DTI GROUP LTD — Capital/Financing Update 2017

Nov 15, 2017

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ASX announcement

15 November 2017

Inventory Management and Balance Sheet Review

DTI Group Ltd (DTI) has recently completed development of a range of new recorder and passenger information system (PIS) products for the global transit industry. During FY17 DTI invested in excess of $7 million in developing these products.

Following completion of the product development phase, DTI has undertaken a comprehensive review of its balance sheet with a focus on asset recoverability and valuation. As a result of this review, DTI has identified a total impairment of $3.1 million, as set out below:

$’000s	Inventory	Receivables	Intangibles	PPE	Total
Obsolete stock (net or provision)	(2,080)				(2,080)
Inventory reclassified	(83)			83	-
Impairment of receivables		(453)			(453)
Impairment of intangibles			(572)		(572)
TOTAL	(2,163)	(453)	(572)	83	(3,105)

The identified impairments are attributed to:

• i) Obsolete stock associated with components and spares held for legacy products;

• ii) Slow moving stock held in support of maintenance and support agreements which does not have a commercially realisable value;

• iii) Products returned for repair where the repair costs are uneconomic compared to value of the product;

• iv) Accelerated obsolescence of existing products attributed to future replacement by DTI’s new product range;

• v) Items reported as inventory that have been reclassified as property, plant & equipment;

• vi) Impairment associated with obsolescence of intangibles assets (historical research & development projects); and

• vii) Impairment of aged debtors where future recoverability is uncertain.

Further to this review, DTI has identified a number of improvements to inventory management and classification that will be progressively implemented to ensure stronger controls over inventory levels, valuation and classification in order to meet future growth demands.

DTI Group Ltd | ABN 15 069 791 091 31 Affleck Rd | Perth Airport WA 6105 T +61 8 9479 1195 | F +61 8 9479 1190 www.dti.com.au

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ASX announcement

The impairment will be reflected in the Company’s 1H FY18 results.

For further information please contact Peter Tazewell, Chief Executive Officer on +61 8 9273 2905 or email peter.tazewell@dti.com.au

About DTI Group

DTI Group Ltd (ASX: DTI) provides sophisticated surveillance systems, solutions and services to the mobile security industry worldwide. DTI’s clients are transit agencies, transit operators, freight operators, law enforcement authorities and taxi organisations which utilise a range of professional products and services that encompass on-board recording equipment, fleet management systems, back-end mass storage and retrieval facilities and end-to-end managed services. Sales and project delivery is undertaken both by DTI directly and through its global partners’ network.

DTI is a recognised supplier to the mass transit surveillance market. Core technology development and system design activities are undertaken from the Company’s headquarters in Perth Australia.

DTI Group Ltd | ABN 15 069 791 091 31 Affleck Rd | Perth Airport WA 6105 T +61 8 9479 1195 | F +61 8 9479 1190 www.dti.com.au