, viewing stations, switches and access points, as well as wireless bridges. Network communications can also be included as part of this service. As with on-board systems, DTI designs IT back-office infrastructure with distributed risk. Critical services such as vehicle real-time tracking, driver duress and vehicle data management take priority over other background services.

Help desk, technical support and monitoring – includes help desk support coupled with additional technical (software or network) support as required. Monitoring includes the review and reporting of the status of the CCTV systems on vehicles.

First line maintenance – this service provides for the maintenance of equipment on transit vehicles as well as an on-call support service. First line maintenance includes a field support person with a vehicle. DTI’s maintenance staff have many years combined industry experience in automotive electronics, CCTV, law enforcement and rail.

DTI’s product range and services offer many benefits to passengers, operators, transit industry operators and government agencies including:

• public liability and personal injury claim substantiation and protection working both to support legitimate claims and defend fraudulent claims

• deterring antisocial and criminal behaviour – improving the community perception of public transport which translates to increased patronage and revenues

• providing security and protection to drivers and passengers

• improving emergency response planning and implementation

• meeting the higher industry and government safety and service standards that require improved protection for passengers and drivers and for the delivery of a better service quality

• protection, safety and ultimate peace of mind for operators.

Set out in table 3.2 is a matrix showing DTI’s products, services and market segments.

DTI Group Ltd 2014 prospectus 31

COMPANY OVERVIEW

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Purpose
Records comprehensive surveillance data combined with hardware tailored for the specific industry segment. Surveillance data produced by a range of peripheral hardware, each tailored for the respective industry segment. The surveillance data is recorded by the data recording hardware. Comprehensive back-end system centralises and coordinates the equipment and surveillance data to allow cost-effective management of equipment and data. Outsourcing of managed services allows operators to focus on their own core business. Public liability, personal injury claim, protection, deterring antisocial and criminal behaviour, providing security and protection to the driver and passengers, and reduced operating costs.
Private Enterprise High-value Freight Refer Section 3.2(g) MDR family of hybrid recorders (MDR5R) Analogue and IP cameras; outside, front view and rear view cameras; GPS tracking and driver displays Fleet manager vehicle monitoring and CCTV management system, remote 3G/4G live view Government entities, private operators/ owners, rail manufacturers
Refer Section 3.2(f)
Government Agency Law Enforcement MDR family of hybrid recorders (MDR5L) Analogue and IP cameras, front view cameras, GPS tracking, driver displays, and remote microphones Fleet manager vehicle monitoring and CCTV management system, remote 3G/4G live view Government entities
Taxi Solutions Refer Section 3.2(e)
MDR family of hybrid recorders (MDR5T) Analogue and IP cameras, side view cameras, GPS tracking, waterproof and fireproof solid state drive enclosures Fleet management vehicle monitoring and CCTV management system, 3G/4G live view Government entities, private operators/ owners
Mass Transit Rail Solutions Refer Section 3.2(d) DRU family of hybrid recorders (DRU2, DRU3) Analogue and IP cameras, outside and side view cameras, GPS tracking, Pantograph cameras, passenger counting, driver displays and signs Fleet management vehicle monitoring and CCTV management system, low latency driver display software, remote 3G/4G live view and Pantograph video analytics integrated data viewer Government entities, private operators/ owners, rail manufacturers
Bus Solutions Refer Section 3.2(c) MDR family of hybrid recorders (MDR5L) Analogue and IP cameras, GPS tracking, accelerometers, passenger counting, driver displays and signs Fleet manager vehicle monitoring and CCTV management system, route adherence and remote 3G/4G live view Full service bureau offering Government entities, private operators, bus manufacturers Australia, Europe, the Middle East, Africa and the Americas
Data
Business Segment
recording hardware hardware Software
Surveillance
Managed Services Customers Regions
Products & Services
Surveillance Solutions
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3.2 wHAT ARE DTI’S PRODuCTS AND SERvICES? (cont’d)

(c) Bus solutions

DTI has been providing bus surveillance solutions since 1999 and offers a range of innovative and proprietary technologies tailored for use in bus operations, summarised in figure 3.2 and as follows:

Figure 3.2: Overview of bus surveillance solutions

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(i) Summary of DTI’s bus recording hardware

Mobile digital recorder – the MDR5L is a multi-application, on-vehicle data recording device providing multi-channel video and audio surveillance, engine and vehicle data logging and GPS-based vehicle tracking.

Key features include:

• large storage capacity drives up to 4TB and improved compression technology with H.264 compression

• up to 16 full-frame rate hybrid video channels (analogue D1 or megapixel IP)

• synchronised audio and integrated GPS tracking

• separate streams for recording, local displaying and remote streaming

• integral WiFi 802.11 a,b,g,n for connection to the DTI fleet management suite

• standard integral 3G modem with optional upgrade to 4G

• LCD display for system status and recorded media removal prompts

• video and audio recording (lip synchronised) for driver duress remote streaming applications – compliant with both international IP video standards (ONVIF and PSIA), coupled with RTSP (Real Time Streaming Protocol) support, live streaming, auto-recovery, auto-reconnection and fast reboot

• upright, suspended or wall mounted, plus optional rack mount kit

• SAE J1455 rated power supply and programmable internal power management plus E-mark certification for the European Union

• compact design, ultra-low heat generation

• capable of being linked to a comprehensive back-end management system to deliver a geographically enriched, fleet-wide surveillance and incident management solution. The MDR5L has been exclusively engineered to withstand the rigours of transit vehicle usage.

Figure 3.3: MDR5L

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33

DTI Group Ltd 2014 prospectus

COMPANY OVERVIEW

3.2 wHAT ARE DTI’S PRODuCTS AND SERvICES? (cont’d)

(ii) Summary of DTI’s bus surveillance hardware

Video surveillance – multi-channel, full-frame rate, highresolution camera recording equipment capable of viewing all internal and external areas, including entrance and exit ways, passenger seating areas, fare transaction zones and driver compartment areas; as well as forward, rear and side-facing external views for roadway and vehicle accident management.

Audio surveillance – high-sensitivity audio surveillance for monitoring and recording passenger and driver interactions such as threats and abuse.

GPS – precision GPS tracking for vehicle location, speed and heading information with integration to a wide range of maps and geospatial data sets.

Scratch sensor – acoustic sensor affixed to vehicle windows with audio analysis to provide detection of scratching or etching of windows by vandals. This reduces hours of video reviewing down to just the minutes of when the event occurs.

G-force accelerometer – an optional 3-axis sensor to measure the acceleration (or g-forces) imposed on the vehicle and passengers. The recorded g-force information may be displayed and reviewed in conjunction with the recorded video and overlaid on street level maps and route diagrams.

Vehicle braking, speed, use of turn indicators and street location information are integrated with the video feeds for comprehensive accident investigation or for driver training and assessment.

In addition, the g-force system may be configured with pre-set trigger points to automatically tag, quarantine and download segments of video and operational data when the vehicle’s operation exceeds these threshold values.

Mobile digital recorder – the MDR is a multi-application, onvehicle data recording device providing multi-channel video and audio surveillance, engine and vehicle data logging and GPS-based vehicle tracking. Features include up to 16 full-frame rate video channels and multi-channel synchronised audio and integrated GPS tracking with the ability to record both analogue and megapixel digital cameras on the same unit.

The MDR caters for large storage capacity drives and improved compression technology with H.264 compression.

The on-board MDR may be linked to a comprehensive backend management system to deliver a geographically enriched, fleet-wide surveillance and incident management solution. The MDR has been exclusively engineered to withstand the rigours of transit vehicle usage.

(iii) Summary of DTI’s bus software

CCTV investigation software – advanced fleet management solutions for on-board device management, CCTV and vehicle data recovery, equipment and camera maintenance and reporting essential for the effective control and support of a large-scale, wide-area transit CCTV implementation. The software provides both live and historical reviews with advanced incident searches, image enhancements, data archiving, clip exporting to CD/DVD and printing functions. Using DTI’s optional evidence management module, video information can be prepared to meet the evidentiary requirements of the court systems.

Player control functions allow forward, backward, frame-byframe, multi-speed and pause operations during the review of information. The analysis function then allows the option to zoom in/out and pan regions of interest.

Vehicle location software – delivers precision geographical references for all recorded parameters including video, audio and the range of parameters recorded by the MDR. The integration of GPS tracking with surveillance data is one of the key features of the DTI system.

The vehicle location software integrates bus locations with the video surveillance data, displays vehicle locations on street maps and overlays bus routes, bus stop locations and other meta-data to enhance the investigation process. The integrated GPS data also allows the operator to search and retrieve surveillance information using map-based queries or location references.

Surveillance management systems – a comprehensive “backend” vehicle monitoring and CCTV job management system that automatically prioritises and schedules the recovery of surveillance incidents using high-speed WiFi/WLAN communications infrastructure.

34

(d) Rail solutions

DTI has been providing rail surveillance solutions since 2005 and offers a range of innovative and proprietary technologies tailored for use in rail operations, summarised in figure 3.4 and as follows:

Figure 3.4: Overview of rail surveillance solutions

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(i) Summary of DTI’s rail recording hardware Data recorder unit – built on DTI’s core MDR technology, the DRU has been specially engineered and certified for use in the rail industry. It incorporates multi-channel video and audio recording with an integrated vehicle location sub-system, coupled with shared dual-drive redundancy technology, plus additional grab-and-go storage media. The DRU has the ability to record both analogue and megapixel digital cameras on the same unit.

Key features include:

• multiple large storage capacity drives up to a total of 16TB

• up to 32 full-frame rate hybrid video channels (16 analogue D1 and up to 32 megapixel IP)

• synchronised audio and integrated GPS tracking

• separate streams for recording, local displaying and remote streaming

• external WiFi 802.11 a,b,g,n for connection to the DTI fleet management suite

• external 3G modem with optional upgrade to 4G

• LCD display for system status and recorded media removal prompts

• video and audio recording (lip synchronised) for driver duress remote streaming applications – compliant with both international IP video standards (ONVIF and PSIA), coupled with RTSP (Real Time Streaming Protocol) support, live streaming, auto-recovery, auto-reconnection and fast reboot

• rack mount format

• EN50155 and RIA12 rail certification

• capable of being linked to a comprehensive back-end management system to deliver a geographically enriched, fleet-wide surveillance and incident management solution. The MDR has been exclusively engineered to withstand the rigours of rail usage.

Figure 3.5: DRU3

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(ii) Summary of DTI’s rail surveillance hardware Video surveillance – multi-channel, full-frame rate, highresolution camera recording equipment capable of viewing all internal and external areas, including entrance and exit ways, passenger seating areas, fare transaction zones and driver compartment areas; as well as forward, rear and sidefacing external views for railway, road and vehicle accident management.

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DTI Group Ltd 2014 prospectus

COMPANY OVERVIEW

3.2 wHAT ARE DTI’S PRODuCTS AND SERvICES? (cont’d)

Train data recorder – a comprehensive range of auxiliary inputs are available for the measurement and recording of train operating data. Input channels can be configured as events with user configurable reactions, such as triggers to control other external devices or to archive a segment of train surveillance and operating data. A reaction to an input event may also include activating an alarm and playing an emergency announcement to passengers through DTI’s audio management system.

Figure 3.6: Train data recorder

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Passenger emergency intercom (PEI) – provides remote help points throughout the train. The PEI provides driver and passenger audio and video communication which is also recorded by DTI’s DRU as an emergency event log.

On activation of the PEI a segment of train surveillance data of configurable pre- and post-event duration (normally five minutes preand five minutes post-PEI press) is quarantined, protected and then automatically downloaded from the train to base. The PEI also offers live communications to a control centre.

Driver display unit (DDU) – the DDU is a colour, flat panel display installed in the driver’s compartment for control of the on-board CCTV, route management, signage, passenger information and emergency systems. The DDU incorporates a touch-screen interface for easy use by the train operator and has been specially engineered to ensure optimum location and access by the driver.

Destination indicator (DI) – utilises ultra-bright, high-contrast daylight viewable amber LEDs which have a wide viewing angle of 160 degrees. The DI incorporates an ambient light sensor which ensures high visibility in all lighting conditions, both day and night. These DIs have been deployed across Australian and European trains, trams and buses.

Passenger information display (PID) – a multi-colour sign installed in passenger areas to provide route and emergency information. The PIDs are capable of displaying text and graphics and are controlled by DTI’s onboard DRU. The PID is typically a 96 x 16 pixel matrix offering three active colours and contains nine display fonts.

Remote train announcements – when combined with 3G communications infrastructure, the DTI fleet management system provides remote train announcements either through pre-recorded, ad-hoc or text-to-speech announcements. With the text-tospeech announcement, the text can also be displayed on the PID.

36

(iii) Summary of DTI’s rail software

Passenger counting video analytics – determines passenger numbers in rail cars, in most cases through the use of existing camera positions and fields of view, which allows for cost savings by restricting the need for additional infrastructure and installation. The vision-based algorithms used for passenger counting were developed in-house by DTI.

Pantograph video analytics – automatically tags potential cable faults and problems along the catenary structure which provides power to the train while in motion. This analysis allows for cost savings by notifying operators of potential problems before they become catastrophic. The vision-based algorithms used for the Pantograph video analytics were developed in-house by DTI.

CCTV investigation system – advanced fleet management solutions for on-board device management, CCTV and vehicle data recovery, equipment and camera maintenance and reporting essential for the effective control and support of a largescale, wide-area transit CCTV implementation. The software provides both live and historical reviews with advanced incident searches, image enhancements, data archiving, clip exporting to CD/DVD and printing functions. Using DTI’s optional evidence management module, video information can be prepared to meet the evidentiary requirements of the court systems.

Player control functions allow forward, backward, frame-by-frame, multi-speed and pause operations during the review of information. The analysis function then allows the option to zoom in/out and pan regions of interest.

Automated camera maintenance system – advanced analytical camera condition and alignment reporting (specific to mobile use). Exception reports can be generated for cameras which may have defects such as graffiti, focus and alignment problems.

Fleet data management system – a comprehensive back-end PIS and CCTV data management system which allows data to be automatically transferred from rail cars to a centralised location (eg security control centre) through a combination of LAN and WLAN infrastructure and typically supplied as part of the CCTV system.

Vehicle location system – an optional module which delivers precision geographical references for all recorded parameters including video images, audio communications and the range of parameters recorded by the vehicle data recorder. The integration of GPS tracking with CCTV data is one of the key features of the DTI system.

Vehicle data recorder – a software module that enables complementary train operational and management data to be recorded, monitored, retrieved and reviewed in conjunction with the surveillance data. A comprehensive range of configurable inputs are provided for the measurement of train operating data and peripheral devices. The measured data streams are recorded digitally by the DRU with respect to date, time and geographical location of the train and are fully integrated with the video and audio surveillance data.

(e) Taxi solutions

DTI has been providing taxi solutions since 2012 and offers a range of innovative and proprietary technologies tailored for use in taxi operations, summarised in figure 3.7 and as follows:

Figure 3.7: Overview of taxi solutions

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37

DTI Group Ltd 2014 prospectus

COMPANY OVERVIEW

3.2 wHAT ARE DTI’S PRODuCTS AND SERvICES? (cont’d)

(i) Summary of DTI’s taxi recording hardware Mobile digital recorder – the MDR5L taxi unit (MDR5T) is a multi-application, on-vehicle data recording device providing video and audio surveillance, engine and vehicle data logging and GPS-based vehicle tracking. The typical taxi version includes a non-removable fire resistant and water resistant solid state drive storage device plus internal 3G modem.

Key features include:

• large storage capacity drives up to 2TB and improved compression technology with H.264 compression

• optional fire resistant and water resistant solid state drive storage which preserves data if the vehicle catches on fire or is submerged for up to 24 hours

• up to 16 full-frame rate hybrid video channels (analogue D1 or megapixel IP)

• synchronised audio and integrated GPS tracking

• separate streams for recording, local displaying and remote streaming

• integral WiFi 802.11 a,b,g,n for connection to the DTI fleet management suite

• standard integral 3G modem with optional upgrade to 4G

• LCD display for system status and recorded media removal prompts

• video and audio recording (lip synchronised) for driver duress remote streaming applications – compliant with both international IP video standards (ONVIF and PSIA), coupled with RTSP (Real Time Streaming Protocol) support, live streaming, auto-recovery, auto-reconnection and fast reboot

• upright, suspended or wall mounted, plus optional rack mount kit

• SAE J1455 rated power supply and programmable internal power management

• compact design, ultra-low heat generation

Figure 3.8: MDR5T with internal fire and water resistant solid state drive storage

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(ii) Summary of DTI’s taxi surveillance hardware Video surveillance – multi-channel, full-frame rate, highresolution camera recording equipment capable of viewing all internal and external areas, including passenger and driver seating areas, as well as forward, rear and side-facing external views for roadway and vehicle accident management.

External device interfaces – such as speedometer, taxi meter, lights and brakes.

Maintenance touch-screen data terminal – provides driver information regarding location and system health.

GPS location system – precision GPS tracking for vehicle location, speed and heading information with integration to a wide range of maps and geospatial data sets.

(iii) Summary of DTI’s taxi software

Fleet data management system – a comprehensive back-end data management system which allows data to be automatically transferred from vehicles to a centralised location through a combination of LAN/WLAN or 3G/4G infrastructure.

System route data and back-office analysis – a comprehensive “back-end” vehicle route analysis tool which can track taxi travel/distance and provide central control room alerts for out of area travel.

• capable of being linked to a comprehensive back-end management system to deliver a geographically enriched, fleet-wide surveillance and incident management solution. The MDR5T has been exclusively engineered to withstand the rigours of taxi vehicle usage.

38

(f) Law enforcement solutions

DTI has been providing law enforcement solutions since 2013 and offers a range of innovative and proprietary technologies tailored for use in law enforcement operations, summarised in figure 3.9 and as follows:

Figure 3.9: Overview of law enforcement solutions

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(i) Summary of DTI’s law enforcement recording hardware

Mobile digital recorder – the MDR5L is a multi-application, on-vehicle data recording device providing video and audio surveillance, GPS-based vehicle tracking, engine and vehicle data logging including recording and tagging footage for lights and siren activation. The typical police version also includes a separate in-vehicle display.

Key features include:

• large storage capacity drives up to 2TB and improved compression technology with H.264 compression

• optional fire resistant and water resistant solid state drive storage which preserves data if the vehicle catches on fire or is submerged for up to 24 hours

• up to 16 full-frame rate hybrid video channels (analogue D1 or megapixel IP)

• synchronised audio and integrated GPS tracking

• separate streams for recording, local displaying and remote streaming

• integral WiFi 802.11 a,b,g,n for connection to the DTI fleet management suite

• standard integral 3G modem with optional upgrade to 4G

• LCD display for system status and recorded media removal prompts

• video and audio recording (lip synchronised) for driver duress remote streaming applications – compliant with both international IP video standards (ONVIF and PSIA), coupled with RTSP (Real Time Streaming Protocol) support, live streaming, auto-recovery, auto-reconnection and fast reboot

• upright, suspended or wall mounted, plus optional rack mount kit

• SAE J1455 rated power supply and programmable internal power management

• compact design, ultra-low heat generation

• capable of being linked to a comprehensive back-end management system to deliver a geographically enriched, fleet-wide surveillance and incident management solution. The MDR5L has been exclusively engineered to withstand the rigours of law enforcement usage.

Figure 3.10 Law enforcement MDR5L and monitor

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DTI Group Ltd 2014 prospectus

COMPANY OVERVIEW

3.2 wHAT ARE DTI’S PRODuCTS AND SERvICES? (cont’d)

(ii) Summary of DTI’s law enforcement surveillance hardware

Fixed in-car video system – utilises high-quality components such as cameras, microphones, antennas and displays from DTI’s range of transit-rated products.

Portable in-car video system – based on the in-car video system above, and in conjunction with Australian law enforcement authorities, DTI has developed a portable in-car video system that can be easily reinstalled to a new vehicle and redeployed within 20 minutes. On a fully charged integral battery, DTI’s portable system can run on its own power source for up to eight hours in a vehicle or static location. Remote communication, via 3G and 4G networks, provides ultra high-speed live video streaming, vehicle GPS location plus automated notifications and event downloads.

ICV cameras – high reliability special-purpose microdome cameras engineered to withstand the rigours of vehicle usage.

GPS location system – precision GPS tracking for vehicle location, speed and heading information with integration to a wide range of maps and geospatial data sets.

(iii) Summary of DTI’s law enforcement software

Central recording and management system – a comprehensive back-end CCTV data management system which allows data to be automatically transferred from vehicles to a centralised location (eg security control centre) through a combination of LAN and WLAN infrastructure and typically supplied as part of the CCTV system.

Image compression, security and protection – image compression is provided through user-selectable H.264 compression algorithms. Specific compression levels and picture qualities may be user-configured on a per-camera basis. Comprehensive security information, including date and time, vehicle number (registration), camera name (reference), vehicle location, vehicle speed and heading (available with the optional GPS location system sub-module), is encrypted and embedded with each recorded image for the purpose of image authentication and evidentiary purposes in court applications.

Advanced software modules – DTI’s MDR5L multi-application layer supports a number of plug-in software modules. For law enforcement applications, the supported modules are as follows:

• external device interfaces which can be synchronised with the recording of other surveillance data

• data recording and reporting for lights and sirens

• touch-screen data terminals for police officers.

(g) High-value freight solutions

DTI has been providing high-value freight solutions since 2013 and offers a range of innovative and proprietary technologies tailored for use in high-value freight operations, summarised in figure 3.11 and as follows:

Figure 3.11: Overview of high-value freight solutions at a level crossing

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40

(i) Summary of DTI’s high-value freight recording hardware

Mobile digital recorder – the MDR5R is a multi-application, on-vehicle data recording device providing video and audio surveillance, engine and vehicle data logging and GPS-based vehicle tracking specifically certified for use in the rail industry complete with rail-rated interfaces and cameras.

Key features include:

• large storage capacity drives up to 2TB and improved compression technology with H.264 compression

• up to 16 full-frame rate hybrid video channels (analogue D1 or megapixel IP)

• synchronised audio and integrated GPS tracking

• separate streams for recording, local displaying and remote streaming

• integral WiFi 802.11 a,b,g,n for connection to the DTI fleet management suite

• standard integral 3G modem with optional upgrade to 4G

• LCD display for system status and recorded media removal prompts

• video and audio recording (lip synchronised) for driver duress remote streaming applications – compliant with both international IP video standards (ONVIF and PSIA), coupled with RTSP (Real Time Streaming Protocol) support, live streaming, auto-recovery, auto-reconnection and fast reboot

• upright, suspended or wall mounted, plus optional rack mount kit

• EN50155 rail-rated

• compact design, ultra-low heat generation

• capable of being linked to a comprehensive back-end management system to deliver a geographically enriched, fleet-wide surveillance and incident management solution. The MDR5R has been exclusively engineered to withstand the rigours of high-value freight usage.

Figure 3.12: MDR5R for high-value freight

==> picture [171 x 104] intentionally omitted <==

(ii) Summary of DTI’s high-value freight surveillance hardware

Video surveillance – multi-channel, full-frame rate, high-resolution camera recording equipment capable of viewing all internal and external areas, including entrance and exit ways, and driver compartment areas; as well as forward, rear and side-facing external views for railway, road and vehicle accident management.

Cameras – multi-stream output high-resolution IP cameras with integral infrared illuminators. Each camera is protected by customised enclosures specially designed to withstand the harsh conditions of remote mining operations, such as in the Pilbara region of Western Australia, while providing for easy maintenance and cleaning with direct high-pressure spray.

GPS location system – precision GPS tracking for vehicle location, speed and heading information with integration to a wide range of maps and geospatial data sets.

(iii) Summary of DTI’s high-value freight software

Rear view safety – integrated 3G/4G transmission with GPSbased technology which links vision from the rear of the train to the driver.

Central recording and management system – a comprehensive back-end CCTV data management system which allows data to be automatically transferred from rail cars to a centralised location (eg security control centre) through a combination of LAN and WLAN infrastructure and typically supplied as part of the CCTV system.

(h) Managed services

DTI has been providing managed services since 2007 and has developed a variety of value-add applications that operate in conjunction with and complement the Company’s core surveillance solutions.

(i) Wide-area urban surveillance (“Virtual Observer”)

Using the extensive network of external-facing cameras installed on bus and transit vehicles, DTI has developed a wide-area urban surveillance capability. Video streams from numerous forward-facing cameras can be used to monitor and investigate activities at street level.

Through the implementation of forward- or external-facing cameras, each transit vehicle becomes a patrolling video surveillance unit capturing street level activities as it roams major city areas.

This roaming citywide surveillance function is an invaluable extension to traditional existing “static” CCTV infrastructure for crime prevention, investigation and intelligence gathering.

This technology is marketed as “Virtual Observer” and is held in DTI’s wholly owned subsidiary, Virtual Observer Pty Ltd.

Figure 3.13: Virtual Observer

==> picture [233 x 136] intentionally omitted <==

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

Web Application Web Application
User query User query User query User Query User query Online geospatial interface
Unlimited user platform
Interface InterfaceInterface Web WebWeb Users view query-based video streamed
directly to their desktop
Various fleets providing content to
Virtual Observer users
----- End of picture text -----

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DTI Group Ltd 2014 prospectus

COMPANY OVERVIEW

3.2 wHAT ARE DTI’S PRODuCTS AND SERvICES? (cont’d)

(ii) Driver development and risk mitigation

DTI’s driver development service provides a detailed and comprehensive analysis of driver performance and technique. The analysis application integrates video, GPS mapping, accelerometer and other bus operating data to provide driver development, reduce transit operating costs, and improve efficiency.

The driver development service also:

• improves fuel consumption by monitoring overly vigorous acceleration

• improves brake wear by monitoring brake overuse

• improves safety by monitoring risk events such as excessive swerving, excessive braking, curb mounting and rough roads.

Figure 3.14: Overview of driver development and risk mitigation

==> picture [428 x 321] intentionally omitted <==

(iii) Video management

DTI’s video management services provide turnkey support for requesting, retrieving, storing, cataloguing and dispatching recorded information. By outsourcing video management, transit operators can focus on their core transit business of moving people rather than responding to enquiries from police, homeland security or insurance companies.

(iv) Vehicle data analysis and monitoring

The vehicle data analysis and monitoring service enables important bus operational and engine management data or critical train operational data to be monitored, retrieved, reviewed and reported in conjunction with the surveillance data.

A comprehensive range of configurable auxiliary inputs are monitored including analogue and contact closure type device interfaces.

The measured data streams are recorded digitally in real-time with respect to date, time, geographical location, speed and heading of the vehicle and are fully integrated with the other associated MDR modules including video surveillance and the vehicle location system.

42

Figure 3.15: Overview of vehicle data analysis and monitoring

==> picture [406 x 307] intentionally omitted <==

(v) Schedule adherence analysis

The schedule adherence analysis combines the GPS-based vehicle location information recorded by DTI’s MDR and analyses it against the route schedule database of the operator to deliver comprehensive route performance information. Daily reports detailing route deviations or exceptions are generated providing management information for the operator.

The strength of this service is that schedule deviation data can be provided to the operator detailing which buses are running late in conjunction with visual information via a forward-facing camera. This combination of schedule and video data expands the analysis greatly and provides information to determine the cause of the delay, such as congestion, traffic accidents and roadwork.

Figure 3.16: Overview of schedule adherence analysis

==> picture [406 x 222] intentionally omitted <==

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DTI Group Ltd 2014 prospectus

COMPANY OVERVIEW

3.2 wHAT ARE DTI’S PRODuCTS AND SERvICES? (cont’d)

(vi) IT infrastructure services

IT infrastructure services include maintenance services for depot equipment such as servers, viewing stations, switches and access points, as well as wireless bridges. Network communications can also be included as part of this service.

Figure 3.17: Overview of IT infrastructure services

==> picture [449 x 267] intentionally omitted <==

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

WIFI
2. LIVE VEHICLE
1. DRIVER MESSAGING &
LOCATION & DRIVER
SYSTEM CONTROL
DURESS
3G/4G
SCREENS
Remote
Applications
REAL TIME STREAMING
PROTOCOL USER
RTSP SERVER
VPN AUTOARCHIVER ADSL2
VO SERVER
DATA MANAGER
BACK OFFICE WORKSTATION DEPOT SERVER
APPLICATIONS APPLICATIONS
----- End of picture text -----

(vii) Help desk, technical support and monitoring

The help desk, technical support and monitoring includes help desk support coupled with additional (software or network) technical support as required. Monitoring includes the review and reporting of the status of the CCTV systems on vehicles.

(viii) First line maintenance

DTI is committed to ensuring that the products and solutions it supplies to customers are fully maintained over their operating life through the provision of comprehensive first line maintenance services. The Company’s maintenance department stocks both modular spares and full replacement units, and is able to respond to system failures by dispatching field engineers to site to rectify defective equipment. Where contracted, DTI, by way of its advanced fleet management system, is able to remotely monitor the condition of the customer’s surveillance network, automatically identify equipment failures and exceptions, and then dispatch a field engineer to return the network to working condition.

Figure 3.18: First line maintenance

==> picture [225 x 128] intentionally omitted <==

==> picture [172 x 129] intentionally omitted <==

44

3.3 HOw DOES DTI GENERATE REvENuE?

DTI generates the majority of its operating revenue from the sale of surveillance solutions (as described in Section 3.2) to the mass transit, private enterprise and government sectors comprising:

• Digital recording systems – a range of on-vehicle recording units tailored for each business segment.

• Associated systems and sensors – GPS tracking systems, internal and external signage, passenger information displays, voice announcement systems, peripheral data sensors and passenger emergency help point solutions.

• Software – encompassing CCTV investigation, fleet surveillance management and automated maintenance alerts.

The Company’s remaining revenue is generated from the sale of managed services encompassing video management, vehicle data analysis and monitoring, and help desk technical support and monitoring, as well as a number of other applications that operate in conjunction with and complement DTI’s surveillance solutions.

DTI’s key costs include:

• procurement or manufacture of digital recording hardware and associated sensors and systems

• design and development of new hardware products and solutions

• design and development of system software encompassing CCTV investigation, fleet surveillance management and automated maintenance alerts

• resourcing of managed services encompassing video management, vehicle data analysis and monitoring, and help desk technical support and monitoring

• administration, marketing and management of the solutions, development and services.

3.4 MANuFACTuRING

DTI designs, develops and manufactures a large proportion of its product range in-house, including specialist rail data recorders and peripheral devices such as driver displays, tag switches and accelerometers. DTI subcontracts certain design and manufacturing activities where the manufacturing scale is appropriate, such as the MDR product lines.

(a) In-house manufacturing

Manufacturing of DTI’s DRU is undertaken in-house by technically competent and appropriately experienced staff. Manufacturing of these low-volume and often projectcustomised devices, is better suited to an in-house design, engineering and manufacturing program.

(b) Outsourced manufacturing

DTI has outsourced the manufacturing (and certain engineering and design activities) of the MDR product range to a specialist subcontract manufacturer, with the following scope:

• Unit test – a range of operations, utilising both custom built jigs/fixtures and commercial test equipment to ensure modules are correctly adjusted and operate prior to assembly into larger systems.

• Mechanical assembly – a range of operations supporting the assembly of MDRs and associated kits. Activities cover sheet-metal assembly, cable harness installation and testing.

• Product configuration and system test – undertaken where systems are configured to end-user requirements, then functionally tested.

• Pack and dispatch – based on a diverse range of destinations, DTI has developed methodologies for ensuring products are delivered fit for purpose anywhere in the world.

Figure 3.19: DTI’s subcontractor manufacturing facility

==> picture [233 x 108] intentionally omitted <==

==> picture [233 x 105] intentionally omitted <==

DTI’s subcontract manufacturer assembles up to 100 DTI MDR units per day.

DTI works closely with its subcontract manufacturer for the procurement of MDR components which have long lead times. DTI believes the manufacturer is capable of producing sufficient numbers of MDRs to satisfy its requirements for the foreseeable future.

“Off-the-shelf” peripheral equipment, such as high-resolution cameras, is sourced from other international external suppliers.

The development of proprietary software solutions is undertaken in-house by DTI engineers.

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DTI Group Ltd 2014 prospectus

COMPANY OVERVIEW

3.5 RESEARCH AND DEvELOPMENT

DTI has a philosophy of continual development and enhancement of its products, as well as adaptation to different services and solutions. R&D is undertaken in-house by DTI personnel, including its dedicated team of software developers. DTI has established an R&D roadmap which outlines the heritage, current status and the future of its products and applications. For the past two years, DTI has claimed the R&D tax offset incentive offered under the Australian taxation legislation for eligible R&D expenses.

3.6 COMPLETED INSTALLATIONS

Completed installations are shown in the fi gure below. Notwithstanding rail installations are lower in the number of systems sold when compared to buses, the value associated with rail projects is often signifi cantly higher, refl ecting the increased complexity and number of additional peripheral devices required.

Figure 3.20: DTI global installations

==> picture [500 x 337] intentionally omitted <==

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

UNITED STATES SOUTH AFRICA
Data Data
Recording Recording
Units Sold Cameras Units Sold Cameras
Customer (DRU / MDR) Sold UNITED KINGDOM Customer (DRU / MDR) Sold
UTC (various cities) 12,142 11,438 Data Cape T o wn – bus 233 –
Total 20,430 55,148
----- End of picture text -----

3.7 MARKETING AND SALES PRESENCE

DTI markets its integrated surveillance solutions directly through the Company’s sales team, and indirectly through its network of global business partners

In Australia and the United Kingdom, the Company has made a strategic decision to sell direct to the end user, rather than by way of a local integrator. In these markets, DTI has taken prime responsibility for developing product awareness and building market acceptance, and the Company’s 2011 contract award with Eversholt Rail has delivered a strong base from which to grow the UK market.

The other key markets targeted as part of DTI’s growth strategy include North America and Europe. To assist with the penetration of these markets, DTI has established relationships with key business partners, including UTC, Kratos Defense & Security Solutions and Eversholt Rail Group as examples. DTI will continue to appoint additional business partners or licensees to expand the Company’s reach as required.

DTI also has personnel based in the United Kingdom, Scandinavia, France and the United States to support the Company’s business partners and identify new opportunities.

The Company also markets its surveillance solutions to end customers directly, by taking part in international transit-specifi c trade shows and meeting directly with vehicle manufacturers. DTI’s growth strategy includes increasing the marketing of DTI’s products and capabilities across the European and United States markets.

46

3.8 DTI’S KEy STRENGTHS

(a) Demonstrated track record of executing its strategy and achieving growth

Since its inception DTI has become a leading provider of surveillance systems and fl eet management solutions for the global mobile security market.

The business of DTI was restructured as a public company in August 2004. The Board was reorganised adding greater depth in both corporate and industry experience and providing effective member independence.

DTI has achieved strong historical growth with annual operating revenue increasing from $0.98 million in 2004 to $20.8 million in FY14 as shown in fi gure 3.21 below.

Figure 3.21: DTI revenue growth

==> picture [242 x 149] intentionally omitted <==

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

21
18
15
12
9
6
3
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
DTI’s core technology has been successfully applied and
expanded to create a comprehensive product range covering the
rail, bus, taxi, law enforcement and high-value freight markets.
A$ million
----- End of picture text -----

While expanding its product range, the Company has also undertaken geographic expansion. Having built its technology and capability domestically, in 2006 DTI entered the US market via a partnership with GE Security (now UTC) and more recently extended its US position through a relationship with Kratos Defense & Security Solutions. In 2011, DTI formalised its efforts in the UK incorporating DTI EMEA Ltd in order to undertake a major contract with Eversholt Rail Group for London trains.

DTI has a regional manager based in the United States and a dedicated business development team based in the United Kingdom, supported by key partners in mainland Europe. In 2011, through a relationship with a local integrator, DTI commenced supply of its transit products into the South African market.

(b) Strong market position and capability

DTI considers that it has a strong market position in the following business segments and regions:

• bus surveillance solutions in Australia where DTI has completed signifi cant installations in Perth, Brisbane, Adelaide, Hobart and Canberra

• rail surveillance solutions in Australia with signifi cant installations in Perth and Brisbane

• bus surveillance solutions in the US market as a supplier to its US business partners.

DTI can continue to build on its strong market position in these business segments and regions while expanding into new regions and extending its product offering.

Despite not always being lowest on price, DTI considers that it offers customers more advanced and effi cient products and solutions which have superiority over many of its competitors for the following reasons:

(i) Surveillance solutions

• DTI’s combination of surveillance, back-offi ce and passenger information systems in a single integrated solution is proving to be a strong differentiator in the rail market. The rail market offers considerable opportunities for DTI due to the scale of the projects and competitive strength of DTI’s technology.

• DTI’s hybrid recorder and integrated software suite was selected by UTC (then GE Security) in 2006 to be its fl agship transit CCTV offering across North America, reinforcing DTI’s product leadership in this substantial and lucrative region.

• DTI was awarded a contract against strong domestic and international competition in December 2012 to supply over 1,000 MDR5M bus and light rail systems to the San Francisco Municipal Transportation Agency through Kratos Defense & Security Solutions, once again demonstrating the technological strength of DTI’s product offering.

• The DRU, originally installed into Queensland Rail, has generated signifi cant interest globally with train manufacturers and train operators. This was demonstrated with the award of three contracts in December 2011 to Bombardier, a global supplier of passenger trains, where the next generation DRU3 is being deployed.

• The latest MDR5 product range aimed at transit bus, taxi and law enforcement operators, combined with the Company’s recent successes in major rail engineering, supply and installation contracts, validates DTI’s capability and puts it in a strong position for growth in the mobile security market.

(ii) Managed services

DTI has developed a wide range of value-add applications that operate in conjunction with and complement its core surveillance solutions and services. A number of these applications have patents, including Virtual Observer and automated camera checking software, which provide a key differentiator in the marketplace. In addition to these applications, the range of services which DTI offers is very broad and well recognised, including being recommended for an award at the UK Business Rail Awards in 2013.

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DTI Group Ltd 2014 PROSPECTUS

COMPANY OVERVIEW

3.8 DTI’S KEy STRENGTHS (cont’d)

(c) Exposure to the attractive high-growth mobile security market

The mobile security market and associated submarkets are attractive high-growth sectors due to the substantial number of transportation infrastructure projects to be rolled out in the coming years, and to the recognition of the significant benefits DTI’s technology offers to passengers, drivers, transit industry operators and government agencies including:

• public liability and personal injury claim substantiation and protection working both to support legitimate claims and defend fraudulent claims

• deterring antisocial and criminal behaviour which improves the community perception of public transport and translates to increased patronage and revenues

• providing security and protection to drivers and passengers

• improving emergency response planning and implementation

• meeting the higher industry and government safety and service standards that require improved protection for passengers and drivers and for the delivery of a better service quality

• protection, safety and ultimate peace of mind for operators.

(d) Innovative customer solutions supported by investment in R&D

Custom modifications to DTI’s technology are carried out by the Company’s in-house development team. This ability to modify both the hardware and software, coupled with a close relationship to the end customer, allows for specific customer requirements to be quickly and effectively delivered. The market is moving towards a higher degree of integration with other systems and DTI’s approach and solutions cater for these requirements.

In addition to custom modifications, new products and systems are supported through innovation and investment back into R&D. This leads to solutions that are not only novel, but can also be built on existing features and coupled with the ability to offer point solutions.

In particular, DTI has undertaken the following recent initiatives to develop its hardware and software products:

• The development of the MDR5L product, which was released to the market in July 2011, was further enhanced in 2012 with the introduction of the MDR5M. The MDR5M is a dual-drive enhancement of the cost-effective MDR5L which also includes the integration of technologies such as dual-frequency wireless networking, 3G communications, lower power components, a smaller footprint and 16 full-frame rate camera channels. The MDR5M has been sold mainly into San Francisco where each bus utilises two cameras for transit-only lane enforcement. These cameras record to a separate specialised solid state drive, which can be reviewed to provide infringement evidence for vehicles illegally utilising transit-only lanes.

• DTI has also commenced initial trials in the UK on automated passenger counting using video analytics. The video-based passenger counting module is a cost-effective way to count and monitor passenger numbers on rail or bus fleets. Using discreet overhead cameras above doorways, this technology uses a virtual tripwire zone for detection of human forms. Every time passengers cross a line or enter a designated area in either direction, the software registers a count (in/out) and updates the database. This information is processed and stored on board a database partition within the DTI recorder.

• The development of RTSP (Real Time Streaming Protocol H.263) was commenced in late 2012 to cater for the provision of live images of moving vehicles over bandwidth restricted networks, such as 3G. The protocol is used for establishing and controlling video sessions between remote end points and has been successfully demonstrated in one of the largest cities in the United States which has generated interest in a citywide implementation across 1,500 buses.

• The development of DTI’s latest rail data recording unit (DRU3) was commenced in December 2011, following the contract award with Bombardier. The DRU3 is able to manage up to 32 high-resolution megapixel IP cameras with redundant direct streaming capability. The DRU3 is fully integrated into the Bombardier IP train communications network and architecture via DTI supplied network switches and a software communications interface.

(e) Significant and growing recurring revenue stream

DTI’s managed services provide for a base of continuous and steady revenue streams through a broad range of outsourced services and DTI remains competitive with this offering in the marketplace. Revenue from managed services and maintenance represents approximately 10.9% of total FY15 forecast revenue with the provision of these services to customers in Perth, Adelaide, Brisbane and Tasmania, as well as in the United Kingdom for the Eversholt Rail project.

In addition to the managed services and maintenance revenue, a further 47.3% of total FY15 forecast operating revenue is expected based on existing orders and ongoing purchases of equipment for installation in new vehicles being purchased by existing customers.

(f) Scalable business model

DTI has ensured that its extensive, multi-sector product range utilises a common technology platform (in particular its software framework). This ensures that new features can be easily rolled out across DTI’s product range and customers can therefore procure enhancements throughout the lifecycle of their products and projects.

48

In addition, DTI’s accumulated engineering and project experience, coupled with its comprehensive software technology and product range, means DTI is able to respond quickly to specific customer projects, as well as future projects, and deliver effective software solutions that leverage off this underlying product investment and knowledge.

DTI also has the ability to respond to large-volume supply contracts for its digital recorder range which has been mitigated through the use of a subcontract manufacturer with underlying capacity that is many multiples above DTI’s historic and expected production levels.

(g) Strong customer relationships

DTI has developed strong relationships with its core, highquality customers. These relationships include:

• Brisbane City Council (Queensland Government)

• Queensland Rail (Queensland Government)

• Action Bus (ACT Government)

• Metro Tasmania (Tasmanian Government)

• Department of Planning, Transport and Infrastructure (South Australian Government)

• Public Transport Authority of Western Australia (Western Australian Government)

• Bombardier Transportation Australia (manufacturer of trains)

• Volgren Australia (manufacturer of buses)

• Ansaldo STS Australia (rail technology and systems integrator).

(h) Strong business partners

DTI has the following business partners:

• Cibest (France)

• DTI Polska (Poland)

• Eversholt Rail Group (United Kingdom)

• Kratos Defense & Security Solutions (United States)

• UTC Fire & Security Americas Corporation Inc (United States).

(i) Experienced Board and management team

DTI has an experienced Board and management team with strong technical, commercial and corporate knowledge required to manage and oversee DTI’s business.

DTI’s in-house technical team comprises engineers and scientists from a broad range of disciplines including software, electronics and mechanical engineering, and computer services.

Further information on the background and experience of the Board and management team is set out in Sections 6.2 and 6.3.

3.9 wHAT IS DTI’S GROwTH STRATEGy?

DTI will continue to build on its offering to realise its vision to become a global leader in the mobile security market. The key elements of this strategy are to extend the reach of DTI’s offering to transit operators primarily in bus and rail in North America, Europe, the Middle East, Africa and Australia and continue to develop its product range.

DTI will pursue this objective through a number of strategic initiatives designed to harness organic growth with existing customers, increase its share of the security market and identify appropriate strategic acquisitions as they arise in the future.

(a) Continue to invest in developing innovative technology

DTI will also remain focused on its R&D program and continue to create new or improved products and solutions thus enabling the Company to focus on improving its customer offering and market position.

Led by DTI’s in-house team of software engineers, the Company will continue to focus on expanding its software suite. This suite has become one of DTI’s key market differentiators and a platform that allows new software modules and capabilities to be deployed across large fleet operations and to new and existing customers. These new software solutions are driven by DTI’s objective to extend the large-scale fleet management capabilities of its customers.

In particular, DTI will seek to undertake the following R&D initiatives incorporating sophisticated software analytics:

• As part of DTI’s comprehensive rail product suite, development has commenced on a Pantograph and overhead wire infrastructure inspection solution which uses machine vision and video analytics. These softwarebased systems will be incorporated into DTI’s centralised management system to provide rail maintenance staff with the Pantograph infrastructure condition and information and alerts to potential threats which may cause loss of service on the rail line.

• The Virtual Observer technology which incorporates spatial-temporal data structures to allow footage from forward-viewing cameras across a number of vehicles to be stitched together across time from a virtual location chosen by the surveillance operator. In June 2012, DTI increased its ownership of the Virtual Observer technology from 49.5% to 100%. In October 2013, DTI exhibited Virtual Observer at the annual defence exhibition in Washington DC in the United States.

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DTI Group Ltd 2014 prospectus

COMPANY OVERVIEW

3.9 wHAT IS DTI’S GROwTH STRATEGy? (cont’d)

(b) Continue to expand products and services

DTI’s growth strategy is to expand its surveillance solutions and managed services offering by focusing on opportunities in the following key business segments:

(i) Bus solutions

The continuing development of existing products will permit the increased exploitation of the MDR5 solution in the bus market, as further back-end features are supported, and the integration of the MDR5 with other transit solutions used currently on vehicles.

(ii) Rail solutions

DTI’s entry into the rail sector is in its infancy and is earmarked as an area of signifi cant potential growth. The large market size, together with barriers to entry and high values associated with rail contracts, has the potential to drive DTI’s future earnings.

(iii) Managed services

DTI will continue to interact with both existing customers and new customers to increase and broaden the managed services market segment.

(c) Increase marketing

DTI is targeting the European and United States markets for growth. A sales presence in France, Sweden and Poland has recently been established. DTI has exhibited in a range of international trade shows over the past year, including Trako and Transexpo in Poland and Infrarail in London, as well as shows in Bordeaux and Paris.

(d) Build stronger relationships with business partners to accelerate growth

DTI will seek to enter into preferred supplier arrangements to pursue opportunities in bus, rail and other sectors where overseas markets are considered diffi cult to penetrate directly. These arrangements are likely to be with various entities which are considered to have the appropriate knowledge and expertise in the marketing and rollout of DTI’s solutions in these markets.

(e) Assess opportunities to accelerate growth through strategic acquisitions

A globally fragmented industry provides DTI with opportunities for acquisition of, or investment in, complementary businesses both within Australia and internationally.

This strategy is well supported by a strong Board and management team which have extensive business and industry experience.

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Financial Information and Forecasts

4

4 Financial Information and Forecasts

4.1 FINANCIAL INFORMATION

The Financial Information has been prepared by DTI and includes:

• Historical Financial Information comprising:

• consolidated income statements for FY11, FY12, FY13 and FY14

• consolidated balance sheet as at 30 June 2014.

• Pro forma financial information comprising the Pro Forma Balance Sheet as at 30 June 2014 taking into account the transactions that will arise pursuant to this Offer and any significant subsequent events.

• Forecast Financial Information comprising the consolidated income statement for FY15.

All amounts disclosed in this Section are presented in Australian dollars, and unless otherwise noted, are rounded to the nearest thousand.

(a) Basis of preparation of the Financial Information

The Financial Information has been prepared and presented in accordance with the recognition and measurement principles of Australian Accounting Standards adopted by AASB and the Corporations Act. The Financial Information provided also complies with the recognition and measurement principles of IFRS adopted by the International Accounting Standards Board. The Financial Information is presented in an abbreviated form insofar as it does not include all the disclosures, statements or comparative information as required by Australian Accounting Standards applicable to annual financial reports prepared in accordance with the Corporations Act. Significant accounting policies of DTI relevant to the Financial Information are included in Appendix B.

The Financial Information presented has been reviewed but not audited by BDO Corporate Finance, whose Investigating Accountant’s Report is contained in Section 7. BDO Corporate Finance cannot and does not guarantee that the financial forecasts will be achieved.

(b) Preparation of Historical Financial Information

The Historical Financial Information has been extracted from the audited historical financial statements of the Company for FY11, FY12, FY13 and FY14 on which unqualified audit opinions were issued by BDO Audit.

(c) Preparation of the Pro Forma Balance Sheet

The Pro Forma Balance Sheet has been prepared by adjusting the FY14 consolidated balance sheet for the adjustments outlined in this Section.

(d) Preparation of Forecast Financial Information

The Directors have prepared the Forecast Financial Information based on the economic conditions existing as at the date of the Prospectus, including a number of best-estimate assumptions regarding future events. These events may not eventuate. Whilst the Directors believe that they have prepared the Forecast Financial Information with due care and attention, no guarantee or assurance is given that the forecast results will be achieved.

The Forecast Financial Information must be read in conjunction with the balance of the information in this Prospectus, particularly this Section 4; Section 5, Risk Factors; and Section 7, Investigating Accountant’s Report.

Investors should be aware that the future cannot be predicted with certainty and, as a result, deviations from the Forecast Financial Information are to be expected. The deviations may be materially positive or negative. Investors should note that the best-estimate assumptions are subject to significant uncertainties and contingencies often outside the control of the Directors.

The Directors cannot give any assurance that the Forecast Financial Information will be achieved. This is because the Company’s actual financial results will be affected by many factors that are beyond the Directors’ control. A number of these factors are outlined in Section 5.

The FY15 forecast results and the Pro Forma Balance Sheet include the financial effect of the Offer transaction costs and the impact of the Offer, as well as the financial impact of additional public company costs from the assumed Listing Date.

The Forecast Financial Information presented in this Section should be read in conjunction with the management discussion for FY11, FY12, FY13 and FY14 in Section 4.3, the basis of preparation of the forecast income statements in Sections 4.1(a) and 4.1(d), the sensitivity analysis in Section 4.4, the accounting policies detailed in Appendix B, and the risks outlined in Section 5.

The Historical Financial Information is intended as a summary only and should be read in conjunction with the detailed discussions of the Financial Information, as well as the risk factors set out in Section 5.

The Historical Financial Information does not include any costs associated with the Company operating as a listed public company.

Investors should note that past results are not a guarantee of future performance.

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4.2 HISTORICAL RESuLTS AND FORECAST RESuLTS

(a) Consolidated income statements

Table 4.1 sets out the consolidated income statements for FY11 to FY14 and the consolidated forecast income statement for FY15. Additional discussion on the Financial Information provided below is included in Section 4.3.

Table 4.1: Consolidated income statements for the financial periods FY11 to FY15

($000s)	FY11 Historical	FY12 Historical	FY13 Historical	FY14 Historical	FY15 Forecast
Revenue from sale of goods	15,819	13,605	17,698	17,686	21,796
Revenue from the rendering of services	805	1,677	1,799	2,112	2,337
Operating revenue	16,624	15,282	19,497	19,798	24,133
R&D grant	–	870	877	788	–
Net foreign exchange gains	142	268	136	138	–
Other income	4	–	–	1	–
Non-operating revenue	146	1,138	1,013	927	–
Total revenue	16,770	16,420	20,510	20,725	24,133
Cost of goods sold	(9,645)	(9,268)	(10,894)	(9,895)	(12,187)
Employee benefts expense	(3,325)	(4,188)	(4,284)	(5,044)	(5,188)
Other expenses	(2,377)	(2,831)	(2,312)	(2,709)	(2,368)
EBITDA	1,423	133	3,020	3,077	4,390
Depreciation and amortisation	(389)	(645)	(948)	(967)	(994)
EBIT	1,034	(512)	2,072	2,110	3,396
Net interest (expense) income Net proft (loss) before tax	(469) 565	9 (503)	23 2,095	83 2,193	79 3,475
Income tax (expense) beneft	211	200	(470)	(1,077)	(892)
Net proft (loss) after tax	776	(303)	1,625	1,116	2,583

Notes

• The Directors’ best-estimate assumptions supporting the forecast income statement for FY15 set out in table 4.1 assume the Company listed on 16 December 2014 and reflect the impact of being a listed company from that date.

• The costs of the Offer for the Company are estimated to be $315,000 (refer to Section 10.9 for a breakdown of the costs). It is anticipated that $200,000 of these costs will be offset against the equity raised from the Offer. The balance of the costs totalling $115,000 was expensed through the historical FY14 income statement.

• The summary historical income statements for FY11, FY12 and FY13 do not include any costs related to the Offer or costs associated with being a listed company.

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Financial inFormation and Forecasts

4.2 HISTORICAL RESuLTS AND FORECAST RESuLTS (cont’d)

(b) Historical balance sheet and Pro Forma Balance Sheet

Table 4.2 sets out the historical consolidated balance sheet with the pro forma adjustments to reflect the impact of the Offer and associated costs that will be in place immediately following Completion of the Offer as if it had occurred or were in place as at 30 June 2014.

Table 4.2: Consolidated historical balance sheet and Pro Forma Balance Sheet as at 30 June 2014

Table 4.2:Consolidated historical ba	lance sheet and Pro	Forma Balanc	e Sheet as at 30
	Historical	Impact of	Pro Forma
($000s)	30.6.14	the Offer	30.6.14
Current Assets
Cash and cash equivalents	1,448	1,804	3,252
Other fnancial assets	400	–	400
Trade and other receivables	5,747	–	5,747
Inventories	2,544	–	2,544
Other current assets	90	–	90
Total current assets	10,229	1,804	12,033
Non-current Assets
Plant and equipment	652	–	652
Intangible assets	2,055	–	2,055
Other receivables	452	60	512
Total non-current assets	3,159	60	3,219
Total assets	13,388	1,864	15,252
Current Liabilities
Trade and other payables	2,882	–	2,882
Borrowings	13	–	13
Provisions	–	–	–
Total current liabilities	2,895	–	2,895
Non-current Liabilities
Borrowings	66	–	66
Provisions	48	–	48
Deferred tax liabilities	204	–	204
Total non-current liabilities	318	–	318
Total liabilities	3,213	–	3,213
Net assets	10,175	1,864	12,039
Equity
Contributed equity	9,274	1,864	11,138
Reserves	1,139	–	1,139
Accumulated losses	(238)	–	(238)
Total equity	10,175	1,864	12,039

The pro forma adjustments made to the audited historical balance sheet of DTI as at 30 June 2014 reflect the following assumptions:

• Proceeds of the Offer – an increase in issued capital reflecting new capital raised of $2,004,000 under the Offer, less capitalised Offer transaction costs of $140,000 (net of associated deferred tax of $60,000).

• Offer transaction costs – total transaction costs of the Offer incurred by DTI are estimated at $315,000, of which $140,000 will be offset directly against equity raised in the Offer and $115,000 which was expensed in the FY14 income statement. It is assumed that the total transaction costs are deductible to DTI for tax purposes over five years, resulting in a deferred tax asset of $60,000.

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4.3 MANAGEMENT DISCuSSION AND ANALySIS OF THE FINANCIAL INFORMATION

DTI owns three subsidiaries with Statutory reporting being consolidated and not segmented into regions or business units.

Table 4.1 sets out the consolidated income statements for FY11 to forecast FY15.

(ii) Gross profit

Despite the consistent level of sales in FY13 and FY14, gross profit was higher in FY14 with the margin percentage improving from 49% to 55%. This is primarily due to the delivery of several high-margin rail projects during the year in both Australia and the United States.

(iii) Operating expenses

(a) Management discussion – FY13 compared to FY12

(i) Revenue

Operating revenue increased by $4.2 million to $19.5 million in FY13 compared to FY12. The increase in revenue was primarily affected by increased sales to the US market to a long-term customer; and the addition of a new customer, Kratos Defense & Security Solutions, for a project to supply systems to the San Francisco Municipal Transportation Agency. Sales to the United States represented just over 50% of operating revenue in FY13.

FY13 also saw a significant increase in revenue from bus industry customers accounting for over 70% of total sales.

(ii) Gross profit

Gross profit increased by $2.5 million in FY13 mainly as a result of increased sales to the US market. This increase was both in dollar and percentage terms, with the margin percentage improving to 49%.

(iii) Operating expenses

Operating expenses in FY13 were largely in line with FY12, with increased marketing expenses and development costs offset by reduced warehousing and freight costs.

(iv) EBITDA

EBITDA increased by $2.9 million primarily as a result of increased sales and improved gross margins. Coupled with stable operating expenses, EBITDA as a percentage of operating revenue improved to over 15%.

(b) Management discussion – FY14 compared to FY13

(i) Revenue

Operating revenue was consistent in FY14 compared to FY13. Overall, operating revenue in FY14 reflected very strong sales in the Australasian market to an increased range of customers and, in particular, the delivery of a large heavy rail project. These sales offset sales to the United States which were lower than FY13 primarily due to the timing of budget approval for new buses to a key transit operator. This budget approval has recently been confirmed and 970 new buses have been ordered with delivery expected mainly in FY15.

FY14 has also seen growth in maintenance and service revenues from the larger installed base.

The diversification of the revenue mix in FY14 has seen sales to bus industry customers account for approximately 60% of DTI’s operating revenues (compared to over 70% in FY13).

Operating expenses increased in FY14 mainly as a result of increased marketing expenses, coupled with increased development costs associated with a range of projects.

(iv) EBITDA

With increased gross margin being offset by increased operating costs as noted above, FY14 EBITDA was broadly consistent with FY13.

(v) Tax expenses

The income tax expense for FY14 was significantly higher than FY13 despite profit before tax being similar due to previously available carried forward assessed tax losses being fully utilised in FY13. FY14’s income tax expense is greater than 30% of net profit before tax due to the gross benefit of the R&D tax incentive being reported as other income, with the tax thereon disclosed separately under income tax expense.

(c) Management discussion – forecast FY15 compared to FY14

Table 4.1 sets out the consolidated income statements for FY11 to forecast FY15.

(i) Revenue

Operating revenue is forecast to increase strongly in FY15 compared to FY14 with operating revenue up over $4.3 million. The increase in revenue is primarily due to strong forecast sales in the Australasian and European markets. Sales to the United States are forecast to be at broadly consistent levels with FY14.

Approximately 56% of the forecast FY15 operating revenue is expected based on existing orders and ongoing purchases of equipment for installation in new vehicles purchased by existing customers. The balance of the forecast follows a detailed review taken by management of known opportunities. These opportunities were then assessed depending on how advanced they are (ie the extent to which they had been specified, tendered, shortlisted etc), with a further weighting applied based on management’s assessment of DTI’s capacity to be awarded the contract.

Overall, DTI has forecast a success rate of approximately 27%, which management believes is both achievable and consistent with historic success rates, and particularly for the Australasian region is conservative when compared to past successes.

Over the next few years, the Company sees considerable growth opportunities in the European market, underpinned by consistent sales in Australasia. In FY15 the Company is forecasting EMEA to deliver 27% of DTI’s operating revenues, up from 8% in FY14. The broadening of DTI Group’s sales base will see the United States account for approximately 34% of FY15 operating revenues and Australasia 39%.

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DTI Group Ltd 2014 prospectus

Financial inFormation and Forecasts

4.3 MANAGEMENT DISCuSSION AND ANALySIS OF THE FINANCIAL INFORMATION (cont’d)

The diversification of the operating revenue mix is forecast to continue in FY15, with sales of surveillance systems to bus industry customers representing approximately 58% of DTI’s revenues, rail customers approximately 32% and managed services and maintenance the balance.

(ii) Gross profit

Gross profit is forecast to be up by $1.1 million in FY15. This is primarily due to the increased sales noted in Section 4.3(c)(i). Gross profit as a percentage of operating revenue will reduce to 50% (from 55% in FY14) due to the mix of high and low margin contracts forecasted between FY14 and FY15.

(iii) Operating expenses

Operating expenses are forecast to be marginally lower in FY15 with marketing and development costs forecast to be sufficient to manage the increased revenue.

(iv) EBITDA

EBITDA is in line with the significant growth in revenues and gross margin. EBITDA is forecast to be significantly up in FY15 by 43% compared to FY14.

(v) Tax expenses

The FY15 forecast income tax expense as a percentage of profit before tax will be significantly lower than FY14. This is due to the R&D tax incentive being received in the form of a tax offset (with revenue forecasted to exceed the $20 million cut-off) and not in the form of a refundable tax offset as occurred in FY14. Accordingly, the net benefit of the R&D tax incentive in FY15 will be solely reflected as a reduced income tax expense; whereas, in FY14 the gross benefit was disclosed under other income with the tax thereon reported separately.

(vi) Forecast half-yearly comparison

Forecast revenue for the six-month period ended 31 December 2014 is expected to be approximately $7.80 million resulting in a first half forecast EBITDA performance of $0.29 million. Accordingly, the Company’s forecast second half revenue and EBITDA performance is expected to be substantially higher than the first six-month period. A significantly higher level of contracted, expected and prospective contracts and orders are forecast to be awarded in the second half of FY15.

(vii) General assumptions

In preparing the Forecast Financial Information, the following general assumptions have been adopted for the forecast period:

• there is no material change to the competitive operating environment in which DTI operates

• within the Australian and major global economies, prevailing levels of growth, interest and inflation rates, and prevailing consumer confidence continue throughout the forecast period

• there are no significant beneficial or adverse effects from changed economic conditions in the markets in which DTI operates

• there are no significant industrial, contractual or political disturbances or disruptions impacting DTI or the markets in which it operates

• there is no material change in the legislative regimes and regulatory environment in the areas in which DTI and its key customers operate

• there will be no significant changes in the tax regimes in Australia in particular, current corporate income tax and withholding tax rates

• there will be no changes in A-IFRS or other applicable accounting standards that will have a material effect on the Company’s results

• GST will apply to the provision of the Company’s products and services in Australia, as provided for in the legislation existing at the date of this Prospectus

• there will be no significant changes in currency exchange rates, in particular the US dollar to the Australian dollar, the pound sterling to the Australian dollar and the Euro to the Australian dollar

• the Company is not and will not be a party to any significant litigation

• there are no material terminations of agreements with key customers

• there is no loss of key management personnel and DTI maintains its ability to recruit and retain required personnel

• there are no material acquisitions or disposals, restructuring or investments

• the expected changes flowing directly from the Offer as set out in or contemplated by this Prospectus are presented within the pro forma adjustments included in table 4.2. Pro rata incremental listed company costs and additional interest revenue are included in the Forecast Financial Information

• there will be no dividend paid in FY15

• the Offer will proceed in accordance with the timetable set out in this Prospectus.

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(viii) Specific assumptions

A summary of specific assumptions, including key revenue, margin and expense assumptions, applied when preparing the Forecast Financial Information for DTI, is as follows:

• The revenue forecast is based on known and projected sales opportunities including any forecast changes in product mix. Operating revenues are forecast to grow as a result of growth in the overall market, continued tender wins based largely on historical run rates, as well as repeat business from existing customers.

• The base interest bill rates are to remain consistent with those presently experienced.

• There are no material changes to existing staff levels.

• Staff costs are built up in detail using known salary information and known wage increases. As the Company is yet to seek the approval of Shareholders for an employee incentive scheme, no provision for incentives has been made. Similarly, bonus entitlements will not be considered by the Company until completion of the audited financial report and accordingly no provision has been made.

• Direct marketing costs are forecast based on expected spend required to support the relevant lead forecasts, in line with run rates, adjusted for expected market demand.

• Overheads (excluding staff costs) are forecast based on the most recent run rate, with some items considered separately if there are any known changes.

• The exchange rates between the Australian dollar and other currencies are:

• US dollar = A$0.89

• Euro = A$0.68

• GBP = A$0.55

• Incremental costs associated with being a company listed on ASX (above those already incurred by DTI as a non-listed public company) are estimated to be $150,000 per annum, which has been applied to the FY15 forecast on a pro rata basis (from the anticipated Listing Date to 30 June 2015).

• Depreciation and amortisation are forecast based on existing depreciation and amortisation rates and expected capital expenditure for the forecast period.

• There will only be inflationary increases in insurance renewals (which occurs annually in February).

• The consumer price index has been applied where appropriate at a rate of 3% per annum.

• There are no significant new regulatory requirements concerning safety and security.

• The Company will have increased working capital after Listing.

• The Australian income tax expense has been forecast at an effective rate of 25.7% for FY15 reflecting the anticipated tax benefit from claiming a tax deduction of 40% on eligible R&D expenditure anticipated to be incurred in FY15.

• Future dividends will be paid in accordance with the dividend policy described in this Prospectus.

DTI Group Ltd 2014 prospectus 57

Financial inFormation and Forecasts

4.4 SENSITIvITy ANALySIS

The Forecast Financial Information is based on a number of key assumptions which have been outlined and which are subject to change. The Forecast Financial Information is also subject to a number of risks as outlined in Section 5.

The Directors have given all due care and attention to the forecasts before their adoption, but by their very nature are subject to uncertainty and unexpected events many of which are beyond the control of the Directors. Accordingly, the Directors’ assessment of the forecasts may vary materially from the actual results and there can be no guarantee or assurance that the forecasts will be achieved.

Investors should be aware that future events cannot be predicted with certainty and as a result, deviations from the figures forecast in this Prospectus are to be expected. To assist investors in assessing the impact of these assumptions on the Forecast Financial Information, the sensitivity of the EBITDA for FY15 to changes in certain assumptions is set out below.

The sensitivity is provided as a guide only and variations in actual performance could exceed the ranges shown.

Table 4.3: Sensitivity analysis on forecast EBITDA FY15 ($000s)

Table 4.3:Sensitivity analysis on forecast EBITDA	FY15 ($000s)
	Change in	Impact on EBITDA
Parameter	Assumption	Forecast for FY15
Sale prices/gross margin rate	+/– 1%	+/– 241
Tender win rate on new projects	+/– 1%	+/– 48
Employee benefts/wages growth	+/– 1%	–/+ 52
Change in A$ to US$1	+/– 1c	–/+ 32
Change in A$ to GBP1	+/– 1c	–/+ 26

1 Change calculated on sales and cost items only.

Care should be taken in interpreting these sensitivities. The estimated impact of the variables has been calculated in isolation from changes in other variables in order to illustrate the likely impact on the forecast. In practice, changes in variables may affect each other, or be additive, and it is likely that the Company would respond to any adverse change in one variable by seeking to minimise the net effect.

4.5 INDEbTEDNESS

(a) Indebtedness of DTI

The total indebtedness presented below is at the most recent reviewed balance date.

Table 4.4: Indebtedness of DTI

Table 4.4:Indebtedness of DTI
	Historical	Pro Forma	Pro Forma
($000s)	30.6.14	Adjustments	30.6.14
Cash and cash equivalents1	1,448	1,804	3,252
Leases	(81)	–	(79)
Net total (indebtedness)/cash and cash equivalents	1,369	1,804	3,173

1 Cash and cash equivalents at 30 June 2014 exclude the retainer amounts (totalling $400,000) held on term deposit which are recorded under “other historical assets” in the historical consolidated balance sheet at 30 June 2014. For further details on the retainer amounts refer to Section 10.5(i).

(b) Summary of facilities

DTI has leased selected assets (service vehicles) through Capital Finance Australia Limited. A brief summary of DTI’s facilities with Capital Finance Australia Limited is set out below.

Table 4.5: DTI’s facilities with Capital Finance Australia Limited

Table 4.5:DTI’s facilities with Capital Finance Austral	ia Limited
Lender	Facility	Use of Proceeds/ Facilities	Facility Size $000s
Capital Finance Australia Limited	Leasing facility	Vehicle leasing	79

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(c) Financial covenants

There are no financial covenants in relation to the above lease facilities.

(d) Security

Title to leased vehicles remains with the lessor.

4.6 DIvIDEND POLICy

Shares issued pursuant to this Prospectus will rank equally with each other for dividend entitlements.

The payment of dividends by the Company is at the discretion of the Directors.

DTI does not provide any assurance of the future level of dividends or the extent to which they are franked. The ability to pay dividends and their franking will depend on a number of factors, some of which are beyond the control of DTI and the Directors.

The Company has a number of growth strategies it is pursuing, and the Board will consider the payment of dividends in the future having regard to the funding requirements of these growth strategies, as well as other considerations including the general business environment, the operating results, the financial position of the Company, capital requirements, regulatory restrictions and any other factors the Directors may consider relevant. The Company has no current plans to pay a dividend in FY15.

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DTI Group Ltd 2014 prospectus

Risk Factors

5 60

5 Risk Factors

The activities of the Company are subject to risks and there are many factors which may impact both on its future performance and the value of the Company’s securities. Some of these risks can be mitigated by the use of safeguards and controls, but many are outside the control of the Company and cannot be mitigated. Therefore, investors who acquire Shares may be exposed to a number of risks. Broadly, these risks can be described as risks specific to an investment in the Shares and the Company’s underlying business operations and risks general to investing in the share market.

The New Shares issued pursuant to this Prospectus do not carry any guarantee of profitability, dividends, return of capital or the price at which they trade on ASX. The major factors which investors should consider before making an investment decision are listed below. This list is not exhaustive and investors should read this Prospectus in its entirety before making an investment decision. Investors should also have regard to their own investment objectives and financial circumstances and should consider seeking appropriate professional advice before deciding whether to invest in the Shares.

5.1 RISKS SPECIFIC TO AN INvESTMENT IN SHARES AND uNDERLyING buSINESS OPERATIONS

The Company’s operating performance and profitability, and thus an investment in Shares, are affected by a number of specific factors. These factors include but are not limited to the following risks.

(a) Loss of key customers, contracts or revenue

As a usual part of its business, DTI’s customer contracts and projects are subject to tender, variations, additions or reductions. DTI could lose one or more key customers or significant contracts or projects, including during the forecast period, due to a range of events. Any loss of key customers, or loss of funding or a reduction in government budget allocations to key customers, significant contracts or projects, may materially and adversely affect DTI’s revenue, profitability or growth.

(b) Loss of key business partners

As a usual part of its business, DTI supplies products and services to business partners. These business partners are under no obligation to purchase DTI’s products and services and may decide to purchase products and services from competitors and may develop products and services themselves. The UTC Product Purchase Agreement, which is summarised in Section 10.5(c), does not require UTC to purchase minimum quantities of products or solutions. Limited or no purchase orders by UTC may materially affect DTI’s revenue, profitability and growth.

(c) Reliance on strategy

DTI’s future success relies heavily on the successful implementation of its strategy of being a provider of integrated surveillance systems and fleet management solutions for the global mobile security market. Successful execution of this strategy will require DTI to successfully apply its core competencies in the development or modification of its products and software. No assurance can be given that DTI will be successful in the ongoing implementation of this strategy.

DTI’s growth strategy relies heavily on market acceptance of its products and services. There is a risk that market acceptance of DTI’s products and services will not be as high as the Company expects or that market acceptance may take longer than expected to materialise.

(d) Delivery risk and time delays

DTI’s financial performance is dependent on its ability to deliver contracts and projects in accordance with contractual obligations. Contractual obligations may include set dates for delivery. If delivery is delayed the customer may seek to claim damages from DTI. Disputes which arise in relation to contractual obligations may result in significant losses and acute pressure on DTI’s cash flow.

(e) Tender timelines and project schedules

DTI’s financial forecasts and performance are often reliant on timelines that are issued to DTI during the tender process, or on project delivery schedules that are determined during the procurement stage, both of which may be influenced or affected by the performance or decisions of third parties. While delay claims may be available for certain projects or situations, delays may still have a material impact on revenue projections and the financial performance of DTI.

(f) Technology integration

The Company supplies advanced systems for integrated video surveillance, passenger information and fleet management solutions for the global mass transit industry. Some tailored systems may involve integration of different technologies in order to provide a total package. As a result there is a risk that integration of different technologies may be difficult or costly or integration is not possible.

(g) Competition

DTI operates in a competitive industry. DTI competes with some companies that are larger and more financially secure, as well as with some companies that benefit from local experience and relationships with customers. Increased competition could result in price reductions, underutilisation of personnel, reduced operating margins and loss of customers or market share. Any of these occurrences in any region in which DTI may operate could adversely affect its operating and financial performance.

(h) Reliance on key employees

DTI depends on the talent and experience of its employees. Whilst every effort is made to retain key employees and contractors and to recruit new personnel as the need arises, loss of a number of key personnel may adversely affect DTI’s earnings or growth prospects. In addition, strong demand for skilled personnel may limit DTI’s growth and profitability caused by the scarcity of professional personnel or by potential increases in compensation costs associated with attracting or retaining such personnel.

(i) Reliance on subcontractors

DTI relies on subcontracting and outsourcing of certain services, including manufacture and installation. If any of these third parties fail to perform their services or cease providing services to DTI, there is potential for delay to the completion of projects or new third-party arrangements may need to be organised.

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DTI Group Ltd 2014 PROSPECTUS

Risk factoRs

5.1 RISKS SPECIFIC TO AN INvESTMENT IN SHARES AND uNDERLyING buSINESS OPERATIONS (cont’d)

(j) Dependence of suppliers

DTI’s in-house manufacturing and outsourced manufacturing operations are dependent upon the delivery of materials and components by outside suppliers in a timely manner. Some components are standard items and available from a number of suppliers while others are manufactured to DTI’s specifications. The failure to supply, in a timely manner, materials and components at acceptable costs and in the quantities and specifications required by DTI, could adversely impact on the manufacturing operations, sales and financial performance of DTI.

(k) Intellectual property

DTI’s core products and software do not have legal intellectual property protection in the form of registered patents. However, in the field in which it operates, DTI believes that patents are not a significant success factor. Success rather depends on the Company’s know-how, established international distribution channels, technical competence, production techniques and the timely application of the Company’s technology, together with product quality, customer service and the managerial and marketing competence of the Company’s personnel. Refer to Section 9 for a list of the technology that DTI does hold patents over.

DTI has the protection of employing an in-house development team for its hardware and software R&D. This lowers the risk exposure to loss of intellectual property compared to having an outsourced engineering function.

(l) Foreign exchange risk

Some of the components used in the manufacture of DTI’s products are acquired in foreign currencies. Also, some of DTI’s receivables, payables, intercompany transfers and expenses are incurred in foreign currencies and some of DTI’s sales occur in foreign currencies. Adverse movements in exchange rates for either of DTI’s revenue, expenditure, receivables, payables or intercompany transfers, or cash holdings in foreign currencies may adversely affect the financial performance of DTI.

(m) Release of Shares held in escrow

All Existing Shares held by Directors and 90% of Existing Shares held by other Existing Shareholders will be subject to voluntary escrow in respect of all those Existing Shares until after the audited financial accounts for FY15 are released to ASX by the Company.

released from escrow.

These escrow arrangements may impact the level of liquidity for trading in Shares and the prevailing market price for Shares. In particular, in the event that a significant number of those Existing Shareholders decide to sell some or all of those Existing Shares at the completion of the Escrow Period (either collectively or individually), the volume of potential Shares for sale may be significant versus DTI’s free float of Shares. This may have a material adverse effect on the market price of Shares potentially leading up to, at the time of and/or post any completed or attempted sell down.

The escrow arrangements are set out in Section 8.18.

(n) Regulatory risk

Some aspects of the industry in which DTI operates are impacted by government legislation and regulations in respect to collection of data, privacy, data protection, freedom of information and other matters. The industry may undergo regulatory or legislative change which may create opportunities or adversely impact the activities and operations of DTI.

(o) R&D tax offset

DTI claims the R&D tax offset incentive offered under Australian taxation legislation for the eligible R&D expenses incurred by DTI. The tax incentive offered may undergo regulatory or legislative change and may be varied or repealed which may adversely impact the Company’s taxation liabilities and the amount of tax payable.

(p) Unforeseen expenditure risk

Expenditure may need to be incurred that has not been taken into account during the preparation of this Prospectus. Although DTI is not aware of any such additional expenditure requirements, if such expenditure is subsequently incurred this may adversely affect the expenditure proposals of DTI.

(q) Future contracts

As at the date of this Prospectus, DTI is in negotiations with a number of existing and potential new customers in relation to the execution of new contracts or purchase orders. DTI has included a number of these potential agreements in its FY15 financial forecasts, weighted to reflect the likelihood that the agreements are ultimately executed. DTI’s revenue, and FY15 financial forecasts, will vary depending on whether, and to what extent, the agreements are executed. If some agreements are not executed, and the Company is unable to replace the forecast revenue from alternative agreements, there could be a material adverse effect on DTI’s revenue, profitability or growth.

At the expiration of the Escrow Period, approximately 70.92 million Shares (representing approximately 85.3% of the Shares on issue at the Completion of the Offer) will be

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5.2 GENERAL INvESTMENT RISKS

(a) Market conditions

In addition to the risks summarised in Section 5.1, a number of factors outside the Company’s control may significantly impact on the Company, its performance and the price of the Shares. These factors include:

• economic conditions in both Australia and internationally

• relative changes in foreign exchange rates

• investor sentiment and local and international share market conditions

• changes to government policy, legislation or regulation

• changes in fiscal, monetary and regulatory policies

• the nature of competition in the industries in which the Company operates

• interest rates and inflation rates

• the introduction of taxation reform.

Investors should recognise that the Company’s revenues, expenses and cash flows could be negatively affected by any of the above factors which, in turn, may affect the price or value of the Shares.

The share prices for many companies can be subject to wide fluctuations which, in many cases, may reflect a diverse range of non-specific influences such as global hostilities and tensions, acts of terrorism and the general state of the economy. Such market fluctuations may have a material adverse effect on the market price of the Shares.

(b) Additional requirements for capital

The funds raised under the Offer are considered sufficient to meet the immediate objectives of DTI. Additional funding may be required in the event costs exceed DTI’s estimates and to effectively implement its business and operations plans in the future to take advantage of opportunities for acquisitions, joint ventures or other business opportunities and to meet any unanticipated liabilities or expenses which DTI may incur.

DTI may seek to raise further funds through equity or debt financing, joint ventures, production sharing arrangements or other means. There can be no assurance that additional finance will be available when needed or, if available, the terms of the financing might not be favourable to DTI and might involve substantial dilution to Shareholders.

(c) Force majeure

DTI’s projects now or in the future may be adversely affected by risks outside the control of the Company including labour unrest, civil disorder, war, terrorism, subversive activities or sabotage, fires, floods, explosions or other catastrophes, epidemics or quarantine restrictions.

(d) Funding risk

The Company, in the ordinary course of its operations and developments, is required to issue financial assurances, particularly insurances and bond/bank guarantee instruments, to secure statutory and environmental performance undertakings and commercial arrangements. The Company’s ability to provide such assurances is subject to external financial and credit market assessments and its own financial position.

Loan agreements and other financing arrangements, such as debt facilities, convertible note issues and financial leases (and any related guarantee and security) that may be entered into by the Company, may contain covenants, undertakings and other provisions which, if breached, may entitle lenders to accelerate repayment of loans and there is no assurance that the Company would be able to repay such loans in the event of an acceleration. Enforcement of any security granted by the Company or default under a finance lease could also result in the loss of assets.

The Company is exposed to risks associated with its financial instruments (consisting of cash, receivables, accounts payable and accrued liabilities due to third parties from time to time). This includes the risk that a third party to a financial instrument fails to meet its contractual obligations; the risk that the Company will not be able to meet its financial obligations as they fall due; and the risk that market prices may vary which will affect the Company’s income.

(e) Insurance risk

DTI insures its operations in accordance with industry practice. However, in certain circumstances, the Company’s insurance may not be of a nature or level to provide adequate insurance cover. The occurrence of an event that is not covered or fully covered by insurance could have a material adverse effect on the business, financial conditions and results of the Company.

No assurances can be made that the Company’s performance will not be adversely affected by any such market fluctuations or factors. Neither the Company, its Directors nor any other person guarantees the performance of the Company or the market price at which the Shares trade.

The value of the Shares will be determined by the share market and will be subject to a range of factors beyond the control of the Company and its Directors including the demand and availability of Shares. There can be no guarantee that an active market in the Shares will develop or the market price of the Shares will not decline.

DTI’s continued ability to effectively implement its business plan over time may depend in part on its ability to raise additional funds. There can be no assurance that any such equity or debt funding will be available to the Company on favourable terms or at all. If adequate funds are not available on acceptable terms, the Company may not be able to take advantage of opportunities, develop new ideas or otherwise respond to competitive pressures.

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6

6 Key People, Interests and benefits

6.1 bOARD OF DIRECTORS

The Board has a broad range of experience in the technology industry as well as diversified commercial expertise. The composition of the Board is set out in Section 6.6(b).

6.2 DIRECTOR PROFILES

Table 6.1: Director profiles

Table 6.1:Director profles
Director	Experience
Christopher John Morris	Term of Offce
Non-Executive Chairman	Chris was appointed non-executive Chairman of DTI in June 2011.
	Skills and Experience
	Chris has worked across the global securities industry for more than 30 years. He co-founded
	Computershare in 1978 and oversaw its listing on ASX in 1994. Chris’s long-term strategic vision
	and passion for the industry have been instrumental in transforming Computershare from an
	Australian business into a successful global public company.
	Other Directorships and Offces(current and recent)
	Non-Executive Chairman of Computershare Limited
	Non-Executive Chairman of Smart Parking Limited Former Non-Executive Director of Webfrm Group Limited
	Board and Committee Memberships
	Chairman of the Nominations and Remuneration Committee
Richard Andrew Johnson	Term of Offce
Managing Director and Chief Executive Offcer	Richard joined DTI as General Manager in 2005 and commenced the role as Chief Executive Offcer in 2006. In August 2011 he joined the Board as Managing Director.
	Skills and Experience
	Richard’s qualifcations include a Bachelor of Science in Electrical Engineering from the University
	of Calgary, and a Master of Engineering Studies and a Master of Business Administration from the
	University of Western Australia. He has more than 19 years experience in the transit technology
	sector. Richard held senior management positions at ERG Limited which developed, supplied and
	managed integrated fare collection systems for the transit industry around the world.
	Other Directorships and Offces(current and recent)
	Director of Virtual Observer Pty Ltd
	Director of DTI EMEA Ltd
	Director of DTI Capital Pty Ltd
	Board and Committee Memberships
	Member of the Nominations and Remuneration Committee

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6.2 DIRECTOR PROFILES (cont’d)

Director	Experience
Neil Edward Goodey	Term of Offce
Non-Executive Director	Neil co-founded DTI in June 1995 and held the position of Managing Director until 2009.
	Skills and Experience
	Over the last 25 years Neil has founded and managed a number of successful technology-driven
	companies, including DTI. He created the software-focused vision for DTI and worked directly
	with the Company’s engineering team to develop DTI’s products and underlying intellectual
	property.
	Other Directorships and Offces(current and recent)
	Former Executive Director of Aeroquest International Limited
	Board and Committee Memberships
	Member of the Audit, Risk and Compliance Committee
	Member of the Nominations and Remuneration Committee
Glyn Gregory Denison	Term of Offce
Non-Executive Director	Glyn was appointed a Director in January 2004. He was formerly an Executive Director of
	DTI responsible for business development before relinquishing his executive responsibilities in
	December 2006.
	Skills and Experience
	Glyn’s qualifcations include a Bachelor of Engineering and a Diploma in Business and
	Administration. He has over 30 years experience in the development of international distribution
	of technical products for the public transport industry, including senior roles at ERG Limited. Glyn
	has extensive knowledge of the public transit sector, including the existing customer base of DTI
	and its business partners.
	Other Directorships and Offces(current and recent)
	Non-Executive Director of OBJ Ltd
	Former Non-Executive Director of Australian Renewable Fuels Ltd
	Board and Committee Memberships
	Member of the Audit, Risk and Compliance Committee
	Member of the Nominations and Remuneration Committee
Jeremy Philip King	Term of Offce
Non-Executive Director	Jeremy was appointed a Director in June 2011.
	Skills and Experience
	Jeremy is a corporate lawyer by background and holds a Bachelor of Laws. He has over 15 years experience in domestic and international legal, fnancial and corporate matters. Jeremy
	has extensive corporate experience, particularly in relation to cross-border private equity and leveraged buy-out acquisitions, as well as acting for banks, fnancial institutions and corporate
	issuers in respect of various debt and equity capital raisings.
	Other Directorships and Offces(current and recent)
	Director of DTI Capital Pty Ltd
	Director and Company Secretary of Smart Parking Limited
	Non-Executive Director of Orca Energy Limited
	Non-Executive Director of CEB Resources PLC
	Chairman of Continuation Investments Limited
	Former Director of Glory Resources Limited
	Board and Committee Memberships
	Chairman of the Audit, Risk and Compliance Committee
	Member of the Nominations and Remuneration Committee

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6.3 SENIOR MANAGEMENT PROFILES

Table 6.2: Senior management profiles

Table 6.2:Senior management	profles
Executive	Experience
Richard Johnson	Refer to Section 6.2.
Managing Director and Chief Executive Offcer
Bruce Mitchell Chief Financial Offcer and	Bruce has been a qualifed Chartered Accountant for almost 20 years and has over 18 years experience in senior fnancial roles. He joined DTI in 2012 as Chief Financial Offcer and Company
Company Secretary	Secretary and is responsible for the management and administration of all aspects relating to both internal and external fnancial accounting and reporting. Prior to joining DTI, Bruce gained experience working as a fnancial director for several South African-based companies. He has
	worked across varied industries including information technology and manufacturing.
	Bruce has a Bachelor of Accounting Science (Honours) from the University of South Africa, and a
	Bachelor of Commerce from the University of Natal.
Jean-Michel Florent Chief Operating Offcer	Jean-Michel has over 20 years experience in technology and international business with a focus over the past 9 years in the security industry. He has extensive key product management and
	operations experience at senior levels, including the delivery of a large number of key projects.
	Jean-Michel joined DTI in 2010 leading the development of the current line of bus recorders and was General Manager Asia before being promoted to the Chief Operating Offcer position in
	2013. Prior to joining DTI, he was a key member of the CCTV outsource development teams at EverFocus and GE Security and was Vice President Operations for network security frm Clavister
	AB.
	Jean-Michel holds a Bachelor of Science in Electrical Engineering and Computer Science from the
	University of California, Berkeley.
Rick Gougeon	Rick joined DTI in 2009 as General Manager Americas. His experience spans 20 plus years in
General Manager Americas	the security and public transit industry. Rick has well rounded experience at a senior level within
	the industry, including operations and installation management, sales management, product
	management and customer service. He has also instigated new policies, procedures and products throughout his career including the launch of the frst DTI MobileView digital recorder.
	Previously, he was with Insight Video Net (a software developer for mobile law enforcement
	and video capture) as a key liaison to Panasonic’s law enforcement team. Rick has also held
	management positions with GE Security (a former division of General Electric).
	Rick is a graduate of the General Electric accelerated leadership program.
Steve Donnohue	Steve has over 14 years experience in the European transport sector delivering mobile technology
General Manager EMEA	solutions to predominantly light rail, metro, inter-city and underground rail customers. Starting
	out in retail management, Steve has spent the majority of his career in manufacturing and
	support organisations holding key positions in procurement, project management and business
	development prior to joining DTI in 2009.
	As a fully qualifed project manager, Steve has been responsible for establishing, recruiting and
	managing installation and support teams in numerous companies and has extensive experience
	in channel management dealing with original equipment manufacturers of motor vehicles,
	consultancy groups, transport operators and integration partners across the EMEA region.

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6.4 INTERESTS AND bENEFITS

This Section sets out the nature and extent of the interests and benefits of certain persons involved in the Offer. Other than set out below or elsewhere in this Prospectus, no:

• Director or proposed director of the Company

• person named in this Prospectus as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of this Prospectus

• promoter of the Company; or

• Underwriter to the Offer

holds at the time of lodgement of this Prospectus with ASIC, or has held in the two years before the lodgement of this Prospectus with ASIC, an interest in:

• the formation or promotion of the Company

• property acquired or proposed to be acquired by the Company in accordance with its formation or promotion or in connection with the Offer; or

• the Offer,

and no amount (whether in cash, Shares or otherwise) has been paid or agreed to be paid, nor has any benefit been given or agreed to be given, to any such persons for services in connection with the formation or promotion of the Company or the Offer or to any Director or proposed Director to induce them to become or qualify as a Director.

(a) Interests of advisors

DTI has engaged the following professional advisors:

• Baillieu Holst has acted as Underwriter to the Offer. The fees paid or payable for this role are set out in Section 10.5(a)(i). During the 24 months preceding lodgement of this Prospectus with ASIC, Baillieu Holst has not received any fees from the Company for any other services.

• Steinepreis Paganin has acted as legal advisor to DTI in relation to the Offer. DTI has paid or agreed to pay approximately $85,000, excluding disbursements and GST, for these services. During the 24 months preceding lodgement of this Prospectus with ASIC, Steinepreis Paganin has not received any fees from the Company.

• Pendulum Capital has acted as corporate advisor to DTI. During the 24 months preceding lodgement of this Prospectus with ASIC, Pendulum Capital has received fees of $180,000 (excluding disbursements and GST) from the Company.

• BDO Corporate Finance has acted as Investigating Accountant and has prepared the Investigating Accountant’s Report. DTI has paid or agreed to pay approximately $36,000, excluding disbursements and GST, for these services. During the 24 months preceding lodgement of this Prospectus with ASIC, BDO Corporate Finance has not received any fees from the Company for any other services.

• FB Rice has acted as the patent attorney and has prepared the independent intellectual property report on the scope of the Company’s patents and patent applications. DTI has paid or agreed to pay approximately $9,000, excluding disbursements and GST, for these services. During the 24 months preceding lodgement of the Prospectus with ASIC, FB Rice has received fees of $61,190 from the Company for advice relating to patent applications and registrations.

These amounts and other expenses of the Offer have been or will be paid by DTI from the Offer Proceeds. Further information on the use of the Offer Proceeds and payment of expenses of the Offer is set out in Sections 8.4 and 10.9.

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(b) Interests of Directors

Directors are not required under the Constitution to hold any Shares. Details of the holdings of Directors at the date of this Prospectus and as at Completion of the Offer are set out below:

Table 6.3: Directors’ holdings in the Company

Table 6.3:Directors’ hol	dings in the Company
	Pre-Offer Shares	%	Post-Offer Shares	%	Options
Chris Morris	11,200,000	14.7	11,200,000	13.5	11,200,000
Richard Johnson	435,463	0.6	435,463	0.5	4,445
Glyn Denison	2,853,802	3.7	2,853,802	3.4	44,905
Neil Goodey	6,453,888	8.4	6,453,888	7.8	121,310
Jeremy King	175,000	0.2	175,000	0.2	175,000
Total	21,118,153	27.6	21,118,153	25.4	11,545,660

Notes

• All Existing Shares held by Directors will be subject to voluntary escrow arrangements which are described in Section 8.18.

• The Directors have the right to and may apply for New Shares under the Offer. The shareholdings of Directors set out in the Post-Offer column of table 6.3 do not reflect any New Shares which may be issued to Directors under the Offer.

• Directors may hold their relevant interests shown above directly or through holdings by companies and trusts.

• The percentages in table 6.3 are calculated based on the total number of Shares on issue on a pre-Offer and post-Offer basis.

(c) Non-executive Directors’ remuneration

Under the Constitution, the Directors decide the total amount paid to all Directors as remuneration for their services as a Director. However, under the ASX Listing Rules, the total amount paid to all non-executive Directors for their services must not exceed in aggregate in any financial year the amount fixed at the Company’s general meeting. This amount has been fixed by the Company at $250,000 per annum. For FY14 each non-executive Director, including the Chairman, was paid up to $23,000. For FY15 the total remuneration pool for non-executive Directors’ fees is expected to be at least $160,000 reflecting the increased non-executive Directors’ responsibilities for a listed public company. Superannuation payments are included in these amounts.

The remuneration of non-executive Directors must not include a commission or a percentage of the profits or income of the Company.

(d) Managing Director and Chief Executive Officer’s employment contract

DTI entered into an employment contract with Richard Johnson on 1 October 2011 to govern Mr Johnson’s employment at DTI (CEO Agreement). Mr Johnson is employed in the position of Managing Director and Chief Executive Officer of DTI.

Mr Johnson’s employment under the CEO Agreement is on a full-time permanent basis. His employment may be terminated by either party providing written notice in accordance with the CEO Agreement and the CEO Agreement shall expire at the end of that period of notice. Mr Johnson is entitled to a period of notice of five weeks. At the absolute discretion of the Company, payment of ordinary wages in lieu of the required period of notice may be made by the Company to Mr Johnson. If Mr Johnson is, at any time during the term of the CEO Agreement, guilty of misconduct of such a nature that it would be unreasonable to require the Company to continue Mr Johnson’s employment, then the Company may terminate the employment without any period of notice and without payment in lieu (other than remuneration and emoluments accrued to the date of termination) but without prejudice to any other rights or remedies of either party in respect of any breach of the CEO Agreement.

Refer to Section 6.5(a) for details of Mr Johnson’s remuneration.

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6.4 INTERESTS AND bENEFITS (cont’d)

(e) Deeds of indemnity, insurance and access

DTI has entered into a deed of indemnity, insurance and access with each Director which contains rights of access to certain books and records of DTI for a period of seven years after the Director ceases to hold office. This seven-year period can be extended where certain proceedings or investigations commence before the seven-year period expires.

In respect of the indemnity of Directors, DTI is required, pursuant to the Constitution, to indemnify all Directors and officers, past and present, against all liabilities allowed under law. Under the deed of indemnity, insurance and access, DTI indemnifies parties against all liabilities to another person that may arise from their position as an officer of DTI or its subsidiaries to the extent permitted by law. The deed stipulates that DTI will meet the full amount of any such liabilities, including reasonable legal costs and expenses.

In respect of insurance being obtained on behalf of the Directors, DTI may arrange and maintain directors and officers insurance for its Directors to the extent permitted by law. Under the deed of indemnity, insurance and access, DTI must obtain such insurance during each Director’s period of office and for a period of seven years after a Director ceases to hold office. This seven-year period can be extended where certain proceedings or investigations commence before the seven-year period expires.

(f) Other information

Directors may also be reimbursed for travel and other expenses reasonably incurred in attending to DTI Group affairs. Nonexecutive Directors may be paid such additional or special remuneration as the Directors decide is appropriate where they perform extra work or services which are not in the capacity as a Director. There are no retirement schemes for Directors other than statutory superannuation contributions.

6.5 SENIOR MANAGEMENT REMuNERATION

(a) Managing Director and Chief Executive Officer

Under the CEO Agreement, the Managing Director and Chief Executive Officer, Richard Johnson, is currently entitled to receive a fixed base remuneration of $240,000 per annum (exclusive of statutory superannuation contributions) (Base Salary).

In addition to the Base Salary, Mr Johnson is eligible to earn:

• short-term incentives of up to 25% of his Base Salary per annum (ie currently up to $60,000 per annum) payable in cash or Shares at Mr Johnson’s election (ST Incentives)

• long-term incentives of up to 33.3% of his Base Salary per annum (ie currently up to $80,000 per annum) payable by the issue of Shares (LT Incentives).

Accordingly, based on Mr Johnson’s current Base Salary, the maximum remuneration under the CEO Agreement is currently up to $380,000 per annum in cash and Share-based compensation (exclusive of statutory superannuation contributions).

The ST Incentives and LT Incentives are subject to achievement of qualitative non-financial performance indicators and the achievement of key financial metric targets (Performance Hurdles).

The ST Incentives and LT Incentives earned by Mr Johnson for a financial year are determined after the audited financial results for the financial year are completed. At the same time, his Base Salary is reviewed to ensure the Chief Executive Officer’s remuneration is competitive within the market, and the Performance Hurdles that apply for the subsequent financial year are set by the Nominations and Remuneration Committee.

For FY14 Mr Johnson’s bonus under the ST Incentives was $18,000 and $48,000 under the LT Incentives. Mr Johnson received the ST Incentive and LT Incentive bonuses for FY14 in cash.

For further details of the CEO Agreement, and the Performance Hurdles for the ST Incentives and LT Incentives, refer to Section 10.5(b).

(b) Other senior management

DTI’s other senior management personnel are employed under individual employment agreements, which establish the total compensation including a base salary, superannuation contribution and incentive arrangements, confidentiality provisions and leave entitlements.

The employment of a senior manager may be terminated by either DTI or the relevant senior manager providing at least three months notice in writing before the proposed date of termination, or in DTI’s case by payment in lieu of notice.

6.6 CORPORATE GOvERNANCE

(a) Overview

The Board is responsible for the overall corporate governance of DTI. The Board monitors the operational and financial position and performance of DTI and oversees its business strategy including approving the strategic goals of DTI and approving business plans, budgets and forecasts. The Board is committed to maximising performance, generating appropriate levels of Shareholder value and financial return and sustaining the growth and success of DTI. In conducting DTI’s business with these obligations, the Board seeks to ensure that DTI is properly managed to protect and enhance Shareholder interests, and that DTI, its Directors, officers and personnel operate in an appropriate environment of corporate governance. Accordingly, the Board has created a framework for managing DTI including adopting relevant internal controls, risk management processes and corporate governance policies and practices which it believes are appropriate for DTI’s business and which are designed to promote responsible management and conduct of DTI.

The corporate governance policies and practices will be adopted by DTI from the Listing Date and are summarised in this Section. In addition, many corporate governance elements are contained in the Constitution. Details of DTI’s key policies and practices and the charters of the Board and of each Board committee are disclosed at .

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The Company is seeking listing on ASX. The ASX Corporate Governance Council has developed and released its ASX Corporate Governance Principles and Recommendations (ASX Recommendations) for Australian-listed entities in order to promote investor confidence and to assist companies in meeting stakeholder confidence. The ASX Recommendations are not prescriptions, but guidelines. However, under ASX Listing Rules, the Company will be required to provide a statement in its annual report disclosing the extent to which it has followed the recommendations during each reporting period. Where DTI has not followed a recommendation, it must identify the recommendation that has not been followed and give reasons for not following it.

DTI intends to comply with all of the ASX Recommendations from the Listing Date, with the exception of Recommendation 2.5, which provides that the chair should be an independent director. In his position as non-executive Chairman, Mr Chris Morris will, following the Listing Date, hold approximately 13.5% of the issued capital of DTI. Accordingly, the non-executive Chairman is not an independent Director. The Board believes that Mr Morris is the most appropriate person to lead the Board as non-executive Chairman; that he is able to bring independent judgement and business acumen to relevant issues falling within the scope of the role of Chairman; and that DTI as a whole benefits from his extensive experience and knowledge of both large and small public companies.

In accordance with ASX Recommendation 1.5, DTI has adopted a diversity policy which provides that the Board will set measurable objectives for achieving gender diversity and will include in the Company’s annual report each year a summary of the Company’s progress towards achieving the measurable objectives. The Board has yet to set measurable objectives for achieving gender diversity and intends to disclose its measurable objectives in accordance with ASX Recommendation 1.5 in future annual reports.

(b) Composition of the Board

Consistent with the ASX Corporate Governance Guidelines, the Board is comprised of a majority of Directors who are independent as set out in the table 6.4. Further details of the Directors are set out in Section 6.2.

Table 6.4: Composition of the Board

Table 6.4:Compo	sition of the Board
Name	Position	Independence
Chris Morris1	Non-Executive	Non-independent
	Chairman
Richard Johnson2	Managing Director and CEO	Non-independent
Glyn Denison Neil Goodey	Non-Executive Director Non-Executive Director	Independent Independent
Jeremy King	Non-Executive Director	Independent

1 Chris Morris is not considered to be an independent Director as he will on the Listing Date be a substantial shareholder of DTI.

The Company considers that a Director is an independent Director where that Director is not a member of DTI’s management and is free from any business or other relationships that could materially interfere or be perceived to interfere with the independent exercise of the Director’s judgement. The Company has also assessed the independence of its Directors in regard to the requirements for independence which are set out in Principle 2 of the ASX Recommendations.

(c) Board charter

The Board has adopted a charter which sets out its role, composition and responsibilities. The Board acknowledges that it is accountable to Shareholders and must ensure that the Company is properly managed to protect and enhance Shareholders’ wealth and other interests.

(i) Key responsibilities and functions of the Board The key responsibilities and functions of the Board are:

• to develop, review and monitor the Company’s long-term business strategies and provide strategic direction to management

• to ensure policies and procedures are in place to safeguard the Company’s assets and business and to enable the Company to act ethically and prudently

• to develop and promote a system of corporate governance which ensures the Company is properly managed and controlled

• to identify the Company’s principal risks and ensure that it has in place appropriate systems of risk management, internal control, reporting and compliance and that management is taking appropriate action to minimise those risks

• to review and approve the Company’s financial statements. Before the Board approves the Company’s financial statements, it shall receive from the Chief Executive Officer and the Chief Financial Officer a declaration that the financial records of DTI Group comply with the appropriate accounting standards and give a fair view of the financial position and performance of DTI Group

• to monitor management’s performance and the Company’s financial results on a regular basis

• to appoint, appraise and determine the remuneration and benefits of the Chief Executive Officer

• to delegate powers to the Chief Executive Officer as necessary to enable the day-to-day business of the Company to be carried on, and to regularly review those delegations

• to ensure that the Company has in place appropriate systems to comply with relevant legal and regulatory requirements that impact on its operations

• to determine the appropriate capital management for the Company including share and loan capital and dividend payments

• to determine and regularly review an appropriate remuneration policy for employees of the Company.

• 2 Richard Johnson is not considered to be an independent Director as he is an executive of DTI.

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6.6 CORPORATE GOvERNANCE (cont’d)

(ii) Composition and size of the Board

Election of Board members is substantially the province of the Shareholders in general meeting. The Directors consider the size and composition of the Board are appropriate given the size and status of the Company. However, the composition of the Board is subject to review in a number of ways:

• The Constitution provides that Directors shall retire from office at least every three years but may stand for re-election.

• The composition of the Board will be reviewed periodically either when a vacancy arises or if it is considered the Board would benefit from the services of a new Director, given the existing mix of skills and experience of the Board, which should match the strategic demands of the Company.

The Constitution provides for a minimum of three Directors and a maximum of seven Directors. The Board has adopted a policy of five Directors comprising four non-executive Directors and one executive Director, being the Company’s Managing Director. The Board may review this requirement from time to time. The Board consists of three independent Directors. An independent Director is a non-executive Director and:

• is not a substantial shareholder of the Company or an officer of, or otherwise associated directly with, a substantial shareholder of the Company

• within the last three years has not been employed in an executive capacity by the Company or been a Director after ceasing to hold any such employment

• within the last three years has not been a partner, director or senior employee of a material professional advisor or a material consultant to the Company, or an employee materially associated with the service provided

• is not a material supplier or customer of the Company, or an officer of or otherwise associated directly or indirectly with a material supplier or customer, and has no material contractual relationship with the Company other than as a director of the Company

• has not served on the Board for a period which could, or could reasonably be perceived to, materially interfere with the Director’s ability to act in the best interests of the Company

• is free from any interest and any business or other relationship which could, or could reasonably be perceived to, materially interfere with the Director’s ability to act in the best interests of the Company.

(d) Board committees

The Board is served by the following committees:

(i) Audit, Risk and Compliance Committee

The Audit, Risk and Compliance Committee plays a key role in the overview of responsibilities of the Board relating to financial reporting, risk management, internal controls framework, corporate governance and external audit processes.

The committee’s primary responsibilities within the governance structure of the DTI Group are to assist the Board in:

• fulfilling its overview of the audit process

• overviewing financial reporting

• fulfilling its overview of the systems of internal control which the Board and management have established

• its processes of risk management and in monitoring compliance with corporate policies, the code of conduct and corporate governance and risk management policies generally

• the decision-making process

• meeting planning, agenda and board paper format, and minute requirements.

The charter of the Audit, Risk and Compliance Committee provides for at least three Directors comprise the committee where practicable, all of whom are non-executive Directors and the majority of whom are independent Directors. The chairperson of the committee is appointed by the Board. The committee chairperson is an independent non-executive Director. The Chief Executive Officer, the Chief Financial Officer and any other individual may attend meetings at the invitation of the chairperson of the committee, but are not members of the committee. The current committee comprises:

• Mr Jeremy King (Chairman)

• Mr Glyn Denison

• Mr Neil Goodey.

(ii) Nominations and Remuneration Committee

The purpose of the Nominations and Remuneration Committee is to assist and advise the Board on matters relating to the appointment and remuneration of Directors, the Chief Executive Officer and other senior executives and employees of the DTI Group.

The role of the committee in relation to nomination shall be to:

• review the size and composition of the Board

• review and advise the Board on the range of skills available on the Board and appropriate balance of skills for future Board membership

• review and consider succession planning for the Chief Executive Officer, the Chairman and other Directors and key executives

• develop criteria and procedures for the identification of candidates for appointment as Directors, with the criteria including a consideration of the candidate’s

• skills, experience, expertise and personal qualities

• capability to devote the necessary time and commitment to the role

• potential conflicts of interest and independence

• apply the criteria and procedures to identify prospective candidates for appointment as a Director and make recommendations to the Board

• make recommendations to the Board regarding any Directors who should not continue in office, having regard to the results of a formal performance appraisal of Directors and/or consideration of the appropriate composition of the Board

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• nominate for approval by the Board external experts (where appropriate) to advise on the matters listed above

• review the time required from a non-executive Director and whether Directors are meeting this requirement

• evaluate management’s recommendations on the appointment of key executives

• develop a plan for identifying, assessing and enhancing Director competencies

• ensure that there are appropriate professional development opportunities for continuing Directors to develop and maintain the skill and knowledge needed to perform their role as a Director effectively

• ensure that there is an appropriate induction program for new Directors and members of senior management and review its effectiveness.

The role of the committee in relation to remuneration shall be to:

• determine remuneration policies and remuneration of Directors

• determine remuneration and incentive policies packages of key executives

• determine the DTI Group’s recruitment, retention and termination policies and procedures for senior management

• determine and review incentive schemes

• determine and review superannuation arrangements of the DTI Group

• determine and review professional indemnity and liability insurance for Directors and senior management.

The charter of the Nominations and Remuneration Committee provides that unless the Board determines otherwise, the committee shall consist of all members of the Board. The chairperson of the committee shall be the chairperson of the Board. The Board has adopted guidelines for the selection and reappointment of Directors. The current committee comprises the entire Board.

communication with analysts, stockbrokers, the media and major Shareholders. The Company Secretary has overall responsibility for communication with ASX, other regulatory bodies and retail Shareholders.

The policy is based upon compliance with the Company’s disclosure obligations and aims at all times to achieve best practice.

The policy commits the Company to facilitating Shareholder participation in member meetings and to dealing promptly with Shareholder enquiries.

The Company believes that communicating with Shareholders by electronic means, particularly through its website, is an efficient way of distributing information in a timely and convenient manner.

The Company’s website currently includes a section on its corporate governance policies and practices. The website will be updated progressively to contain relevant information to Shareholders and interested parties.

(iii) Market disclosure policy

The purpose of the market disclosure policy is to establish procedures for:

• identifying material price-sensitive information

• reporting such information to the reporting officer for review

• ensuring DTI achieves best practice in complying with its continuous disclosure obligations under the Corporations Act and ASX Listing Rules

• ensuring the Company, the Board and key senior management do not contravene the Corporations Act or ASX Listing Rules.

The rules set out in the policy are designed to ensure that announcements made by the Company:

• are made in a timely manner

• are factual

(e) Policies and standards

DTI has adopted the following operational policies and standards:

(i) Guidelines for the operation of the Board

DTI has established guidelines for the operation of the Board which outline:

• the expected role of individual Directors

• the role of the chairperson of the Board

• the processes the Board should apply in instances of a declared, actual and perceived conflict of interest. In circumstances where any Director, including the Chairman, has a declared, actual or perceived conflict of interest, then the Board is empowered to amongst other options exclude the person from access to the Board papers and voting on the matter.

(ii) Communications policy

DTI recognises the value of providing current and relevant information to its current and prospective Shareholders.

The Chief Executive Officer and the Company Secretary have the primary responsibility for communication with Shareholders. The Chief Executive Officer has overall responsibility for

• do not omit material information

• are expressed in concise and clear language that allows Shareholders and the market to assess the impact of the information when making investment decisions.

This policy applies to Directors, executive officers and members of senior management who are most likely to be in possession of, or become aware of, the relevant information. All DTI staff shall be made aware of the existence of the policy so that they can assist with reporting of potentially sensitive information to the appropriate persons within the Company.

The Company is committed to:

• complying with the general and continuous disclosure principles contained in the ASX Listing Rules and the Corporations Act

• preventing the selective or inadvertent disclosure of material price-sensitive information

• ensuring that Shareholders and the market are provided with full and timely information about its activities

• ensuring that all market participants have equal opportunity to receive externally available information issued by the Company.

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6.6 CORPORATE GOvERNANCE (cont’d)

Continuous disclosure shall be included as an agenda item at all meetings of the Board. Any issue that arises which may need to be disclosed is to be immediately reported to the disclosure officer.

The Company Secretary has been appointed as the Company’s disclosure officer responsible for implementing and administering this policy.

The disclosure officer shall be responsible for all communication with ASX and for making the decisions on what should be disclosed publicly under the policy.

The disclosure officer shall be responsible for developing and maintaining relevant guidelines to help the Company’s employees understand what information may be materially price-sensitive.

The disclosure officer shall be responsible for monitoring all Company disclosure practices and for making recommendations to the Board on updating the policy in response to change in internal structure legislature and regulatory developments and technology developments.

(iv) Securities dealing policy

The purpose of the securities dealing policy is:

• to explain the type of conduct in relation to dealings in securities of DTI that is prohibited under the Corporations Act which is applicable to all employees of and contractors to the DTI Group and to all employees and contractors of any joint venture companies, operations or arrangements to which DTI Group is a party

• to establish a best practice procedure relating to buying and selling securities that provides protection to both DTI and employees against the misuse of unpublished information which could materially affect the value of securities.

An overview of the insider trading laws in Australia is provided to employees. In addition to the restrictions imposed at law, the policy places additional restrictions on the following people in the Company and its related companies (“restricted persons”):

• all Directors

• all executives reporting directly to the Chief Executive Officer

• any other employees of the Company considered necessary or appropriate by the Chief Executive Officer and Company Secretary from time to time.

The Company Secretary will notify the persons who are considered restricted persons for the purposes of the policy.

Restricted persons must not deal in the Company’s securities:

• during the period from 1 January until one trading day following the release of the Company’s half-year results

• during the period from 1 July until one trading day following the release of the Company’s full-year results.

A restricted person must notify the Company Secretary of any dealing in the Company’s securities by the restricted person or any associate of the restricted person within two business days of such dealing having taken place.

(v) Risk management policy

DTI has established a risk management policy to assist in the development of organisational capabilities in risk management for internal control purposes. Risk management is regarded as an integral part of the Company’s strategic planning, business planning and investment/project appraisal procedures. The focus of risk management is the identification and treatment of risks with the objective to add maximum sustainable value to all of the activities of the organisation.

The Board acknowledges that it is ultimately responsible for the risk management and internal control framework of the Company. The Board shall regularly review the effectiveness of the risk management and internal control framework. The Board will review and discuss strategic risks and opportunities arising from changes in the Company’s business environment regularly and on an as needs basis. The Board has delegated some of its responsibilities to the Audit, Risk and Compliance Committee; however, maintains the overall responsibility for the process.

The responsibility for undertaking and assessing risk management and internal control effectiveness is delegated to management. Management is required to report back to the Board through the Audit, Risk and Compliance Committee on the efficiency and effectiveness of risk management.

(vi) Code of conduct

The code of conduct outlines how the DTI Group expects Directors and employees to behave and conduct business in the workplace on a range of issues.

DTI is committed to the highest level of integrity and ethical standards in all business practices. Employees must conduct themselves in a manner consistent with current community and corporate standards and in compliance with all legislation.

The objectives of the code are:

• to provide a benchmark for professional behaviour throughout the Company

• to support DTI’s business reputation and corporate image within the community

• to make employees aware of the consequences if they breach the code.

(vii) Equal opportunity policy

The equal opportunity policy commits DTI to providing a work environment in which everyone is treated fairly and with respect, irrespective of sex, sexual orientation, race, age, disability, religion or ethnic origin and which is free of discrimination, bullying, victimisation, vilification and sexual and other unlawful harassment.

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The policy is based on the following objectives:

• to hire the best-qualified person for the available job without regard to their race, colour, national origin, marital status, pregnancy, religion, political conviction, impairment or sexual preference

• to appraise and promote employees on the basis of objective assessment of performance and potential. This decision will be made without discrimination

• to conduct all Company activities without discrimination

• to maintain a workplace free of harassment.

DTI will comply with relevant and applicable equal opportunity, anti-discrimination and affirmative action legislation, regulations and supporting laws.

(viii) Diversity policy

DTI has adopted a diversity policy to assist the Company to achieve its corporate objective of attracting, developing and retaining people who are highly competent and can contribute to the long-term success of the Company and its corporate values by bringing a broader range of perspectives, experience and ideas. DTI will promote an awareness of a commitment to workplace diversity and establish and assess measurable objectives for achieving improved diversity.

(ix) Whistleblower protection policy

DTI aims to ensure that its Directors and employees act at all times in compliance with all laws and in compliance with the Company’s code of conduct. DTI recognises that any genuine commitment to detecting and preventing illegal and undesirable conduct must include, as a fundamental cornerstone, a mechanism whereby Directors and employees can report their concerns freely and without fear of repercussion.

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DTI Group Ltd 2014 prospectus

Investigating Accountant’s Report

7

7 Investigating Accountant’s Report

28 October 2014

The Directors

DTI Group Ltd 31 Affleck Road Perth Airport WA 6105

Dear Directors

INVESTIGATING ACCOUNTANT’S REPORT

1. Introduction

We have been engaged by DTI Group Ltd ( DTI or Company ) to prepare this Investigating Accountant’s Report ( Report ) on the historical, pro forma and forecast financial information of DTI for inclusion in an initial public offering Prospectus to be issued by the Company in respect of the Offer and listing on the Australian Securities Exchange. Broadly, the Prospectus will offer 6.68 million Shares at an issue price of $0.30 each.

Expressions defined in the Prospectus have the same meaning in this Report.

BDO Corporate Finance holds an Australian Financial Services Licence (AFSL Number 316158). We have included our Financial Services Guide as Appendix 1 of this Report.

2. Scope

The Company has requested BDO Corporate Finance to prepare this Report to cover the following financial information:

Historical Financial Information

The Historical Financial Information detailed in section 4.2 of the Prospectus, which comprises:

• the consolidated income statements for the FY11, FY12, FY13 and FY14; and

• the consolidated balance sheet as at 30 June 2014.

The Historical Financial Information for FY11, FY12, FY13 and FY14 has been audited by BDO Audit on which unqualified audit opinions were issued.

Pro Forma Financial Information

The pro forma financial information as detailed in section 4.2 of the Prospectus comprises the Pro Forma Balance Sheet as at 30 June 2014.

The Pro Forma Balance Sheet assumes Completion of the Offer.

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INVESTIGATING ACCOUNTANT’S REPORT

Forecast Financial Information

The Forecast Financial Information as detailed in section 4.2 of the Prospectus, which comprises:

• the forecast income statement of DTI for FY15 (including actual results for the two months ended 31 August 2014 and forecast information for the ten months ended 30 June 2015).

The Forecast Financial Information is based on the assumptions outlined in section 4.3 of the Prospectus.

3. Directors’ responsibility

The Directors are responsible for the preparation of the Historical Financial Information, pro forma financial information and Forecast Financial Information, including the selection and determination of pro forma adjustments included in the Pro Forma Balance Sheet and the bestestimate assumptions included in the Forecast Financial Information. This includes responsibility for such internal controls as the Directors determine are necessary to enable the preparation of Historical Financial Information, Pro Forma Balance Sheet and Forecast Financial Information are free from material misstatement, whether due to fraud or error.

4. Our responsibility

Financial Information

The Investigating Accountant’s responsibility is to express a limited assurance conclusion on the Financial Information based on the procedures performed and the evidence we have obtained. We have conducted our engagement in accordance with the Standard on Assurance Engagement ASAE 3450 Assurance Engagements involving Corporate Fundraisings and/or Prospective Financial Information .

We have reviewed the Financial Information in order to state whether, on the basis of the procedures described, anything has come to our attention that would cause us to believe that the Financial Information is not prepared, in all material aspects, by the Directors on the basis of the stated basis of preparation.

Our review of the Financial Information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain reasonable assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Our review of the Financial Information did not involve updating or re-issuing any previously issued audit or review report on any financial information used as a source of the Historical Financial Information and Pro forma Balance Sheet.

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Forecast Financial Information

Our responsibility is to express a limited assurance conclusion on the Forecast Financial Information based on the procedures performed and the evidence we have obtained. We have conducted our engagement in accordance with the Standard on Assurance Engagement ASAE 3450 Assurance Engagements involving Corporate Fundraisings and/or Prospective Financial Information .

We have reviewed the Forecast Financial Information and the Directors’ best-estimate assumptions underlying them in order to state whether, on the basis of the procedures described, anything has come to our attention that causes us to believe that:

• the Directors’ best estimate assumptions do not provide reasonable grounds for the Forecast Financial Information;

• in all material respects the Forecast Financial Information is not

• prepared on the basis of the Directors’ best-estimate assumptions as described in the Prospectus;

• presented fairly in accordance with the stated basis of preparation, being the recognition and measurement principles contained in Australian Accounting Standards, applied to the Forecast Financial Information and the Company’s adopted accounting policies; and

• the Forecast Financial Information is unreasonable.

Our review of the Forecast Financial Information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain reasonable assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

5. Conclusion

Conclusion on the Financial Information

Based on our review, which was not an audit, nothing has come to our attention which would cause us to believe the Financial Information does not present fairly, in all material aspects:

• the consolidated income statements for FY11, FY12, FY13 and FY14;

• the consolidated balance sheet as at 30 June 2014; and

• the Pro Forma Balance Sheet as at 30 June 2014,

in accordance with the recognition and measurement requirements (but not all the presentation and disclosure requirements) of Australian Accounting Standards and the accounting policies adopted by DTI.

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INVESTIGATING ACCOUNTANT’S REPORT

Conclusion on Forecast Financial Information

Based on our review, which was not an audit, nothing has come to our attention which would cause us to believe that:

• the Directors’ best-estimate assumptions used in the preparation of the forecast income statements for FY15 do not provide reasonable grounds for the Forecast Financial Information; and

• in all material respects the Forecast Financial Information is not

• prepared on the basis of the Directors’ best-estimate assumptions as described in section 4.3 of the Prospectus;

• presented fairly in accordance with the stated basis of preparation, being the recognition and measurement (but not all the presentation and disclosure requirements) of Australian Accounting Standards and the accounting policies adopted by DTI; and

• the Forecast Financial Information is unreasonable.

The Forecast Financial Information has been prepared by the Directors in order to provide prospective investors with a guide to the potential financial performance of DTI for the year ended 30 June 2015. There is a considerable degree of subjective judgement involved in preparing forecasts since they relate to events and transactions that have not yet occurred and may not occur. The Directors’ best-estimate assumptions on which the Forecast Financial Information is based relate to future events and transactions that management expect to occur and actions that management expect to take and are also subject to uncertainties and contingencies, which are often outside the control of DTI. Evidence may be available to support the Directors’ best-estimate assumptions on which the Forecast Financial Information is based; however, such evidence is generally future-orientated and therefore speculative in nature.

Prospective investors should be aware of the material risks and uncertainties in relation to an investment in DTI, which are detailed in the Prospectus, and the inherent uncertainty relating to the Forecast Financial Information. Accordingly, prospective investors should have regard to the investment risks and sensitivities described in section 5 of the Prospectus. The sensitivity analysis in section 4.4 of the Prospectus demonstrates the impact on the Forecast Financial Information of changes in key best-estimate assumptions. We express no opinion as to whether the Forecast Financial Information will be achieved.

We disclaim any assumption of responsibility for any reliance on the Report, or on the Forecast Financial Information to which it relates, for any purpose other than that for which it was prepared. We have assumed, and relied on representations from certain members of management of DTI, that all material information concerning the prospects and proposed operations of DTI have been disclosed to us and that the information provided to use for the purpose of our work is true, complete and accurate in all respects. We have no reason to believe that those representations are false.

6. Consent

BDO Corporate Finance has consented to the inclusion of this Report in the Prospectus in the form and context in which it is included. At the date of this Report, this consent has not been withdrawn.

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7. Disclosures

BDO Corporate Finance is the corporate advisory arm of BDO Audit in Perth. Without modifying our conclusions, we draw attention to the Prospectus, which describes the purpose of the financial information, being for inclusion in the Prospectus. As a result, the financial information may not be suitable for use for another purpose.

Neither BDO Corporate Finance nor BDO Audit, nor any director or executive or employee thereof, has any financial interest in the outcome of the proposed transaction except for the normal professional fee due for the preparation of this Report.

Yours faithfully BDO Corporate Finance (WA) Pty Ltd

Adam Myers Director

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DTI Group Ltd 2014 PROSPECTUS

INVESTIGATING ACCOUNTANT’S REPORT

APPENDIX 1 — FINANCIAL SERVICES GUIDE

BDO Corporate Finance (WA) Pty Ltd ABN 27 124 031 045 (‘ we ’ or ‘ us ’ or ‘ ours ’ as appropriate) has been engaged by DTI Group Ltd ( DTI ) to provide an Investigating Accountant’s Report for inclusion in the Prospectus to be issued by the Company in respect of the proposed initial public offering and listing on the Australian Securities Exchange.

Financial Services Guide

In the above circumstances we are required to issue to you, as a retail client, a Financial Services Guide ( FSG ). This FSG is designed to help retail clients make a decision as to their use of the general financial product advice and to ensure that we comply with our obligations as financial services licensees.

This FSG includes information about:

• who we are and how we can be contacted;

• the services we are authorised to provide under our Australian Financial Services Licence, Licence No. 316158;

• remuneration that we and/or our staff and any associates receive in connection with the general financial product advice;

• any relevant associations or relationships we have; and

• our internal and external complaints handling procedures and how you may access them.

Information about us

BDO Corporate Finance (WA) Pty Ltd is a member firm of the BDO network in Australia, a national association of separate entities (each of which has appointed BDO (Australia) Limited ACN 050 110 275 to represent it in BDO International). The financial product advice in our Report is provided by BDO Corporate Finance (WA) Pty Ltd and not by BDO or its related entities. BDO and its related entities provide services primarily in the areas of audit, tax, consulting and financial advisory services.

We do not have any formal associations or relationships with any entities that are issuers of financial products. However, you should note that we and BDO (and its related entities) might from time to time provide professional services to financial product issuers in the ordinary course of business.

Financial services we are licensed to provide

We hold an Australian Financial Services Licence that authorises us to provide general financial product advice for securities to retail and wholesale clients.

When we provide the authorised financial services we are engaged to provide expert reports in connection with the financial product of another person. Our reports indicate who has engaged us and the nature of the Report we have been engaged to provide. When we provide the authorised services we are not acting for you.

General Financial Product Advice

We only provide general financial product advice, not personal financial product advice. Our Report does not take into account your personal objectives, financial situation or needs. You should consider the appropriateness of this general advice having regard to your own objectives, financial situation and needs before you act on the advice.

Fees, commissions and other benefits that we may receive

We charge fees for providing reports, including this Report. These fees are negotiated and agreed with the person who engages us to provide the Report. Fees are agreed on an hourly basis or as a fixed amount depending on the terms of the agreement. The fee payable to BDO Corporate Finance (WA) Pty Ltd for this engagement is approximately $30,000.

Except for the fees referred to above, neither BDO, nor any of its directors, employees or related entities, receive any pecuniary benefit or other benefit, directly or indirectly, for or in connection with the provision of the Report.

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Other Assignments

BDO Audit and Assurance (WA) Pty Ltd is the appointed Auditor of DTI. We do not consider that this impacts on our independence in accordance with the requirements of Regulatory Guide 112 ‘Independence of Experts’. We have completed a conflict search of BDO affiliated organisations within Australia. This conflict search incorporates all Partners, Directors and Managers of BDO affiliated organisations. We are not aware of any circumstances that, in our view, would constitute a conflict of interest or would impair our ability to provide objective assistance in this matter.

Remuneration or other benefits received by our employees

All our employees receive a salary. Our employees are eligible for bonuses based on overall productivity but not directly in connection with any engagement for the provision of a report. We have received a fee from DTI for our professional services in providing this Report. That fee is not linked in any way with our opinion as expressed in this Report. Referrals We do not pay commissions or provide any other benefits to any person for referring customers to us in connection with the reports that we are licensed to provide. Complaints resolution Internal complaints resolution process As the holder of an Australian Financial Services Licence, we are required to have a system for handling complaints from persons to whom we provide financial product advice. All complaints must be in writing addressed to The Complaints Officer, BDO Corporate Finance (WA) Pty Ltd, PO Box 700 West Perth WA 6872.

When we receive a written complaint we will record the complaint, acknowledge receipt of the complaint within 15 days and investigate the issues raised. As soon as practical, and not more than 45 days after receiving the written complaint, we will advise the complainant in writing of our determination. Referral to External Dispute Resolution Scheme

A complainant not satisfied with the outcome of the above process, or our determination, has the right to refer the matter to the Financial Ombudsman Service (‘ FOS ’). FOS is an independent organisation that has been established to provide free advice and assistance to consumers to help in resolving complaints relating to the financial service industry. FOS will be able to advise you as to whether or not they can be of assistance in this matter. Our FOS Membership Number is 12561. Further details about FOS are available at the FOS website www.fos.org.au or by contacting them directly via the details set out below.

Financial Ombudsman Service GPO Box 3 Melbourne VIC 3001 Toll free: 1300 78 08 08 Facsimile: (03) 9613 6399 Email: info@fos.org.au

Contact details

You may contact us using the details set out on page 1 of our Report.

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DTI Group Ltd 2014 PROSPECTUS

Details of the Offer

8

8 Details of the Offer

8.1 DESCRIPTION OF THE OFFER

This Prospectus relates to an invitation to subscribe for 6.68 million New Shares at the offer price of $0.30 per Share. The Offer is open to the general public and clients of the Underwriter. Details of how to apply for New Shares are set out in Section 8.10. Details of the ownership of Existing Shares as at the Prospectus date and the expected ownership of Shares on Completion of the Offer are set out in Section 8.5. The total number of Shares at Completion of the Offer will be 83.13 million Shares. All Shares will rank equally with each other.

8.2 PuRPOSE OF THE OFFER

The purpose of the Offer is to:

• provide additional working capital and funding to support future growth of the Company

• enhance DTI’s flexibility to pursue growth opportunities, including possible acquisitions

• provide DTI with the benefits of an increased profile from being a listed entity

• provide investors an opportunity to become a shareholder of DTI.

8.3 OFFER PROCEEDS

The Offer is expected to raise $2,004,000.

8.4 SOuRCES AND uSES OF OFFER PROCEEDS

The following table details the sources and uses of the Offer Proceeds, and pro forma cash and cash equivalents at 30 June 2014.

Table 8.1: Sources and uses of Offer Proceeds

8.4 SOuRCES AND uSES OF OFFER PROCEEDS The following table details the sources and uses of the Offer Proceeds, and pro forma cash and cash equivalents at 30 June 2014. Table 8.1:Sources and uses of Offer Proceeds	8.4 SOuRCES AND uSES OF OFFER PROCEEDS The following table details the sources and uses of the Offer Proceeds, and pro forma cash and cash equivalents at 30 June 2014. Table 8.1:Sources and uses of Offer Proceeds
Sources of Funds $000 Uses of Funds $000
Cash proceeds received for the issue of New Shares under the Offer 2,004 Cash and cash equivalents at 30 June 20141 1,448	Costs of the Offer to be incurred in FY152 200 Pro forma cash balance as at 30 June 20143 3,252
3,452	3,452

1 Cash and cash equivalents at 30 June 2014 exclude the retention amounts (totalling $0.4 million) held on term deposit which are recorded under “other financial assets” in the historical consolidated balance sheet at 30 June 2014. For further details on the retention amounts, refer to Section 10.5(i).

2 Refer to table 10.4 in Section 10.9 for the total costs of the Offer which include costs incurred in FY14.

3 The funds in the pro forma cash balance as at 30 June 2014 will be used for additional working capital and growth purposes.

Table 8.1 is a statement of current intentions as of the date of this Prospectus. As with any budget, intervening events and new circumstances have the potential to affect the manner in which the funds are ultimately applied. The Board reserves the right to alter the way funds are applied on this basis.

8.5 CAPITAL STRuCTuRE

The capital structure of DTI as at the date of this Prospectus and at Completion of the Offer is set out in the table below:

Table 8.2: Capital structure of DTI as at the date of this Prospectus and at Completion of the Offer

	Pre-Offer Post-Offer
	Shares % Shares % Options3
Directors1 Other Existing Shareholders2 New Shareholders from the Offer	21,118,153 27.6 21,118,153 25.4 11,545,660 55,332,858 72.4 55,332,858 66.6 825,146 – – 6,680,000 8.0 –
Total	76,451,011 100.0 83,131,011 100.0 12,370,806

• 1 Details of the holdings of Directors are set out in Section 6.4(b).

• 2 Details of the holdings of other Existing Shareholders (excluding the holdings of Directors) are set out in Section 10.4(a).

• 3 The terms and conditions of the Options are set out in Section 8.22.

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8.6 OTHER INFORMATION AbOuT THE COMPANy

Details of the Company’s formation, registration and tax status, along with information regarding DTI’s corporate structure are set out in Section 10.

The Company’s Pro Forma Balance Sheet as at 30 June 2014, including details of the pro forma adjustments, is set out in Section 4.

The Directors do not expect that any single Shareholder will control the Company on Completion of the Offer as defined by section 50AA of the Corporations Act.

The Directors believe that on Completion of the Offer the Company will have sufficient working capital to carry out its stated business objectives.

8.7 INvESTMENT RISKS

As with any share investment, there are a number of risks associated with investing in the Company. The principal risks that could impact the Company are detailed in Section 5. Applicants are advised to consider these risks carefully before deciding whether to invest in the Company and to seek appropriate professional advice. In particular, the Company’s financial forecasts are based on various assumptions. These assumptions may be affected by a range of business and other risks (including risks that apply equally to all companies and businesses such as changes in interest rates, movements in exchange rates and general economic conditions). The assumptions relevant to the Forecast Financial Information are set out in Section 4.3 and the risks are set out in Section 5.

8.8 DIvIDEND POLICy

The Board may from time to time resolve to pay dividends to Shareholders and fix the amount of the dividend, the time for determining entitlements to the dividend and the timing and method of payment. The Board has yet to establish a dividend policy and no dividends have previously been paid to Shareholders. Whilst the Company continues to expand its business operations, profits should remain in the Company rather than distributing profits in the form of dividends. The Board periodically reviews the suitability of this current dividend policy against future business plans, growth opportunities and working capital requirements.

8.9 uNDERwRITING ARRANGEMENTS

The Offer is fully underwritten by Baillieu Holst. The Underwriter and DTI have entered into an Underwriting Agreement under which the Underwriter agrees, subject to certain conditions and termination events, to underwrite all Applications. The Underwriting Agreement sets out a number of circumstances under which the Underwriter may terminate the agreement and the underwriting obligations. A summary of certain terms of the agreement and underwriting arrangements, including the termination provisions, is set out in Section 10.5(a).

8.10 HOw TO APPLy FOR NEw SHARES

To participate in the Offer, the Application Form must be completed in accordance with the instructions on that form. Applications must be for a minimum 7,000 New Shares ($2,100). Applicants applying for additional New Shares must apply in multiples of 500 New Shares (representing a further investment of $150). No brokerage, stamp duty or other costs are payable by Applicants on the acquisition of New Shares under the Offer.

Application Forms must be accompanied by a cheque in Australian dollars for the full Application Amount at $0.30 per New Share. Cheques must be made payable to “DTI Group Ltd” and crossed “Not Negotiable”. All Application Amounts will be paid into a trust account. Any interest earned on the trust account will be for the benefit of the Company.

Application Forms and cheques must be received by the Share Registrar before 5.00pm EST on the Closing Date at the following address:

Computershare Investor Services Pty Limited GPO Box 52 Melbourne Vic 3001

8.11 ACCEPTANCE OF APPLICATION FORMS

Application Forms and accompanying cheques need not be accepted by the Share Registrar at any other address. Payments by cheque will be deemed to be made by an Applicant when the cheque is honoured by the bank on which it is drawn.

The Company reserves the right to extend the Closing Date or close the Offer early, in each case without notice and without liability to any person. Applicants are therefore urged to lodge their relevant Application Forms as soon as possible.

Acceptance of an Application Form by the Company creates a legally binding contract between the Applicant and the Company for the number of New Shares for which the relevant Application Form is accepted. The Application Form does not need to be signed to be valid.

If the Application Form is not completed correctly, or if the accompanying payment is for the wrong amount, it may still be treated by the Company as valid. The Directors’ decision as to whether to treat that Application as valid and how to construe, amend or complete the Application Form is final. However, an Applicant will not be treated as having applied for more New Shares than is indicated by the amount of the cheque for the Application Amount.

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8.12 ALLOCATION AND ALLOTMENT OF NEw SHARES

The Company, in conjunction with the Underwriter, reserves the right to reject any Application or to allot a lesser number of New Shares than that applied for. If the number of New Shares allocated is less than that applied for, the surplus Application Amount will be promptly refunded without interest.

Final allocations will remain subject to the absolute discretion of the Company in conjunction with the Underwriter.

The allotment of New Shares will occur as soon as practicable after the Offer has closed. All New Shares issued pursuant to the Offer will rank equally in all respects with the Existing Shares of the Company.

Statements of shareholding will be despatched as required by ASX. It is the responsibility of Applicants to verify their allocation prior to trading the New Shares. Applicants who sell New Shares before they receive their statement of shareholding will do so at their own risk.

8.13 RESTRICTIONS ON DISTRIbuTION

No action has been taken to register or qualify this Prospectus, the New Shares or the Offer or otherwise to permit a public offering of the New Shares in any jurisdiction outside Australia.

The Prospectus does not constitute an offer or invitation to subscribe for New Shares in any jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer or invitation or issue under this Prospectus.

This Prospectus may not be released or distributed in the United States or elsewhere outside Australia, unless it has attached to it the selling restrictions applicable in the jurisdictions outside Australia, and may only be distributed to persons to whom the Offer may lawfully be made in accordance with the laws of any applicable jurisdiction.

The New Shares have not been, and will not be, registered under the US Securities Act or the securities laws of any state of the United States and may not be offered or sold in the United States.

8.14 DISCRETION REGARDING THE OFFER

DTI may withdraw the Offer at any time before the issue of New Shares to successful Applicants under the Offer. If the Offer, or any part of it, does not proceed, all relevant Application Monies will be refunded (without interest) as soon as practicable in accordance with the requirements of the Corporations Act.

DTI and the Underwriter also reserve the right to extend the Offer or any part of it, accept late Applications either generally or in particular cases, reject any Application, or allocate to any Applicant fewer New Shares than the amount applied for.

8.15 ASX LISTING

The Company will apply to ASX no later than seven days after the date of this Prospectus for the Company to be admitted to the Official List and for ASX to grant Official Quotation to:

• the New Shares to be issued under this Prospectus pursuant to the Offer

• the remaining Existing Shares on issue,

other than those that are determined by ASX as restricted securities in accordance with ASX Listing Rules. DTI’s ASX code is expected to be “DTI”.

If approval is not granted within three months (or such longer period as permitted by ASIC) of the date of this Prospectus, the Offer will be cancelled and no New Shares will be issued and all Application Monies will be refunded in full without interest in accordance with the requirements of the Corporations Act.

Neither ASX nor ASIC takes any responsibility for the content of this Prospectus. The fact that ASX may admit the Company to the Official List and grant Official Quotation to the Shares is not to be taken in any way as an indication by ASX as to the merits of the Company or the Shares.

DTI will be required to comply with ASX Listing Rules, subject to any waivers obtained by DTI from time to time.

Each Applicant in the Offer will be taken to have represented, warranted and agreed as follows:

• It understands that the New Shares have not been, and will not be, registered under the US Securities Act or the securities laws of any state of the United States and may not be offered, sold or resold in the United States.

• It is not in the United States.

• It has not and will not send the Prospectus or any other material relating to the Offer to any person in the United States.

• It will not offer or sell the New Shares in the United States or in any other jurisdiction outside Australia.

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8.16 CHESS AND ISSuER SPONSORED HOLDINGS

DTI will apply to participate in CHESS and will comply with the ASX Listing Rules and the ASX Settlement Operating Rules. CHESS is an electronic transfer and settlement system for the transactions in securities quoted on ASX under which transfers are effected in an electronic form.

When the Shares become approved financial products (as defined in the ASX Settlement Operating Rules), holdings will be registered in one of two subregisters, being CHESS or an issuer sponsored subregister.

For all successful Applicants, the Shares of a Shareholder who is a participant in CHESS or a Shareholder sponsored by a participant in CHESS will be registered on CHESS. All other Shares will be registered on the issuer sponsored subregister.

Following Completion of the Offer, Shareholders will be sent a holding statement that sets out the number of Shares that have been allocated to them. This statement will also provide details of a Shareholder’s HIN (holder identification number) for CHESS holders or, where applicable, the SRN (securityholder reference number) of issuer sponsored holders. Shareholders will subsequently receive statements showing any changes to their shareholding. Certificates will not be issued.

Shareholders will receive subsequent statements during the first week of the following month if there has been a change to their holding on the register and as otherwise required under the ASX Listing Rules and the Corporations Act. Additional statements may be requested at any other time either directly through the Shareholder’s sponsoring broker in the case of a holding on CHESS or through the Share Registrar in the case of a holding on the issuer sponsored subregister. DTI and the Share Registrar may charge a fee for these additional shareholding statements.

8.17 RESTRICTED SECuRITIES

If ASX classifies any of the Existing Shares as being subject to the restricted securities provisions of ASX Listing Rules, those Shares will be required to be held in escrow for a period determined by ASX which will be disclosed to ASX as pre-Official Quotation disclosure.

8.18 vOLuNTARy ESCROw

All Existing Shares held by Directors and 90% of Existing Shares held by other Existing Shareholders (Escrowed Shareholders) will be subject to voluntary escrow arrangements in respect of all those Existing Shares until after the audited financial accounts for FY15 are released to ASX by the Company (Escrow Period). Each of these Escrowed Shareholders has entered into an escrow deed in respect of their escrowed shareholding which prevents them from disposing of their respective escrowed Shares for the relevant Escrow Period. The Escrowed Shareholders may be released early from these escrow obligations to enable:

• the Escrowed Shareholder to accept an offer under a takeover bid in relation to its Shares and holders of at least half of the Shares the subject of the bid that are not held by the Escrowed Shareholders have accepted the takeover bid; or

• the Shares held by the Escrowed Shareholders to be transferred or cancelled as part of a merger by scheme of arrangement under Part 5.1 of the Corporations Act.

During the Escrow Period, the Escrowed Shareholders whose Shares are subject to escrow, may deal in any of their Shares to the extent the dealing is required by applicable law (including an order of a court of competent jurisdiction).

The restriction on “disposing” is broadly defined and includes, among other things, selling, assigning, transferring or otherwise disposing of any interest in the Shares, encumbering or granting a security interest over the Shares, doing, or omitting to do, any act if the act or omission would have the effect of transferring effective ownership or control of any of the Shares or agreeing to do any of those things.

8.19 TAXATION

The Australian taxation consequences of any investment in Shares will depend upon the investor’s particular circumstances. It is the obligation of investors to make their own enquiries concerning the taxation consequences of an investment in the Company. The Company and its advisors do not accept any responsibility or liability for any taxation consequences to investors in respect of the issue of Shares under this Prospectus.

Section 10.12 outlines some taxation considerations for Australian taxpayers.

If you are in any doubt as to the course of action you should consult your professional advisor.

8.20 PRIvACy

If you complete an Application, you will be providing personal information to the Company (directly or via the Share Registrar).

You can obtain a copy of the Company’s privacy policy online at the Company’s website. For further information refer Section 10.11.

8.21 DESCRIPTION OF SHARES AND CONSTITuTION

The shares issued under this Prospectus will be fully paid ordinary shares in the capital of the Company and will rank equally with the Existing Shares. The rights attaching to the Shares are:

• set out in the Constitution

• in certain circumstances, regulated by the Corporations Act, ASX Listing Rules, ASX Settlement Operating Rules and common law.

A summary of the principal rights, liabilities and obligations attaching to Shares and a description of the material provisions of the Constitution is set out below. This summary is not intended to be an exhaustive or definitive summary of the rights and liabilities of Shareholders. For a Shareholder to obtain a definitive assessment of the rights which attach to Shares in any specific circumstance, the Shareholder should seek their own legal advice.

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(a) Voting rights

Subject to any special rights or restrictions attached to any class or classes of shares in the Company, at a general meeting, every holder of Shares present in person or by proxy, body corporate representative or attorney has one vote on a show of hands and one vote for each Share held on a poll.

Votes are cast by a show of hands unless a poll is demanded. The chairperson of the meeting or at least five Shareholders entitled to vote on the resolution or Shareholders with at least 5% of the votes that may be cast on the resolution may demand a poll.

(b) General meetings

Each holder of Shares is entitled to receive written notice of and attend and vote at general meetings of the Company. The Company must give at least 28 days written notice of a general meeting of the Company. Two Shareholders must be present to constitute a quorum for a general meeting and no business may be transacted at any meeting except the election of a chairperson of the meeting and an adjournment, unless the quorum required is present at the start of the business. The Company is obliged to convene and hold an annual general meeting in accordance with the Corporations Act.

(c) Dividends

Subject to and in accordance with the Corporations Act, the ASX Listing Rules, the rights of any preference shareholders and the rights of the holders of any Shares created or raised under any special arrangement as to dividend, the Directors may determine that a dividend is payable and fix the amount, the time of payment and the method of payment. Dividends shall be payable only out of the profits.

The Directors may from time to time pay to the Shareholders any interim dividend that they may determine. No dividend shall carry interest as against the Company. The Directors may set aside out of the profits of the Company such sums as they think proper as reserves, to be applied at their discretion for any purpose for which the profits of the Company may be properly applied.

Subject to the ASX Listing Rules and the Corporations Act, the Company may, by resolution of the Directors, implement a dividend reinvestment plan on such terms and conditions as the Directors think fit. The dividend reinvestment plan may provide for dividends (relating to participating Shares), less any amount which the Company be entitled or obliged to retain, to be applied by the Company to the subscription price of Shares.

(d) Transfer of Shares

Generally, all Shares are freely transferable subject to the procedural requirements of the Constitution and to the provisions of the Corporations Act, ASX Listing Rules and ASX Settlement Operating Rules and in any other case recognised under the Corporations Act or by any instrument in writing in any usual or common form or in any other form that the Directors approve. If the Company refuses to register a paperbased transfer it must tell the lodging party in writing of the refusal and the reason for it.

(e) Rights on winding-up

Subject to the rights of holders of any securities who have priority on a winding-up, if the Company is wound up, any surplus will be divided amongst holders of Shares in proportion to the number of Shares held by them. If the Company is wound up, the liquidator may, with the authority of a special resolution, divide among the Shareholders in kind the whole or any part of the property of the Company and may, for that purpose, set a value as the liquidator considers fair upon the property to be so divided and may determine how the division is to be carried out between the Shareholders.

The liquidator may, with the authority of a special resolution of the Company, vest the whole or any part of any such property in trustees upon such trusts for the benefit of the contributories as the liquidator thinks fit, but so that no Shareholder is compelled to accept any Shares or other securities in respect of which there is any liability.

(f) Issue of further Shares

The Directors may issue Shares and grant options over unissued Shares on such terms and conditions as the Directors in their absolute discretion shall determine. Subject to the Corporations Act, the Company with the approval of Shareholders may convert its Shares into a larger or smaller number of Shares, and may reduce its Share capital and may buy back its Shares.

(g) Variation of class rights

At present, the Company’s only class of shares on issue is ordinary shares. Subject to the Corporations Act and the terms of issue of a class of shares, the rights attaching to any class of shares may be varied or cancelled:

• with the consent in writing of the holders of three-quarters of the issued shares included in that class; or

• by a special resolution passed at a separate meeting of the holders of those shares.

In either case, in accordance with the Corporations Act, the holders of not less than 10% of the votes in the class of shares, the rights of which have been varied or cancelled, may apply to a court of competent jurisdiction to exercise its discretion to set aside such variation or cancellation.

(h) Share buy-backs

Subject to the Corporations Act and ASX Listing Rules and the ASX Settlement Operating Rules, the Company may buy back Shares on terms and at times as determined by the Board.

(i) Sale of listed securities of minority member

Subject to the Corporations Act and ASX Listing Rules, the Company may sell the shares of a Shareholder who holds less than a marketable parcel of Shares, provided that the procedures set out in the Constitution are followed.

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Details of the offer

8.21 DESCRIPTION OF SHARES AND CONSTITuTION (cont’d)

(j) Directors’ appointment and rotation

Under the Constitution, the minimum number of Directors that may comprise the Board is three and the maximum is fixed by the Directors, but may not be more than seven unless the Shareholders pass a resolution varying that number. Directors are elected at annual general meeting of the Company. Retirement will occur on a rotational basis so that no Director (excluding the Managing Director) holds office without re-election beyond the third annual general meeting following the meeting at which the Director was last elected. The Directors may also appoint a Director to fill a casual vacancy on the Board or in addition to the existing Directors, who will then hold office until the next annual general meeting of the Company.

(k) Directors’ voting

Decisions arising at a meeting of the Board will be decided by a majority of votes of the Directors present at the meeting and entitled to vote on the matter. In the case of an equality of votes on a resolution, the chairperson of the meeting has a second or casting vote, unless there are only two Directors present or qualified to vote, in which case the proposed resolution is taken as having been lost.

(l) Indemnities and access to records

The Company, to the extent permitted by law, indemnifies each Director against any liability incurred by that person as an officer of the Company or its subsidiaries, and reasonable legal costs incurred by that person in defending an action for a liability of that person. The Company, to the extent permitted by law, may make a payment (whether by way of an advance, loan or otherwise) to a Director in respect of legal costs incurred by that person in defending an action for a liability of that person.

The Company, to the extent permitted by law, may pay, or agree to pay, a premium for a contract insuring any Director against any liability incurred by that person as an officer of the Company or its subsidiaries and legal costs incurred by that person in defending an action for a liability of that person.

The Company, to the extent permitted by law, may enter into an agreement or deed with a Director or a person who is, or has been, an officer of the Company or its subsidiaries, under which the Company must do all of the following:

• keep books of the Company and allow either or both that person and that person’s advisors access to those books on the terms agreed

• indemnify that person against any liability incurred by that person as an officer of the Company or its subsidiaries and legal costs incurred by that person in defending an action for a liability of that person

• make a payment (whether by way of advance, loan or otherwise) to that person in respect of legal costs incurred by that person in defending an action for a liability of that person

• keep that person insured in respect of any act or omission by that person while a Director, or an officer of the Company or its subsidiaries, on the terms agreed (including as to payment of all or part of the premium for the contract for insurance).

(m) Proportional takeover bids

The Constitution contains provisions requiring Shareholder approval in relation to any proportional takeover bid. The provisions will lapse three years from the date of the adoption of the Constitution unless renewed by a special resolution of Shareholders in a general meeting.

(n) Directors’ remuneration

The Directors, other than the Managing Director, will be paid by way of fees for services up to the aggregate sum per annum as may be approved from time to time by the Company in general meeting. The current aggregate sum per annum is $250,000. Any change to that maximum aggregate sum needs to be approved by Shareholders. The Constitution also makes provision for the Company to pay all reasonable expenses of Directors in attending meetings and carrying on their duties. The current remuneration arrangements for non-executive Directors are detailed in Section 6.4(c) and the current remuneration arrangements for the Managing Director is detailed in Section 6.5(a).

(o) Amendment to the Constitution

The Constitution may only be amended by a special resolution passed by at least 75% of Shareholders present (in person or by proxy) and entitled to vote on the resolution at a general meeting of the Company. In addition, at least 28 days written notice specifying the intention to propose the resolution as a special resolution must be given.

8.22 DESCRIPTION OF OPTIONS

Set out below are the terms and conditions of the Options on issue:

• Each Option entitles the holder to subscribe for one Share.

• Each Option is exercisable at any time prior to 5.00pm WST on 30 June 2015 by notice in writing to the Company accompanied by payment of the exercise price of 32.2 cents per Share.

• Subject to the Corporations Act and the Constitution, Options are freely transferable.

• All Shares to be allotted pursuant to the exercise of Options will rank pari passu in all respects with the Company’s then issued Shares.

• There are no participating rights or entitlements inherent in an Option and holders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Options without exercising the Option. However, the Company will ensure that, for the purposes of determining entitlements to any such issue, the record date will be at least 14 days after the issue is announced. This will give holders of Options the opportunity to exercise their Options prior to the date for determining entitlements to participate in any such issue.

• If at any time the issued capital of the Company is reconstructed, all rights of an Option holder are to be changed in a manner consistent with the Corporations Act and the ASX Listing Rules at the time of the reconstruction.

90

• Shares issued pursuant to the exercise of an Option will be issued at the end of each month after the receipt of a properly executed notice of Option exercise and the application monies in respect of the exercise of the Options.

• A certificate will be issued for the Options and exercise of the Options will be effected by completing the notice of exercise of the Options which accompanies the certificate and delivering it to the Company together with payment of the required exercise price.

• The Company will issue a new certificate in the event that part only of the Options are exercised for the balance of the Options held and not exercised.

• The Company will at least ten business days prior to expiry of the Options (but no earlier than 90 days prior to expiry) send notices to the holders of Options stating the name of the holder, the number of Options held, the exercise price, the due date for payment and the consequences of non-payment.

• Options not exercised by the expiry date will lapse. There is no obligation to exercise an Option.

• The Options are unquoted securities. The Company will not seek to apply for Official Quotation of the Options.

• An Option does not confer the right to a change in the exercise price or a change in the number of underlying securities over which the Option can be exercised.

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DTI Group Ltd 2014 prospectus

Patent Attorney’s Intellectual Property Report

9

9 Patent Attorney’s Intellectual Property Report

Our Ref: 164508 24 October 2014 The Directors DTI Group Ltd 50 Affleck Road PERTH AIRPORT WA 6105

Dear Directors

INTELLECTUAL PROPERTY REPORT

This report is about patents and patent applications owned by DTI Group Ltd ("DTI"), its subsidiary, or its predecessors in title. This report is submitted for inclusion in a prospectus to be issued by DTI.

Executive Summary

• There are two patent families in the portfolio of DTI.

• The first patent family protects an invention entitled "Testing surveillance camera installations" with patents registered in the United States of America, Australia and New Zealand, and a patent pending in Canada.

• The second patent family protects an invention entitled "Virtual Observer" with patents registered in Australia, Belgium, Germany, France, United Kingdom and the Netherlands, and patents pending in the United States of America and Canada.

• All patents and patent applications have been assigned to DTI or its subsidiary. The assignments are currently being recorded on the granted patents and pending patent applications with each relevant patent office.

• Four provisional patent applications in the field of pantograph technology have been recently filed. However, as these inventions are not yet in the public domain we are unable to provide further details about these inventions in this report.

DTI Group Ltd 2014 PROSPECTUS 93

PATENT ATTORNEY’S INTELLECTUAL PROPERTY REPORT

The Directors Our Ref: 164508 24 October 2014

Background

FB Rice is a firm of patent and trade mark attorneys specialising in the law and practices relating to intellectual property and, more particularly, patents, trademarks, industrial designs and plant breeders rights. All partners of FB Rice are Fellows of the Institute of Patent and Trade Mark Attorneys of Australia. In addition, all partners of FB Rice are registered New Zealand patent attorneys. The patent attorneys of FB Rice are specialists in the technology areas of electrical and mechanical engineering, electronics, chemistry, biotechnology, medical devices, computers and information and communication technology. Each of the professional staff members in the patent department of FB Rice holds tertiary qualifications in the technology area in which that person practises. Most of the professional staff members of FB Rice in the patent department also hold postgraduate qualifications.

Patents

Patents are an important component of an intellectual property portfolio. To obtain protection in any jurisdiction, it is necessary to file an application for registration of the relevant right in that jurisdiction. Patents are a form of intellectual property that cover inventions and provide a monopoly in exchange for an inventor's full disclosure of his or her invention to the public. Patents are granted for inventions that are new or improved useful products. A patent has a finite term, generally 20 years, and provides the owner with a period in which others may be excluded from commercially exploiting an invention that is covered by the claims of the granted patent. However, the granting of patent rights does not confer a right on the patentee to exploit an invention and this is subject to the existence of any intervening third party rights, such as an earlier patent in the same field which is in force in respect of over-arching technology. This report is concerned with patents to which DTI has rights and which concern, primarily, a novel automatic testing system for surveillance camera installations and a wide-area video surveillance network (Virtual Observer).

Set out below are details of patents owned by DTI or its predecessors in title. Information concerning the status of the patents and patent applications is based on data from FB Rice records and its renewals agent CPA Global. DTI's portfolio of patent properties is divided into two inventions each protected by a patent family.

Invention 1: Testing surveillance camera installations

This invention concerns the testing of surveillance camera installations. In particular, the invention involves an automatic testing system for surveillance camera installations, and a method for testing. The invention involves receiving test or "probe" images from each camera in the installation. A reference image from each camera is stored. A comparison is made between the probe image with a reference image from the same camera so as to automatically detect when maintenance is required for that camera. The comparison involves the steps of (a) extracting salient features from both the probe and reference images; (b) calculating matching factors between the salient features extracted from both images; and (c) computing a decision about whether maintenance is required from the matching factors.

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The Directors Our Ref: 164508 24 October 2014

Country	Number	Status	Expires
United States of America	8305438	Registered	24 October 2028
Australia	2007231552	Registered	28 March 2027
New Zealand	571839	Registered	28 March 2027
Canada	2644451	Pending

This invention was provisionally protected as an Australian provisional patent application 2006901599 filed with IP Australia on 29 March 2006. Following the usual course, this Australian provisional application has been succeeded by an International (PCT) application PCT/AU2007/00398. This International (PCT) patent application claimed priority from the Australian provisional application and was filed on 28 March 2007. Again, following the usual course, this International (PCT) application has now lapsed but the rights in some countries were preserved by entering national phase. These national phase applications that have not lapsed are set out below.

This invention is protected in the United States of America by a granted patent 8305438. The scope of monopoly in the United States of America is specific to details of matching factors and their use in the determination of whether maintenance is required. The next renewal fee is due on 6 May 2016. Provided all renewal fees are paid in a timely fashion, this United States of America patent will expire no later than 24 October 2028.

This invention is protected in Australia by a granted patent 2007231552. Similarly to the United States of America, the scope of monopoly in Australia is specific to details of the matching factors. The next renewal fee is due on 28 March 2015. Provided all renewal fees are paid in a timely fashion, this Australian patent will expire no later than 28 March 2027.

This invention is protected in New Zealand by a granted patent 571839. The scope of monopoly in New Zealand is the same as the scope sought in the International (PCT) application. The next renewal fee is due on 28 March 2017. Provided all renewal fees are paid in a timely fashion, this New Zealand patent will expire no later than 28 March 2027.

This invention is protected by a pending patent application in Canada 2644451. The scope of monopoly currently being sought is substantially similar to the scope of monopoly achieved in the United States of America. A response to an examination report has been recently filed with the Canadian Intellectual Property Office. We await notification of further progress of examination in Canada. The next renewal fee is due on 28 March 2015. Provided this Canadian patent application passes examination and all renewal fees are paid in a timely fashion, the resulting Canadian patent will expire no later than 28 March 2027.

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DTI Group Ltd 2014 PROSPECTUS

PATENT ATTORNEY’S INTELLECTUAL PROPERTY REPORT

The Directors Our Ref: 164508 24 October 2014

Invention 2: Virtual Observer

This invention concerns wide-area video surveillance system where some cameras are located on moving vehicles. In particular, a surveillance network, a virtual observer itself, and also the method for operating a virtual observer. Each camera in the surveillance network captures video. Segments or frames of video, from each camera are associated with trajectory parameters of (a) time and (b) spatial position, and possibly (c) radius, (d) orientation, and (e) resolution and field of view. The frame and the associated trajectory parameters are stored. The stored information can be used to create a composite view from an imaginary camera located in the network.

Country	Number	Status	Expires
Australia	2007240116	Registered	13 April 2027
Belgium	2005748	Registered	13 April 2027
Germany	2005748	Registered	13 April 2027
France	2005748	Registered	13 April 2027
United Kingdom	2005748	Registered	13 April 2027
The Netherlands	2005748	Registered	13 April 2027
United States of America	12/297,118	Pending
Canada	2643768	Pending

This invention was provisionally protected as an Australian provisional patent application 2006901978 filed with IP Australia on 13 April 2006. Following the usual course, this Australian provisional application has been succeeded by an International (PCT) application PCT/AU2007/000483. This International (PCT) patent application claimed priority from the Australian provisional application and was filed on 13 April 2007. Again, following the usual course, this International (PCT) application has now lapsed but the rights in some countries were preserved by entering national phase. These national phase applications that have not lapsed are set out below.

This invention is protected in Australia by a granted patent 2007240116. The scope of monopoly in Australia is specific to the cameras being both static and moving. The next renewal fee is due on 13 April 2015. Provided all renewal fees are paid in a timely fashion, this Australian patent will expire no later than 13 April 2027.

This invention is protected in Belgium by a granted patent 2005748. The scope of monopoly in Belgium is specific to the cameras being mounted in a fleet, and using the stored information to also construct the virtual view. This Belgian patent is a validation of the European patent. The next renewal fee is due on 13 April 2015. Provided all renewal fees are paid in a timely fashion, this Belgian patent will expire no later than 13 April 2027.

The facts of the above Belgian patent also apply to the German patent 2005748, French patent 2005748, United Kingdom patent 2005748 and the Netherlands patent 2005748.

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The Directors Our Ref: 164508 24 October 2014

This invention is protected by a pending patent application 12/297,118 in the United States of America. The scope of monopoly currently being sought is similar to the protection achieved in Belgium and further specific to particular observation parameters of the virtual viewpoint. A response to an examination report has been recently filed with the United States Patent and Trademark Office. We await notification of further progress of examination in the United States of America. Renewal fees become due after grant. Provided this United States of America patent application passes examination and all renewal fees are paid in a timely fashion, the resulting United States of America patent will expire no earlier than 13 April 2027.

This invention is protected by a pending patent application 2643768 in Canada. A response to an examination report is due to be filed with the Canadian Intellectual Property Office by 28 July 2014 and FB Rice has instructions from DTI to do this. In that response the monopoly sought will be similar to the scope achieved in Belgium. The next renewal fee is due on 13 April 2015. Provided this Canadian patent application passes examination and all renewal fees are paid in a timely fashion, the resulting Canadian patent will expire no later than 13 April 2027.

Pantograph technology

Four inventions have been provisionally protected as Australian provisional patent applications filed with IP Australia, as follows:

Title	Number	Status	Date filed
Identification of a pantograph represented in an image	2014903664	Pending	15 September 2014
Identification of a contact point between a pantograph and a power supply line in an image	2014903665	Pending	15 September 2014
Arcing filtering using multiple image capture devices	2014903670	Pending	15 September 2014
Arc detection system and method	2014903671	Pending	15 September 2014

These inventions are provisionally protected essentially everywhere in the world. To prevent these provisional rights from lapsing, further patent applications claiming priority from the above provisional applications must be filed by 15 September 2015. These further patent applications can be either International (PCT) patent applications or individual patent applications for specific jurisdictions in which protection is sought.

Assignment

The patent portfolio entitled "Testing Surveillance Camera Installations" was assigned from the Curtin University of Technology to DTI on 1 January 2010. The patent portfolio entitled "Virtual Observer" was assigned from the Curtin University to Virtual Observer Pty Ltd on 12 June 2012. According to our search of the Australian Securities and Investments Commission register, Virtual Observer Pty Ltd is wholly owned by DTI. These assignments are currently being recorded with each patent office against the pending and registered patents listed above.

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DTI Group Ltd 2014 PROSPECTUS

PATENT ATTORNEY’S INTELLECTUAL PROPERTY REPORT

The Directors Our Ref: 164508 24 October 2014

General statements about the status of patents and patent applications

We believe the information provided here to be accurate but caution that the accuracy of such information is, of necessity, subject to the accuracy of the databases accessed.

Patent validity and infringement of third party rights

FB Rice make no assertion that the patents and patent applications are valid or enforceable or that DTI has the freedom in any country to exploit the technology referred to in the relevant patent specifications without infringing the rights of third parties.

FB Rice cannot guarantee that the patents, even if valid, will adequately cover any commercial products commercialised by DTI, its licensees or sub-licensees, or that the inventions achieve the stated results or advantages.

Independence

FB Rice were instructed by DTI to prepare this report. FB Rice have prepared this report for inclusion in the DTI prospectus on a strictly commercial fee-for-service basis. To the best of our knowledge and belief, no partner or employee of FB Rice has any financial interest in DTI.

Yours sincerely FB RICE

Connie Merlino Partner cmerlino@fbrice.com.au

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Additional Information

10

10 Additional Information

10.1 CORPORATE bACKGROuND

DTI was registered in the state of Western Australia on 8 June 1995 as a private company. The Company’s status was converted to a public company on 27 August 2004 and the Company’s name was changed to DTI Group Ltd on 21 January 2005.

10.2 COMPANy TAX STATuS

The Company is taxed as an Australian tax resident public company for the purpose of Australian income tax law.

10.3 CORPORATE STRuCTuRE

The table below lists the entities which are directly wholly owned (100%) subsidiaries of DTI. The Company does not have any partly owned subsidiaries.

Table 10.1: Wholly owned subsidiaries of DTI

Table 10.1:Wholly owned subsidiarie	s of DTI
	Country of
Entity	Incorporation
Virtual Observer Pty Ltd1	Australia
DTI EMEA Ltd2	United Kingdom
DTI Capital Pty Ltd3	Australia

1 The developer and owner of DTI’s Virtual Observer technology as described in Section 3.2(h)(i).

2 The marketer of DTI’s products and software solutions in the United Kingdom.

3 Currently dormant with no activities.

10.4 CAPITAL STRuCTuRE

The table below sets out the share capital of DTI as at the date of this Prospectus and at Completion of the Offer.

Table 10.2: Share capital of DTI

	Pre-Offer Post-Offer
	Shares % Shares % Options3
Directors1 Other Existing Shareholders2 New Shareholders from the Offer	21,118,153 27.6 21,118,153 25.4 11,545,660 55,332,858 72.4 55,332,858 66.6 825,146 – – 6,680,000 8.0 –
Total	76,451,011 100.0 83,131,011 100.0 12,370,806

1 Refer to table 6.3

2 Refer to table 10.3

3 The terms and conditions of the Options are set out in Section 8.22.

(a) Details of Existing Shareholders’ (excluding Directors) holdings

Details of Existing Shareholders’ (excluding Directors) holdings as at the date of this Prospectus and at Completion of the Offer are set out in the table 10.3:

100

Table 10.3: Details of Existing Shareholders’ (excluding Directors) holdings

Table 10.3:Details of Existing Shareholders’ (ex	cluding Directors)	holdings
	Pre-Offer		Post-Offer
ExistingShareholder	Shares	%	Shares	%	Options	%
VIX Investments Ltd	12,250,000	16.0	12,250,000	14.7	218,750	1.8
LeGrande Investments Pty Ltd	5,791,317	7.6	5,791,317	7.0	86,870	0.7
Fineshore Pty Ltd	3,699,150	4.8	3,699,150	4.4	79,989	0.6
Pendulum Investments Pty Limited	3,594,178	4.7	3,594,178	4.3	54,691	0.4
Mr N Tuflli	2,754,738	3.6	2,754,738	3.3	41,321	0.3
Bernville Pty Ltd	2,362,500	3.1	2,362,500	2.8	35,000	0.3
Super RAB Pty Ltd	2,362,500	3.1	2,362,500	2.8	35,000	0.3
LTC Management Pty Ltd	1,963,892	2.6	1,963,892	2.4	43,750	0.4
Wood Street Pty Limited	1,800,477	2.4	1,800,477	2.2	43,750	0.4
Stephens Group Pty Ltd	1,662,500	2.2	1,662,500	2.0	–	–
LacyDee Investments Pty Ltd	1,573,075	2.1	1,573,075	1.9	–	–
Mr M R Beech & Mrs R L Beech	1,400,000	1.8	1,400,000	1.7	17,500	0.1
Foxmore Holdings Pty Ltd	1,333,332	1.7	1,333,332	1.6	19,999	0.2
Dalcrest Investment Pty Ltd	1,324,071	1.7	1,324,071	1.6	19,859	0.2
Cleary Nominees Pty Ltd	1,225,329	1.6	1,225,329	1.5	–	–
Mr A G P Baker & Mrs R J Baker	1,207,500	1.6	1,207,500	1.5	–	–
Pendulum Group Pty Limited	1,108,380	1.4	1,108,380	1.3	–	–
Zanea Pty Ltd	1,106,000	1.4	1,106,000	1.3	–	–
Perpetual Trustee Company Limited	896,000	1.2	896,000	1.1	12,950	0.1
<Darryl James Smalley Personal
Superannuation Fund>
D & J Cleary	875,000	1.1	875,000	1.1	43,750	0.4
Faiban Pty Ltd	837,501	1.1	837,501	1.0	27,874	0.2
LTC Management Pty Ltd	770,154	1.0	770,154	0.9	–	–
Papl Moodco Pty Ltd	612,500	0.8	612,500	0.7	–	–
Delacy Holdings Pty Ltd	521,500	0.7	521,500	0.6	8,750	0.1
Lanzerac Nominees Pty Ltd	490,000	0.6	490,000	0.6	13,125	0.1
E L Bolto & K Wells	466,669	0.6	466,669	0.6	–	–
Mr A D Moody & Mrs G P Moody	350,000	0.5	350,000	0.4	17,500	0.1
Mr D Abbott	331,653	0.4	331,653	0.4	4,718	–
Rannon Pty Ltd	306,250	0.4	306,250	0.4	–	–
Protea Holdings Pty Ltd	262,500	0.3	262,500	0.3	–	–
Mr W Lau	84,000	0.1	84,000	0.1	–	–
Mr R M Gougeon	10,192	0.0	10,192	0.0	–	–
Total	55,332,858	72.4	55,332,858	66.6	825,146

Notes

• 90% of the Existing Shares held by the Existing Shareholders set out in table 10.3 will be subject to voluntary escrow arrangements which are described in Section 8.18.

• • The Existing Shareholders set out in table 10.3 have the right to and may apply for New Shares under the Offer. The shareholdings of Existing Shareholders set out in the Post-Offer Share column of table 10.3 do not reflect any New Shares which may be issued to the Existing Shareholders under the Offer.

• The percentages in table 10.3 are calculated based on the total number of Shares on issue on a pre-Offer and post-Offer basis.

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AdditionAl informAtion

10.4 CAPITAL STRuCTuRE (cont’d)

(b) Details of Directors’ holdings

Details of the holdings of Directors are set out in Section 6.4(b).

10.5 MATERIAL AGREEMENTS

The Directors consider that the material contracts summarised below and elsewhere in this Prospectus are the contracts which an investor would reasonably regard as material and which investors and their professional advisors would reasonably expect to find described in this Prospectus for the purpose of making an informed assessment of the Offer.

As this Section only contains a summary, the provisions of each agreement are not fully described. To understand fully all rights and obligations pertaining to the material agreements, it would be necessary to read them in full.

(a) Underwriting Agreement

DTI and Baillieu Holst (Underwriter) are parties to an underwriting agreement entered into on or about the date of this Prospectus (Underwriting Agreement). Under the Underwriting Agreement, the Underwriter has agreed to act and fully underwrite the Offer.

(i) Fees

DTI has agreed to pay the Underwriter a fee of $60,000 in connection with the Offer. In addition, the Company has agreed to reimburse the Underwriter for certain agreed costs and expenses incurred by the Underwriter in relation to the Offer.

(ii) Termination events

The Underwriter may, at any time after lodgement of the Prospectus with ASIC and on or before the Completion of the Offer, or at any other time as specified below, terminate the Underwriting Agreement by notice to DTI on the occurrence of a number of customary termination events, including (among others):

• a statement in any of the offer documents is or becomes misleading or deceptive or is likely to mislead or deceive, or a matter required to be included is omitted from an offer document

• there occurs a new circumstance that arises after the Prospectus is lodged that would have been required to be included in the Prospectus if it had arisen before the lodgement

• DTI issues, or, in the reasonable opinion of the Underwriter, is required to issue, a supplementary Prospectus to comply with section 719 of the Corporations Act

• the S&P/ASX 200 Index falls to a level that is 90% or less than the level it was at the close of trading for two consecutive business days or on the business day immediately prior to the Completion of the Offer

• the voluntary restriction agreements entered into between DTI and Existing Shareholders, in respect of the Existing Shares, remaining on foot and unvaried with no party in default

• there are not, or there ceases to be, reasonable grounds in the reasonable opinion of the Underwriter for any statement or estimate in the offer documents, which relates to a future matter, unlikely to be met in the projected timeframe (including in each case financial forecasts)

• approval is refused or not granted, or approval is granted subject to conditions other than customary conditions, to the Company’s admission to the Official List on or before the shortfall notification date, or the quotation of the Offer Shares on ASX through CHESS on or before the Listing Date, or if granted, the approval is subsequently withdrawn, qualified (other than by customary conditions) or withheld

• DTI alters its issued capital or any member of the DTI Group disposes or attempts to dispose of a substantial part of the business or property of the DTI Group without the Underwriter’s prior written consent

• the insolvency of the Company or any group member

• a material contract being altered, amended or varied without the consent of the Underwriter

• where an event occurs which is, or is likely to give rise to, a material adverse change that would be required to be included in the offer documents if it had arisen before the initial distribution or lodgement

• where a statement or expression or opinion in the Prospectus which relates to a future matter (including any forecast or prospective financial statement) becomes incapable of being met.

The Underwriter may, at any time after lodgement of the Prospectus with ASIC and on or before the Completion of the Offer, terminate the Underwriting Agreement if certain customary events occur and the Underwriter has reasonable grounds to believe that the event has or could reasonably be expected to have a material adverse effect on the success or outcome of the Offer, the trading price of the Shares on ASX or there is a reasonable possibility of the Underwriter contravening or incurring liability under any applicable laws as a result of the event. These events include (amongst others):

• the due diligence report or verification material or any other information supplied by or on behalf of DTI to the Underwriter in relation to the DTI Group or the Offer is, or becomes, false or misleading or deceptive, including by way of omission

• a change occurs in the senior management of the Company, as set out in Section 6.3, or the Board; or

• a representation, warranty, undertaking or obligation contained in the Underwriting Agreement on the part of DTI (whether severally or jointly) is breached, becomes not true or correct or is not performed.

(iii) Conditions, representations, warranties and undertakings

The Underwriter’s obligation to underwrite the Offer is conditional on:

• the voluntary restriction agreements entered into between DTI and Existing Shareholders in respect of the escrow of Existing Shares, remaining on foot

102

• DTI providing closing certificates which confirm in writing they have complied with their obligations under the Underwriting Agreement and the Offer when required

• DTI applying for Official Quotation of the Shares offered under the Offer within seven days after the date of this Prospectus

• ASX indicating, by the date the Underwriter has to subscribe for any shortfall to the Offer, that it will grant Official Quotation of the Shares offered subject only to customary conditions.

DTI gives certain standard representations, warranties and undertakings to the Underwriter that are customary for an underwriting agreement of this kind. These relate to matters such as the conduct of DTI, information provided by DTI, financial information, material contracts, licences, insurance and information in this Prospectus.

DTI’s undertakings include that they will, from the date of the Underwriting Agreement until 180 days after Completion of the Offer, without the Underwriter’s prior consent (not to be unreasonably withheld or delayed):

• not issue, or agree to issue, or indicate that they may or will issue, or grant any rights to be issued, any securities or convertible securities, other than under the Underwriting Agreement, the Offer, the exercise of existing Options, an employee incentive plan, non-underwritten dividend reinvestment plan or bonus plan

• carry on their businesses in the ordinary course and have not and will not dispose or agree to dispose of the whole or any part of their business or their property except in the ordinary course or as disclosed in this Prospectus.

In addition to the above undertakings, DTI undertakes that it will not alter the issued capital of the Company or amend the Constitution.

(iv) Indemnity

Subject to certain exclusions relating to, amongst other things, gross negligence, fraud or wilful misconduct of an indemnified party, DTI agrees to indemnify the Underwriter and certain affiliated parties indemnified from losses suffered in connection with the Offer.

(b) CEO Agreement

The CEO Agreement is the remuneration and reward framework established by the Company for the Managing Director and Chief Executive Officer, Richard Johnson.

The CEO Agreement is designed to provide a competitive base salary with the addition of short- and long-term incentive rewards to attract and retain a strong candidate and promote financial performance and growth, whilst also encouraging longterm Shareholder value.

(i) Salary package

Under the CEO Agreement, the Managing Director and Chief Executive Officer, Richard Johnson, is currently entitled to receive a fixed base remuneration of $240,000 per annum (exclusive of

statutory superannuation contributions) (Base Salary).

In addition to the Base Salary, Mr Johnson is eligible to earn:

• short-term incentives of up to 25% of his Base Salary per annum (ie currently up to $60,000 per annum) payable in cash or Shares at Mr Johnson’s election (ST Incentives)

• long-term incentives of up to 33.3% of his Base Salary per annum (ie currently up to $80,000 per annum) payable by the issue of Shares (LT Incentives).

Accordingly, based on Mr Johnson’s current Base Salary, the maximum remuneration under the CEO Agreement, is currently up to $380,000 per annum in cash and Share-based compensation (exclusive of statutory superannuation contributions).

The ST Incentives and LT Incentives are subject to achievement of qualitative non-financial performance indicators and the achievement of key financial metric targets (Performance Hurdles).

The ST Incentives and LT Incentives earned by Mr Johnson for a financial year are determined after the audited financial results for the financial year are completed. At the same time, his Base Salary is reviewed to ensure the Chief Executive Officer’s remuneration is competitive within the market, and the Performance Hurdles that apply for the subsequent financial year are set by the Nominations and Remuneration Committee.

For FY14 Mr Johnson’s bonus under the ST Incentives was $18,000 and $48,000 under the LT Incentives. Mr Johnson received his ST Incentive and LT Incentive bonuses for FY14 in cash.

(ii) ST Incentives

Under the ST Incentives, Mr Johnson is eligible to receive up to $60,000 per annum in the form of a cash bonus, which is contingent on his achievement of certain performance conditions. The cash bonus is calculated by allocating:

• up to 70% of the bonus on achievement of EBITDA targets established at the start of each financial year

• up to 30% of the bonus based on certain key qualitative performance metrics, such as project management and leadership, as determined by the Nominations and Remuneration Committee.

The maximum bonus payable under the ST Incentives annually is $60,000 based on the current Base Salary.

The EBITDA targets established by the Nominations and Remuneration Committee are measured by adopting the same accounting standards as those adopted in the financial statements for that financial year.

Under the ST Incentives, the Chief Executive Officer has the right to elect to take the cash payment in the form of performance incentive Shares (which rank equally with Shares).

(iii) LT Incentives

The LT Incentives are in the form of shares in the Company. The ownership of Shares is designed to align the interests of the Chief Executive Officer with those of Shareholders.

DTI Group Ltd 2014 prospectus 103

AdditionAl informAtion

10.5 MATERIAL AGREEMENTS (cont’d)

The value of the Shares earned under the LT Incentives is based on the achievement of earnings per share performance targets of the Company established at the start of each financial year and certain key qualitative performance metrics as determined by the Nominations and Remuneration Committee. The split between the performance conditions are:

• up to 50% of the bonus on achievement of earnings per share targets established at the start of each financial year

• up to 50% of the bonus based on certain key qualitative performance metrics, such as project management and leadership, as determined by the Nominations and Remuneration Committee.

The maximum bonus payable under the LT Incentives is $80,000 per annum based on the current Base Salary.

With the continued growth of the Company and Listing, the Board may implement an employee incentive scheme in the future as a way to retain and attract key management and staff and reward performance.

Any employee incentive scheme would be determined by the Nominations and Remuneration Committee and Shareholder approval to the scheme would be sought. The notice of meeting seeking Shareholder approval of the incentive scheme would disclose information as required by ASX Listing Rules.

(c) UTC product purchase and licensing agreements

On 9 August 2013, DTI entered into a product purchase agreement with UTC Fire & Security Americas Corporation Inc (UTC) under which UTC may, by purchase order, acquire specified DTI products (predominantly its MDR system) (UTC Product Purchase Agreement). There are no minimum purchase requirements. The contract’s initial term ends on 31 December 2017 and UTC may elect to extend for a further five years in certain circumstances. At the end of the term, the contract automatically renews for one-year periods (unless at least 90 days notice of non-renewal is given by a party).

On 19 July 2013, DTI entered into a licence agreement with UTC that grants UTC a non-exclusive, worldwide, nontransferrable licence (which UTC may sub-license) to use DTI’s intellectual property rights in respect of the MDR system hardware and software for the sole purpose of marketing, selling, distributing and maintaining of MDR systems sold by UTC or its affiliates. The agreement term ends on 31 December 2017 and UTC may elect to extend for a further five years provided UTC also extends the UTC Product Purchase Agreement.

(d) Ansaldo STS Australia

On 8 October 2013, DTI entered into a contract with Ansaldo STS Australia Pty Ltd for the supply of DTI video surveillance systems for remote monitoring of driverless trains and level crossings on rail lines which are operated by Rio Tinto in the North West of Western Australia. DTI anticipates completing the supply under this contract by the second half of calendar year 2014.

(e) SouthLink

On 19 February 2013, DTI entered into a contract with SouthLink, a South Australian business providing urban bus services in Adelaide’s outer suburbs. Under the contract DTI has agreed to supply and maintain DTI video surveillance equipment and software for SouthLink’s vehicles and depot. The contract term is three years ending on 19 February 2016.

(f) Brisbane City Council

On 25 September 2012, DTI entered into a contract with the Brisbane City Council (BCC) for the support and maintenance of DTI CCTV systems on BCC buses. The contract term ends on 18 September 2015 but may be extended for four years at BCC’s election.

(g) Bombardier Transportation

On 2 December 2011, DTI entered into a contract with Bombardier Transportation Australia Pty Ltd (Bombardier) for the manufacture, delivery, testing and commissioning of 22 CCTV systems for a new fleet of 22 trains for the South Australian Government. The contract provides for ongoing maintenance of the CCTV systems for a period of ten years to December 2021. DTI anticipates completing commissioning of the remaining CCTV systems by the second half of calendar year 2015.

On 2 December 2011, DTI entered into a contract with Bombardier for the manufacture, delivery, testing and commissioning of 31 CCTV systems for 31 trains for the Public Transport Authority of Western Australia. The contract provides for ongoing maintenance of the CCTV systems for a period of 7.5 years to June 2017. DTI anticipates completing commissioning of all the CCTV systems by the second half of calendar year 2015.

On 2 December 2011, DTI entered into a contract with Bombardier for the manufacture, delivery, testing and commissioning of 15 CCTV systems for 15 trains for the Public Transport Authority of Western Australia. DTI anticipates completing supply of these CCTV systems by the second half of calendar year 2014. The contract provides for ongoing maintenance of the CCTV systems for a period of ten years to December 2021. Bombardier issued an option for an additional 15 systems in August 2013 and 7 systems in May 2014. DTI anticipates completing commissioning of these systems by the second half of calendar year 2015.

(h) Eversholt Rail

On 2 September 2011, DTI entered into a contract with Eversholt Rail (UK) Limited (Eversholt) for the provision of various maintenance and support services in respect of DTI CCTV systems installed on two of Eversholt’s commuter train fleets operating in the East Anglia region of the UK. The contract term ends on 2 September 2016, with Eversholt having an option to extend for five years, and a further option to extend for four more years thereafter.

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(i) Queensland Rail

On 25 September 2008, DTI entered into a contract with QR Passenger Pty Ltd (Queensland Rail) for the design, manufacture, supply, assembly, testing and delivery of communications equipment and CCTV equipment for Queensland Rail Citytrain passenger trains. Under the contract DTI has manufactured, designed, tested and delivered a digital video surveillance system and communications system upgrades for 143 trains, with each train comprising 3 rail cars. DTI completed the supply of equipment in April 2013 and all amounts owed under the contract have been paid, other than a retention amount of approximately $250,000 payable after the defects liability period ends in 2018.

On 18 November 2011, DTI entered into a contract with Queensland Rail Limited for the installation of digital video surveillance systems and communications system upgrades for 143 trains. DTI completed installations in April 2013 and all amounts owed under the contract have been paid, other than a retention amount of approximately $150,000 payable after the defects liability period ends in 2018.

10.6 RELATED-PARTy TRANSACTIONS

As at the date of this Prospectus, the Company is a party to the following transactions with related parties:

• Each Director has received and continues to receive the benefit of a deed of indemnity, insurance and access as detailed in Section 6.4(f).

• Each Director has received and continues to receive the benefit of a policy of directors and officers insurance as detailed in Section 6.4(f).

• Richard Johnson is an executive Director and receives remuneration for the performance of his executive services as detailed in Section 6.5(a).

• Chris Morris, Glyn Denison, Neil Goodey and Jeremy King are non-executive Directors and are entitled to Directors fees for acting as such as detailed in Section 6.4(d).

Although not a related-party transaction, Chris Morris is the Chairman of the Directors and a substantial shareholder of Computershare, DTI’s share registrar. As at the date of this Prospectus, DTI has not incurred any charges by Computershare. Computershare is expected to be paid $5,000 for share registrar services related to this Prospectus as detailed in Section 10.9. DTI will pay Computershare for ongoing share registrar services in accordance with Computershare’s normal charging policy for public listed companies which are similar in size to DTI.

10.7 LEGAL PROCEEDINGS

So far as the Directors are aware, there are no current or threatened, civil litigation, arbitration, proceedings or administrative appeals or criminal or governmental precautions of a material nature in which the Company is directly or indirectly concerned which are likely to have a material impact on the business or financial position of the Company.

10.8 ASIC RELIEF

ASIC has also granted relief, under section 741(1)(a) of the Corporations Act, from the application of section 707(3) of the Corporations Act in respect of Shares that may be issued upon the exercise of existing Options after the Listing Date to enable holders of those Shares to freely on-sell those Shares after the Listing Date without requiring a prospectus. This relief is only given in respect of Shares which are issued on the exercise of existing Options within 12 months from the date of this Prospectus.

10.9 COSTS OF THE OFFER

The costs of the Offer set out below totalling approximately $315,000 (excluding GST) have been paid from existing cash reserves or will be payable from the Offer Proceeds.

Table 10.4: Costs of the Offer

Table 10.4:Costs of the Offer
Cost	Amount
Legal fees	85,000
Accounting fees	36,000
Share Registrar fees	5,000
ASX listing fees and ASIC lodgement fees	80,000
Underwriting fees	60,000
Patent attorney fees	9,000
Design and printing expenses	20,000
Other expenses	20,000
Total costs of the Offer1	315,000

1 The total costs of the Offer incurred by DTI are estimated at $315,000 of which $115,000 was expensed in FY14 and $200,000 will be offset in FY15 directly against equity raised in the Offer.

10.10 CONSENTS

Written consents to the issue of this Prospectus have been given and at the time of lodgement of this Prospectus with ASIC had not been withdrawn by the Directors. Written consents to be named in this Prospectus in the capacity indicated below and in the forms and context in which each is named, have been given by, and at the time of lodgement of this Prospectus have not been withdrawn:

• Baillieu Holst as the underwriter to the Offer

• Steinepreis Paganin as legal advisor (other than in relation to taxation matters to DTI in relation to the Offer)

• BDO Audit as auditor of DTI

• BDO Corporate Finance as investigating accountant to DTI in relation to the Offer

• Computershare Investor Services Pty Limited as share registrar to DTI

• Pendulum Capital as corporate advisor to DTI

• FB Rice as patent attorney to DTI

• Visiongain as the independent market research provider to DTI.

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AdditionAl informAtion

10.10 CONSENTS (cont’d)

None of these firms or companies has caused, authorised or otherwise has responsibility for the issue of this Prospectus or the preparation of any part of this Prospectus except for:

• BDO Corporate Finance in relation to the inclusion in this Prospectus of the Investigating Accountant’s Report in the form and context in which it is included

• FB Rice in relation to the inclusion in this Prospectus of the intellectual property report in the form and context in which it is included.

References are made in this Prospectus to entities that have certain dealings with DTI, including counterparties to material contracts referred to in this Prospectus. These entities have been referred to for information purposes only. These entities did not authorise or cause the issue of this Prospectus and have no involvement in the preparation of any part of this Prospectus.

None of these named firms, companies or entities makes any offer of Shares.

10.11 PRIvACy NOTIFICATION

By filling out the Application Form you are providing personal information to the Company.

The Privacy Act regulates the way the Company collects, uses, disposes, keeps secure and gives people access to their personal information.

The Company is committed to respecting the privacy of your personal information.

The Company collects, holds and uses that personal information in order to process your Application and to administer your shareholding in the Company. This includes the Company:

• setting up and maintaining a register of Shareholders in accordance with the Corporations Act

• communicating with Shareholders, such as sending annual reports, notices of meetings and any other documents which the Company wishes to send to Shareholders

• paying dividends

• complying with its legal and regulatory obligations.

If you do not provide the information requested in the Application Form, the Company may not be able to process or accept your Application.

Your personal information may be provided to the Company’s agents or service providers on the basis that they deal with such information in accordance with the Company’s directions.

The types of agents and service providers that may be provided with your personal information and the circumstances in which your personal information may be disclosed are:

• the Share Registrar for ongoing administration of the share register

• printers and mail houses for the purposes of preparation and distribution of documents to you and for handling mail

• professional service providers such as lawyers, accountants, auditors and other professional advisers for the purpose of administering and advising on the Shares and for any associated actions

• other companies where the Company believes it is more efficient to outsource services or functions to those companies.

Your personal information may be provided to certain third parties. The types of third parties that may be provided with your personal information, and the circumstances in which your personal information may be disclosed, are:

• your financial advisor or broker (other than your tax file number information) in connection with services provided to you by your advisor or broker

• government, regulatory authorities or other people when permitted or required by law, such as ASIC or people inspecting the share register in accordance with the Corporations Act

• ASX

• in certain circumstances and with safeguards to respect your privacy, potential or actual purchasers of an interest in the Company or the Company’s business or any part thereof.

You have the right to gain access to your personal information held by, or on behalf of, the Company, subject to certain exemptions under the law. You may be required to pay a reasonable charge in order to access your personal information.

10.12 TAXATION CONSIDERATIONS

The following considerations are for Australian taxpayers only. If you are a taxpayer in another jurisdiction, you should seek professional advice to determine the taxation implications of an investment in DTI.

(a) Australian taxation considerations

The following tax comments are based on the tax law in Australia in force as at the date of this Prospectus. Australian tax laws are complex. This summary is general in nature and is not intended to be an authoritative or a complete statement of all potential tax implications for each investor. During the ownership of the Shares by investors, the taxation laws of Australia or their interpretation may change. The precise implications of ownership or disposal will depend upon each investor’s specific circumstances. Investors should seek their own professional advice on the taxation implications of holding or disposing of the Shares, taking into account their specific circumstances.

The following information is a general summary of the Australian income tax implications for Australian resident individuals, complying superannuation entities, trusts, partnerships and corporate investors. These comments do not apply to investors that hold shares on revenue account, investors who are exempt from Australian income tax or investors subject to the Taxation of Financial Arrangements regime in Division 230 of the Income Tax Assessment Act 1997 which have made elections for the fair value or reliance on financial reports methodologies.

106

(b) Dividends paid on Shares

(i) Australian resident individuals and complying superannuation entities

Dividends paid by the Company on a Share will constitute assessable income of an Australian tax resident investor. Australian tax resident investors who are individuals or complying superannuation entities should include the dividend in their assessable income (some superannuation funds may be exempt in relation to Shares held to support current pension liabilities) in the year the dividend is paid, together with any franking credit attached to that dividend. Such investors should be entitled to a tax offset equal to the franking credit attached to the dividend. The tax offset can be applied to reduce the tax payable on the investor’s taxable income. Where the tax offset exceeds the tax payable on the investor’s taxable income, such investors should be entitled to a tax refund.

To the extent that the dividend is unfranked, the investor will generally be taxed at their marginal rate on the dividend received with no tax offset.

(ii) Corporate investors

Corporate investors are also required to include both the dividend and the associated franking credit in their assessable income. They are then allowed a tax offset up to the amount of the franking credit on the dividend.

An Australian resident corporate investor should be entitled to a credit in their own franking account to the extent of the franking credit on the distribution received. This will allow the corporate investor to pass on the benefit of the franking credits to their own shareholder(s) on the payment of dividends.

Excess franking credits received cannot give rise to a refund for a company, but can be converted into carry-forward tax losses.

(iii) Trust and partnerships

Investors which are trustees (other than trustees of complying superannuation entities) or partnerships should include the franking credit in determining the net income of the trust or partnership. The relevant beneficiary or partner may be entitled to a tax offset equal to the beneficiary’s or partner’s share of the net income of the trust or partnership.

(iv) Shares held at risk

The benefit of franking credits can be denied where an investor is not a “qualified person” in which case the investor will not need to include an amount for the franking credits in their assessable income and will not be entitled to a tax offset.

Broadly, to be a “qualified person”, two tests must be satisfied; namely, the holding period rule and the related payment rule.

Under the holding period rule, an investor is required to hold shares “at risk” for more than 45 days continuously (which is measured as the period commencing the day after the shares were acquired and ending on the 45[th] day after the shares become ex-dividend) in order to qualify for franking benefits, including franking credits. This holding period rule is subject to certain exceptions, including where the total franking offsets of an individual in a year of income do not exceed $5,000.

Under the related payment rule, a different testing period applies where the investor has made, or is under an obligation to make, a related payment in relation to the dividend. The related payment rule requires the investor to have held the shares at risk for the continuous 45 day period as above but within the limited period commencing on the 45[th] day before, and ending on the 45[th] day after, the day the shares become ex-dividend.

Special rules apply to trust and beneficiaries.

Investors should seek professional advice to determine if these requirements, as they apply to them, have been satisfied.

(v) Disposal of Shares

Most Australian resident investors will be subject to Australian CGT on the disposal of shares. Some investors will hold shares on revenue account, trading stock or under the Taxation of Financial Arrangements regime. These investors should seek their own advice.

An investor will derive a capital gain on the disposal of a particular share where the capital proceeds received on disposal exceeds the CGT cost base of the share. The CGT cost base of the share is broadly the amount paid to acquire the share plus any transaction/incidental costs.

A CGT discount may be available on the capital gain for individual investors, trustee investors and investors that are complying superannuation entities provided the particular shares are held for at least 12 months prior to sale. Any current year or carry-forward capital losses should offset the capital gain first before the CGT discount can be applied.

The CGT discount for individuals and trusts is 50% and for complying superannuation entities is 33.33%. In relation to trusts, the rules are complex, but this discount may be able to be flowed up to beneficiaries of the trust.

An investor will incur a capital loss on the disposal of the particular shares to the extent that the capital proceeds on disposal are less than the CGT reduced cost base of the shares.

If an investor derives a net capital gain in a year, this amount is included in the investor’s assessable income. If an investor incurs a net capital loss in a year, this amount is carried forward and is available to offset against capital gains derived in subsequent years, subject in some cases to the investor satisfying certain rules relating to the recoupment of carried-forward losses.

(vi) Tax file number

An investor is not required to quote their TFN to the Company. However, if a TFN or exemption details are not provided, Australian tax may be required to be deducted by the Company from dividends at the maximum marginal tax rate plus the Medicare levy. An investor that holds Shares as part of an enterprise may quote its Australian Business Number instead of its TFN.

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ADDITIONAL INFORMATION

10.12 TAXATION CONSIDERATIONS (cont’d)

(vii) Stamp duty

No stamp duty should be payable by investors on the acquisition of Shares.

Investors should seek their own advice as to the impact of stamp duty in their own particular circumstances.

(viii) GST

10.16 ENQuIRIES

This document is important and should be read in its entirety. Persons who are in any doubt as to the course of action to be followed should consult their stockbroker, solicitor, accountant or other professional advisor without delay.

10.17 STATEMENT by DIRECTORS

This Prospectus is authorised by each director of DTI who consents to the lodgement with ASIC and its issue.

The acquisition, redemption or disposal of the Shares by an Australian resident (that is registered for GST) will be an input taxed fi nancial supply, and therefore is not subject to GST. No GST should be payable in respect of dividends paid to investors.

An Australian resident investor that is registered for GST will not generally be entitled to claim the full input tax credits in respect of GST on expenses they incur that relate to the acquisition or disposal of the Shares (eg lawyers and accountants fees).

Investors should seek their own advice on the impact of GST in their own particular circumstances.

10.13 REFERENCES TO PubLICATIONS

References are made in this Prospectus to material that is attributed to various sources. Those references are based on statements already published in public documents or a book, journal or corporate publication. Those organisations did not prepare those materials specifi cally for this Prospectus and have had no involvement in the preparation of any part of this Prospectus.

10.14 DOCuMENTS AvAILAbLE FOR INSPECTION

Copies of the following documents are available for inspection during normal offi ce hours, free of charge, at the registered offi ce of the Company, for 13 months after the date of this Prospectus:

• the Constitution

• written consents to the issue of this Prospectus.

10.15 GOvERNING LAw

The Prospectus and the contracts that arise from the acceptance of Applications under this Prospectus are governed by the laws applicable in Western Australia and each Applicant under this Prospectus submits to the exclusive jurisdiction of the courts of Western Australia.

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Appendix A – Glossary and Interpretation

Appendix A – Glossary and Interpretation

1 GLOSSARy

In this Prospectus and in the Application Form, the following words have these meanings, unless the context otherwise requires:

Word	Meaning
AASB	Australian AccountingStandards Board
A-IFRS	Australian Equivalents to International Financial ReportingStandards
Appendix	An appendix to this Prospectus
Applicant	Individuals or entities who submit an Application Form together with the appropriate
	Application Monies
Application	An application for Shares in the Offer made by an Applicant in an Application Form or such
	other form approved bythe Company
Application Amountor	The amount accompanying the Application Form submitted by an Applicant
Application Monies
Application Form	The application form attached to this Prospectus
ASIC	Australian Securities and Investments Commission
ASX	ASX Limited(ACN 008 624 691)
ASX ListingRules	The listingrules of ASX
ASX Settlement OperatingRules	The settlement rules of ASX Settlement PtyLtd(ACN 008 504 532)
Baillieu Holst	Baillieu Holst Ltd(ACN 006 519 393)
BDO Audit	BDO Audit(WA)PtyLtd(ACN 112 284 787)
BDO Corporate Finance	BDO Corporate Finance(WA)PtyLtd(ACN 124 031 045)
Board	The board of Directors of the Company
CCTV	Closed-circuit television
CGT	Capitalgains tax
CHESS	Clearing House Electronic Subregister System operated by ASX in accordance with the
	Corporations Act
ClosingDate	5.00pm EST on 1 December 2014 bywhich Applications must be lodged for the Offer unless varied
Company	DTI and or one or more of its associates or subsidiaries (as those terms are defned in the
	Corporations Act)
Completion of the Offer	Completion in respect of the allotment and issue of New Shares of the Offer in accordance with
	the UnderwritingAgreement
Constitution	The Company’s constitution
Corporations Act	Corporations Act 2001 (Cth)
Directors	Each of the directors of the Companyfrom time to time
DRU	The data recorder unit designed byDTI for rail use
DTI	DTI GroupLtd(ACN 069 791 091)
DTI Group	DTI and or one or more of its associates or subsidiaries (as those terms are defned in the
	Corporations Act)
EBIT	Earnings before interest and tax(this is a non-IFRS measure)
EBITDA	Earnings before interest, tax, depreciation and amortisation(this is a non-IFRS measure)
EMEA	Europe, the Middle East and Africa
Escrow Period	Theperiod until after the audited fnancial accounts for FY15 are released to ASX bythe Company
EST	Australian Eastern Summer Time
ExistingShareholder	The holder of ExistingShares
ExistingShares	The Shares on issue as at the date of this Prospectus
Financial Information	The Historical Financial Information, the Pro Forma Balance Sheet and the Forecast Financial Information defned in Section 4.1
Forecast Financial Information	The forecast fnancial information defned in Section 4
FY11	Financialyear ended 30June 2011
FY12	Financialyear ended 30June 2012

110

Word	Meaning
FY13	Financialyear ended 30June 2013
FY14	Financialyear ended 30June 2014
FY15	Financialyear ended 30June 2015
GPS	Globalpositioningsystem
GST	Goods and services tax
Historical Financial Information	The historical fnancial information defned in Section 4
IFRS	International Financial ReportingStandards
InvestigatingAccountant	BDO Corporate Finance(WA)PtyLtd
InvestigatingAccountant’s Report	The report contained in Section 7
IP	Internetprotocol
IT	Information technology
LAN	A local area network on a computer network that interconnects computers within a limited area
Listing	The listingof the Companyon ASX and Offcial Quotation of the Shares
ListingDate	The date on which the Shares are frstgranted Offcial Quotation
MDR	The mobile digital recorder designed byDTI
New Shares	The shares to be issued byDTIpursuant to this Prospectus
NPAT	Netproft after tax
Offer	The offer under this Prospectus of 6.68 million New Shares to be issued byDTI
Offer Price	$0.30per Share,payable on Application
Offer Proceeds	The total funds received through the Offer
Offcial List	The offcial list of entities that ASX has admitted and not removed from listing
Offcial Quotation	Offcialquotation on ASX
OpeningDate	14 November 2014
Option	An option to be issued a Share on the terms and conditions set out in Section 8.22
Pantograph	An apparatus mounted on the roof of an electric train or tram to collect power through contact
	with an overhead wire
Pendulum Capital	Pendulum Capital PtyLimited(ACN 108 119 848)
Privacy Act	Privacy Act 1988 (Cth)
Pro Forma Balance Sheet	The consolidatedpro forma balance sheet set out in Section 4
Prospectus	This prospectus (including the electronic form of this prospectus) and any replacement or
	supplementary prospectus in relation to this document
R&D	Research and development
Section	A section of this Prospectus
Share	A fully paid ordinaryshare in the Company
Share Registrar	Computershare Investor Services PtyLimited(ACN 078 279 277)
Shareholder	A holder of Shares
Statutory	Information compiled from the fnancial statements prepared in accordance with the
	Corporations Act
TFN	Tax fle number
Underwriter	Baillieu Holst Ltd(ACN 006 519 393)
Underwriting Agreement	The agreement of that name between the Company and the Underwriter entered into on or
	about the date of this Prospectus
UK	United Kingdom
US or United States	United States of America

DTI Group Ltd 2014 prospectus 111

APPENDIX A – GLOSSARY AND INTERPRETATION

1 GLOSSARy (cont’d)

Word	Meaning
UTCorUnited Technologies	UTC Fire & Security Americas Corporation Inc, a subsidiary of United Technologies Corporation (IRS Employer Identif cation Number 06-0570975)
Visiongain	Visiongain Limited, a companyincorporated in the United Kingdom(companynumber 03626739)
WLAN	A wireless local area network linkingtwo or more devices usingsome wireless distribution method
WST	Australian Western Standard Time

2 INTERPRETATION

In this Prospectus and in the Application Form, unless the context otherwise requires:

• words and phrases have the same meaning (if any) given to them in the Corporations Act

• words importing a gender include any gender

• words importing the singular include the plural and vice versa

• an expression importing a natural person includes any company, partnership, joint venture, association, corporation or other body corporate and vice versa

• a reference to a section and an appendix is a reference to a section of and an appendix to this Prospectus as relevant

• a reference to a statute, regulation, proclamation, ordinance or by-law includes all statutes, regulations, proclamations, ordinances or by-laws amending, consolidating or replacing it, whether passed by the same or another government agency with legal power to do so, and a reference to a statute includes all regulations, proclamations, ordinances and by-laws issued under that statute

• headings and boldings are for convenience only and do not affect the interpretation of this Prospectus

• a reference to time, unless otherwise stated, is a reference to time in Perth, Australia

• a reference to dollars, $, A$, cents, c and currency is a reference to the lawful currency of the Commonwealth of Australia

• all relevant fi gures stated in this Prospectus are in Australian dollars unless otherwise indicated

• any discrepancies between totals and sum components in tables contained in this Prospectus are due to rounding

• unless otherwise stated, amounts contained in this Prospectus are expressed without GST.

112

Appendix b – Relevant Accounting Policies

113

DTI Group Ltd 2014 PROSPECTUS

Appendix b – Relevant Accounting Policies

The Financial Information has been prepared on a going concern basis adopting the accruals and historical cost basis of accounting and in accordance with the requirements of the Constitution; the Corporations Act, including applicable accounting standards; and other mandatory professional reporting requirements that applied to the reporting periods as outlined below.

The Financial Information has been prepared in accordance with the recognition and measurement principles of Australian Accounting Standards.

bASIS OF PREPARATION OF THE FINANCIAL INFORMATION

The historical, pro forma and forecast financial information has been prepared on the basis of historical cost. Cost is based on the fair values of the consideration given in exchange for assets.

In the application of A-IFRS management is required to make judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstance, the results of which form the basis of making the judgements. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

REPORTING bASIS AND CONvENTIONS

The report is also prepared on an accrual basis and is based on historic costs and does not take into account changing money values or, except where specifically stated, current valuations of non-current assets.

The following is a summary of the material accounting policies adopted by the Company in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.

(a) Income tax

the extent that it is probable that sufficient taxable income will be available against which deductible temporary differences or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not recognised if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a business combination) which affects neither taxable income nor accounting profit. Furthermore, a deferred tax liability is not recognised in relation to taxable temporary differences arising from goodwill.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in associates and are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and that they are expected to reverse in the foreseeable future.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the asset and liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax for the period

Current and deferred tax is recognised as an expense or income in the consolidated statement of profit or loss and other comprehensive income, except when it relates to items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises from the initial accounting for a business combination, in which case it is taken into account in the determination of goodwill or excess.

(b) Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and deposits held at call with financial institutions.

Current tax

Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit or tax loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by reporting date. Current tax for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or refundable).

Deferred tax

Deferred tax is accounted for using the comprehensive balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base of those items.

In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to

(c) Receivables

Trade receivables and other receivables are recorded at amounts due less any allowance for doubtful debts.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. An allowance account (provision for impairment of trade receivables) is used when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of receivables. The amount of the allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial. The amount of the allowance is recognised in the profit and loss.

114

(d) Revenue recognition

Revenues are recognised at fair value of the consideration received net of the amount of GST or value added tax payable to the taxation authorities. Sales revenue represents sales of products or services. Sales of products are recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and can be measured reliably. Risks and rewards are considered passed to the buyer at the time of delivery of the goods to the customer.

Service revenue is recognised when the fees in respect of services rendered are earned, usually when services have been provided to customers.

Accounting Standard AASB 111 Construction Contracts – the Company uses the ‘percentage of completion’ method, which states: “When the outcome of a construction contract can be estimated reliably, contract revenue and contract costs associated with the construction contract shall be recognised as revenue and expenses respectively by reference to the stage of completion of the contract activity at the reporting date”. The Company uses costs incurred as the measure of percentage of completion.

Interest income is recognised on a time proportion basis using the effective interest method.

(e) Provisions

Provisions for legal claims, service warranties and make good obligations are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

(f) Property, plant and equipment

Property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Depreciation is provided on property, plant and equipment. Depreciation is calculated on either a diminishing value or straight-line basis so as to allocate the net cost or other re-valued amount of each asset over its estimated useful life or in the case of certain leased plant and equipment the shorter lease term.

The following estimated useful lives are used in the calculation of depreciation:

• plant and equipment – 2.5–5 years

• motor vehicles under finance lease – 5 years.

(g) Accounts payables

Trade payables and other accounts payable are recognised when the Company becomes obliged to make future payments resulting from the purchase of goods and services. The amounts are unsecured and are usually paid within 60 to 90 days of recognition.

(h) Investments and other financial assets

The Company classifies its financial assets as loans and receivables. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the reporting date which are classified as non-current assets.

Loans and receivables are included in trade and other receivables in the statement of financial position.

Financial assets are derecognised when the rights to receive the cash flows from the financial assets have expired or have been transferred and the Company has transferred substantially all the risks and rewards of ownership.

Loans and receivables are carried at amortised cost using the effective interest method.

The Company assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired.

(i) Financial instruments issued by the Company

Debt and equity instruments are classified as either liabilities or as equity in accordance with the substance of the contractual arrangement.

Transaction costs arising on the issue of equity instruments are recognised directly in equity as a reduction of the proceeds of equity instruments to which the costs relate. Transaction costs are costs that are incurred directly in connection with the issue of those equity instruments and which could not have been incurred had those instruments not been issued.

(j) Intangible assets

Intangibles

Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is recognised in profit or loss in the year in which the expenditure is incurred.

Research and development costs

Research expenditure is recognised as an expense as incurred. Costs incurred on development projects (relating to the design and testing of new or improved products) are recognised as intangible assets when it is probable that the project will be a success considering its commercial and technical feasibility and its costs can be measured reliably. The expenditure capitalised comprises all directly attributable costs, including costs of materials, services and direct labour. Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period. Capitalised development costs are recorded as intangible assets and amortised from the point at which the asset is ready for use on a straight-line basis over its useful life.

DTI Group Ltd 2014 prospectus 115

Appendix B – RelevAnt Accounting policies

REPORTING bASIS AND CONvENTIONS (cont’d)

The carrying value of an intangible asset arising from development expenditure is tested for impairment annually when the asset is not yet available for use, or more frequently when an indication of impairment arises during the reporting period.

A summary of the policies applied to the Company’s intangible assets is as follows:

impairment arises during the reporting period. A summary of the policies applied to the Company’s intangible assets is as follows:	impairment arises during the reporting period. A summary of the policies applied to the Company’s intangible assets is as follows:	impairment arises during the reporting period. A summary of the policies applied to the Company’s intangible assets is as follows:
Policy Patents Development Costs
Useful lives	Finite	Finite
Amortisation methods used	Amortised over the period of expected future benefts from the related project on a straight-line basis.	Amortised over the period of expected future benefts from the related product on a straight-line basis.
Internally generated or acquired	Acquired.	Internally generated.
Impairment testing	Annually and more frequently when an indication of impairment exists.	Annually for assets not yet available for use and more frequently when an indication of impairment exists. The amortisation method is reviewed at each fnancialyear-end.

The patents have been granted for 20 years by the relevant government agency. Therefore, the assets have been assessed as having a finite life.

Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the assets and are recognised in profit or loss when the asset is derecognised.

(k) Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transactions costs) and the redemption amount is recognised in the consolidated statement of profit or loss and other comprehensive income over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities, which are not an incremental cost relating to the actual draw-down of the facility, are recognised as prepayments and amortised on a straight-line basis over the term of the facility.

(l) Goods and services tax

Revenues, expenses and assets are recognised net of the amount of GST, except:

• where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of the asset or as part of the item of expense; or

• for receivables and payables which are recognised inclusive of GST.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables.

(m) Impairment of assets

At each reporting date, the Company reviews the carrying amounts of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in profit or loss immediately, unless the relevant asset is carried at fair value, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cashgenerating unit) in prior years. A reversal of an impairment loss is recognised in profit or loss immediately, unless the relevant asset is carried at fair value, in which case the reversal of the impairment loss is treated as a revaluation increase.

(n) Contributed equity

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

If the Company re-acquires its own equity instruments, for example as a result of a share buy-back, those instruments are deducted from equity and the associated shares are cancelled. No gain or loss is recognised in profit or loss and the consideration paid including any directly attributable incremental costs (net of income taxes) is recognised directly in equity.

(o) Inventories

Inventories are valued at the lower of cost and net realisable value. Costs are assigned to inventory on hand by the method most appropriate to each particular class of inventory, with the majority being valued on a first in first out basis.

(p) Employee benefits

Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave, long service leave, and sick leave when it is probable that settlement will be required and they are capable of being measured reliably.

116

Provisions made in respect of wages and salaries, annual leave, long service leave and sick leave expected to be settled within 12 months are measured at their nominal values using the remuneration rate expected to apply at the time of settlement.

Share-based compensation benefits are provided to employees via the DTI Employee Option Plan.

The fair value of options granted under the DTI Employee Option Plan is recognised as an employee benefit expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which employees become unconditionally entitled to the options. Where the options have vested but are not taken up and are forfeited, the previously recognised expense is not reversed.

The fair value at grant date is independently determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected volatility of the underlying share, and the risk free interest rate for the term of the option.

The fair value of the options granted is adjusted to reflect market vesting conditions, but excludes the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. At each reporting date, the Company revises its estimate of the number of options that are expected to become exercisable. The employee benefit expense recognised each period takes into account the most recent estimate. The impact to the original estimates, if any, is recognised in the consolidated statement of profit or loss and other comprehensive income with a corresponding adjustment to equity.

(q) Government grants

Government grants are assistance by the government in the form of transfers of resources to the Company in return for past or future compliance with certain conditions relating to the operating activities of the Company. Government grants include government assistance where there are no conditions specifically relating to the operating activities of the Company other than the requirement to operate in certain regions or industry sectors.

(r) Leased assets

Leased assets classified as finance leases are recognised as assets. The amount initially brought to account is the present value of minimum lease payments. Finance leased assets are amortised on a diminishing value basis over the estimated useful life of the asset.

Finance lease payments are allocated between interest expense and reduction of lease liability over the term of the lease. The interest expense is determined by applying the interest rate implicit in the lease to the outstanding lease liability at the beginning of each lease payment period.

Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the consolidated statement of profit or loss and other comprehensive income on a straight-line basis over the period of the lease.

(s) Foreign currency

Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated statement of profit or loss and other comprehensive income, except when they are deferred in equity as qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net investment in a foreign operation.

Translation differences on non-monetary financial assets and liabilities are reported as part of the fair value gain or loss. Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss.

All foreign currency transactions during the financial year are brought to account using the exchange rate in effect at the date of the transaction. Foreign currency monetary items at reporting date are translated at the exchange rate existing at that date.

Government grants relating to income are recognised as income over the periods necessary to match them with the related costs. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future related costs are recognised as income of the period in which it becomes receivable.

Government grants relating to assets are treated as deferred income and recognised in profit and loss over the expected useful lives of the assets concerned.

DTI Group Ltd 2014 prospectus 117

APPENDIX B – RELEVANT ACCOUNTING POLICIES

Appendix C – Corporate Directory

118

Appendix C – Corporate Directory

DIRECTORS

Chris Morris Non-Executive Chairman Richard Johnson Managing Director & Chief Executive Officer Neil Goodey Non-Executive Director Glyn Denison Non-Executive Director Jeremy King Non-Executive Director

COMPANY SECRETARY

Bruce Mitchell

REGISTERED AND 31 Affleck Road PRINCIPAL OFFICE Perth Airport WA 6105 Telephone: (08) 9479 1195 Facsimile: (08) 9479 1190 Website: www.dti.com.au UNDERWRITER Baillieu Holst Ltd Level 26, 360 Collins Street Melbourne Vic 3000 CORPORATE ADVISOR Pendulum Capital Pty Limited Level 2, 24 Outram Street West Perth WA 6005 LEGAL ADVISOR Steinepreis Paganin Level 4, 16 Milligan Street Perth WA 6000

AUDITOR BDO Audit (WA) Pty Ltd 38 Station Street Subiaco WA 6008

INVESTIGATING BDO Corporate Finance (WA) Pty Ltd ACCOUNTANT 38 Station Street Subiaco WA 6008

PATENT ATTORNEY

FB Rice Level 23, 44 Market Street Sydney NSW 2000

SHARE REGISTRAR Computershare Investor Services Pty Limited Yarra Falls 452 Johnston Street Abbotsford Vic 3067

DTI Group Ltd 2014 prospectus 119

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