DTI GROUP LTD — Investor Presentation 2018

Feb 25, 2018

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DTI GROUP LTD

2017 Interim Results Presentation 27 February 2018

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

Chief Executive Officer

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Overview – H1 FY18

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Financial
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• Revenue of $8.2 million, 51 per cent increase on FY17

• EBITDA adversely impacted by impairment costs, revenue lag, R&D claim adjustment and ongoing costs associated with past projects

• Working capital managed down by $1.5 million

• $0.9 million negative cash flow from Operations

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Operating
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• New contracts awarded from Majees (Oman Bus) and exercise of DART options

• Operating cost base restructured

Outlook

• Contracted order book[1] of $37.4 million at 31 December 2017 (115 per cent growth since previous HY)

• Opportunity Pipeline stable at $383.4 million with potential for > $50 million to be awarded within six months

• US Bus business continues to perform strongly

• Ongoing strong interest in DTI PIS systems

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1 Includes LoI/LoA

2

Highlights

• Continued growth (115 per cent) in contracted Order Book[1 ]

• Maintaining scheduled deliveries to critical projects (Sydney Metro, Oman Bus)

• Strong positive market reaction to new DTI Passenger Information Displays

• Strong tendering pipeline with Alstom - $187 million

• 1 Includes LoI/LoA

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3

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H1 FY18 FINANCIAL RESULTS

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Key Financial Metrics

	H1 FY18 H1 FY16 8.2 5.4 (6.0) (2.3) (3.3) (1.3) (5.3) (2.7) (4.30) (2.15) Nil nil 0.3 0.4 0.9 8.0 9.7 8.2 (0.9) (0.9) 60 86 37.4 17.4 • Revenue increased from pcp • Significant impairment charges recorded against inventory and debtors • Ongoing costs continue in relation to past projects • Nil term debt • Net trade working capital reduced • Headcount reduced • Growing Order Book
Revenue $m EBITDA $m Underlying EBITDA $m Net profit/(loss) after tax $m Earnings per share ¢ Dividends per share ¢
Gross debt $m Net cash/(debt) $m Net working capital $m Operating cash flow $m
Employees FTE Contracted Order Book $m

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Revenue

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Revenue Split $m Revenue Growth
4.0
20
15 3.0
10 2.0
5 1.0
0 -
FY15 FY16 FY17 FY18 Maintenance Recurring Project
H1 H2 H1 2017 H1 2018
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• Strong revenue increase from pcp

• Weighting to H2 expected to continue

• Increased revenue across all categories

• Strong increase in recurring revenue driven by US bus sales

• Project revenue continues to drive overall growth

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Balance sheet

$m	H1 FY18 FY17
Cash Trade receivables Other receivables Inventory	1.2 3.2
	7.0 9.0
	- 3.1
	6.7 8.0
Property, plant & equip Intangible assets Other assets	1.3 1.0
	4.6 5.6
	0.4 0.2
Total Assets	21.1 30.1
Trade payables Financial liabilities Provisions Deferred Tax	3.9 5.8
	0.3 0.5
	1.1 1.1
	- 1.8
Total Liabilities	5.3 9.2
Total Equity	15.8 20.9
Net cash/(debt) Net trade working capital	0.9 2.7
	9.7 11.2

• Research and development spend significantly reduced as product development phase ends

• Rail projects continue to be working capital intensive • Negligible bank debt

Impairment adjustments recorded

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Cash flow from Operations

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$000s
2,000
(5,335) (6,027) (924) (1,854)
(3,000)
(8,000)
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STRATEGIES

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Strategies – Short term

• Key focus to return to profitability

	Grow Revenue		Stabilise		Cost Down		Overhead
	Base		Production Costs		Strategy		Reduction
•	Increased Order	•	Product design	•	Review supply	•	Tight control of
	Book		finished leading		chain to reduce		costs and
			to stable		component		working capital
			production runs		costs
•	Conversion of	•	Migrate	•	Implement
	Opportunity		production to		design
	Pipeline		lower cost		efficiencies
			manufacturer
•	New Products
	available

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ORDER BOOK AND PIPELINE

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Order Book

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$m
40
35
30
25
20
15
10
5
0
Bus Rail
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• Order Book growing in line with increased marketing effort

• Strong growth in rail sector with strong interest in DTI PIS systems

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

• Expected $50 million in new orders expected to be awarded over next six months

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Opportunity Pipeline

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20.7% 19.6%
59.7%
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Australasia EMEA Americas

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2.3%
12.4%
85.3%
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Bus Rail Taxi Law Enforcement

• Significant identified long term pipeline in excess of $380 million

• Geographic segmentation remains similar with EMEA presenting strongest opportunities

• Market continues to be dominated by rail which generally has higher specifications, engineering effort and capital intensity

• Growth drivers include legislation/evidence standards, public infrastructure spending and potential to reduce insurance and maintenance costs

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Addressable Market

• DTI’s addressable market comprises:

• Mobile surveillance systems, consisting of recorders, cameras and ancillary equipment; and

• Passenger Information Systems, consisting of displays, audio communications and entertainment systems

• FY18 revenue and order book weighted towards PIS

• Mobile Surveillance market is forecast to grow by 12.1 per cent to over US$1.6 billion by 2021[1 ]

• Passenger Information Systems forecast to exceed US$37 billion by 2022[2 ]

• IHS Research – 24 Feb 2017

• Market Research Future – July 2017

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Mobile Video Surveillance Market

• Global market for mobile video surveillance equipment forecast to grow at CAGR of 12.1 per cent to 2021

• DTI is a significant player in mass transit sector (trains, trams and transit buses) which constitutes 46.1 per cent of the market

• The Americas is the largest market for mobile video surveillance equipment while EMEA is the fastest growing market

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Source: IHS Research – 24 Feb 2017

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COMPANY PROFILE

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Company Snapshot

SHARE PRICE

CORPORATE DETAILS

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$0.60 1.8
1.6
$0.50
1.4
$0.40 1.2
1.0
$0.30
0.8
$0.20 0.6
0.4
$0.10
0.2
$0.00 0.0
Share Price Volume (Ms)
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ASX Code DTI Issued Shares 126,671,579 Share Price (12 January 2018) $0.13 Market Capitalisation $16.5 million

MAJOR SHAREHOLDERS

BOARD AND MANAGEMENT

Chris Morris (& Associates) 19.6% UIL Limited 14.1% Board & Management 10.2% Adam Smith 5.1% Other Institutional 5.3%

Neil Goodey Chairperson Peter Tazewell Managing Director Richard Johnson Executive Director Glyn Denison 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[1 ]

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1. Includes End Customers

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OUTLOOK

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Outlook

• Continued growth in contracted order book[1] to $37.4 million

• Identified Opportunity Pipeline of $383 million with in excess of $50 million to be awarded within six months

• Global demand for mobile surveillance and passenger information system equipment continues to be strong

• DTI has developed a strong technical reputation for developing leading edge products and solutions

• Operating cost base restructured

• Focus on project execution and margin management

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1 Includes LoI/LoA

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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 2018 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 forwardlooking 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, 113 E: peter.tazewell@dti.com.au

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