DTI GROUP LTD — Interim / Quarterly Report 2017

Feb 23, 2017

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DTI GROUP LTD

2017 Interim Results Presentation 24 February 2017

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

PETER TAZEWELL Chief Executive Officer

RICHARD JOHNSON Commercial Director

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Overview – H1 FY17

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Financial
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• Revenue of $5.5 million

• Underlying EBITDA adversely impacted by revenue lag and costs associated with new product launch

• Balance sheet strengthened by $11.5 million capital raising

• $0.9 million negative cash flow from Operations

Operating

• Additional resources into growing markets (EMEA, America)

• Major new contracts with Alstom, Delatim, ESG and DART

• Appointment of Operations GM to oversee Project Delivery

• New Products launched – Train recorder, Commuter Comms

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Outlook
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• Growing Opportunity Pipeline – $417 million

• Order book of $17.4 million at 31 December 2016

• Technology roadmap – exponential revenue opportunities

• New generation Mobile Data Recorder (MDR) launched

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Responding to Growth Challenges

• Completed Capital raising of $11.5 million

• Continued investment in R&D

• Launched new products – MDR-6, TDR-6 train recorder, Commuter Communications System

• Expanded sales/business development team

• Investment in business processes and systems

• Expanded Executive Management Team

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H1 FY17 FINANCIAL RESULTS

PETER TAZEWELL

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Key Financial Metrics

		H1 FY17	H1 FY16
Revenue	$m	5.4	8.7	•	Revenue	shortfall
EBITDA	$m	(2.3)	0.1		compared to FY16
Underlying EBITDA	$m	(1.3)	0.23	•	Recognition of non- recurring charges
Net profit/(loss) after tax	$m	(2.7)	(0.2)		against inventory
Earnings per share	¢	(2.85)	(0.23)		and capitalized R&D
Dividends per share	¢	nil	nil	•	Nil term debt
Gross debt	$m	0.4	0.4	•	Working capital expansion from
Net cash/(debt)	$m	8.0	3.0		customer mix
Net working capital	$m	8.2	7.0
Operating cash flow	$m	(0.9)	0.7
Employees		86	78
Order Book	$m	17.4	10.6
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Revenue Analysis

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$m
20
15
10
5
0
FY14 FY15 FY16 FY17
H1 H2
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REVENUE ANALYSIS

• H1 Revenue adversely impacted by project delays and commercial terms

• FY17 revenue expected to be weighted to H2

• FY17 FY revenue based on contracted revenue

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Underlying EBITDA

$m	FY17 FY16
Statutory EBIT Depreciation / Amortization Reported EBITDA Foreign Exchange losses Warranty Provision NRV adjustment – inventory Capitalised R&D impaired	(3,043,942) (374,268) 712,010 496,420 (2,331,932) 122,152 376,571 (64,619) 189,943 258,128 143,327 241,912
**Underlying EBITDA1 **	(1,265,378) 200,860

1 Underlying EBITDA excludes foreign exchange losses and non-recurring costs

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Balance sheet

$m	H1 FY17 FY16
Cash Trade receivables Other receivables Inventory	8.4 0.6
	4.2 6.4
	1.5 2.7
	6.7 5.8
Property, plant & equip Intangible assets Other assets	1.2 1.1
	5.8 4.4
	0.6 0.1
Total Assets	28.2 21.1
Trade payables Financial liabilities Provisions Deferred Tax	2.8 4.0
	0.4 0.5
	1.0 0.9
	0.8 1.0
Total Liabilities	5.0 6.4
Total Equity	23.2 14.7
Net cash/(debt) Net working capital	8.0 0.1
	8.2 8.2

• Improved cash position from capital raising

• Negligible bank debt • Ongoing research and development activities • Impairment adjustments to inventory and capitalised R&D expenditure

Technical Covenant breach – No action from bank

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8

Cash flow from Operations

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$'000s
9,300
7,779
6,200
3,100
(886)
(2,718) (2,332)
0
(3,100)
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ORDER BOOK AND PIPELINE

RICHARD JOHNSON

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Order Book

$m

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20
16
12
8
4
0
Bus Rail
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• Order Book growing in line with increased marketing effort

• Strong growth in rail sector with global infrastructure spend

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

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Global Market

• Global market for mobile video surveillance equipment forecast to grow at 6.9 per cent per annum

• Market dominated by law enforcement (31%) and transit buses (29%)

• Fastest growing sectors are law enforcement (10.3%) and trucks and fleet (8.5%)

• The Americas is the largest market for mobile video surveillance equipment

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Video Sureveillance Equipment - Market Sector
1,000
800
600
400
200
0
2012 2017
Cars & Taxis Law enforcement Trains & Trams
Transit Buses Trucks & Fleet School Buses
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Video Surveillance Equipment - Region
1,000
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800
600
400
200
0
2012 2017
Americas Asia EMEA
Source: IMS Research – July 2013
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Opportunity Pipeline

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Timing of Contract Award
$m
160
120
80
40
0
FY17 FY18 FY19 FY20 FY21
Contracted/Recurring Bus Rail Other
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• Substantial Opportunity Pipeline in excess of $417 million

• Pipeline unwinds over next four years based on expected contract award dates

• Significant proportion in tender phase

• Contracted work supports revenue through FY17 and into FY18

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Opportunity Pipeline

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Contracted Tendered Identified

• Significant identified long term pipeline

• Strong tendering activity

• Growing rail market provides strong growth potential

Bus Rail Law Enforcement

• Stable bus market supports baseload business

Americas EMEA Australasia

• North America and EMEA represent strong growth opportunities

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BUSINESS MODEL AND STRATEGY

PETER TAZEWELL

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Company Snapshot

SHARE PRICE

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$0.60 1,400
$0.50 1,200
1,000
$0.40
800
$0.30
600
$0.20
400
$0.10 200
$0.00 0
Share Price
Volume (000s)
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MAJOR SHAREHOLDERS

Chris Morris (& Associates) 19.4% Board & Management 10.8% UIL Limited 9.8% Other Institutional 7.3%

CORPORATE DETAILS

ASX Code DTI Issued Shares 126,671,579 Share Price (16 Feb 2017) $0.42 Market Capitalisation $53.2 million

BOARD AND MANAGEMENT

Chris Morris Chairman Peter Tazewell Managing Director Richard Johnson Commercial Director Glyn Denison Non-executive Neil Goodey Non-executive Jeremy King Non-executive

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What we do . . .

• DTI designs, develops and installs world-leading surveillance, video analytics, and passenger information systems technology and services to the global mass transit industry

• • Utilising proprietary software with leading edge hardware (hybrid-recorders, commuter communications systems and back office management solutions), DTI provides data solutions to transit operators

• DTI seeks to leverage its engineering capabilities to provide transit operators with increased functionality, products and services

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DTI Key Customers

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Business Model

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Strategy

• Leverage investment in software and product development into new projects

• Partner with aggregators in the rolling stock manufacturing industry

• Continue to grow share of maintenance and recurring

revenue

• Focus on project execution

• Expand support structure in EMEA and Americas

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PRODUCTS AND FUTURE DEVELOPMENTS

RICHARD JOHNSON

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Current Products

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• Passenger Announcement Amplifier

• Intelligent networkable amplifier

• Multi-zone and Hearing Aid loop

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• Passenger Information Display

• High intensity smart display

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• Self-contained and centralised messaging

• Mobile Digital Recorder

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• Built-in switch catering for megapixel IP cameras

• Dual hot swap mass storage

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• Train Data Recorder

• Caters for megapixel IP cameras

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• Hot swap mass storage

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Current Products

• Passenger Emergency Intercom

• Networkable intercom with integrated hearing-aid loop

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• Dynamic Route Map

• 48” ultra wide

screen intelligent display

• Daisy chain networkable

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Technology Roadmap

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OUTLOOK

PETER TAZEWELL

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Outlook

• Continued investment in R&D activities

• Growing Order Book and strong Opportunity Pipeline

• Near term opportunities in Australia, US, UK, South Africa, Sweden, France and Poland

• Product development keeping DTI at forefront of technology curve

• $20 million in new projects to be awarded over next 12 months

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Summary

• Recapitalisation of Company complete

• Growing Opportunity Pipeline as the Company participates more into the rail market

• Growing awareness of DTI and its capabilities in key European, African and North American markets

• Order Book supporting future revenue

• Company maturing and implementing internal improvements necessary to permit rapid growth of the business

• Reorganisation of Operational Team and establishment of Executive Management Team

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Disclaimer

Reliance on third party information

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

This presentation is information in a summary form only and does not purport to be complete. It should be read in conjunction with the Company’s 2017 Interim Report. Any information or opinions expressed in this presentation are subject to change without notice and the Company is not under any obligation to update or keep current the information contained within this presentation. Not investment advice

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

No offer of securities

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

Forward looking statements

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

No liability

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

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Contact Details

PETER TAZEWELL Chief Executive Officer T: +61 8 9373 2905 E: peter.tazewell@dti.com.au

RICHARD JOHNSON Commercial Director T: +61 8 9373 2905 E: richard.johnson@dti.com.au

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