HITECH GROUP AUSTRALIA LIMITED — AGM Information 2016

Nov 24, 2016

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Excellence in Recruitment & Consulting AGM Presentation

25 November 2016

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Highlights

Record FY2016 financial results. On track to deliver significant revenue and profit growth in first half FY2017 1

Over 23 years in operation and established expertise in ICT Services & Recruitment

2

Strong client relationships with multiple preferred supplier agreements in place (private and public sectors) 3 Proprietary candidate and client database (HiBase) of over 300,000 skilled professionals and growing 4

Top tier client base including Federal and State Government departments and leading private organisations 5

High proportion of recurring revenue, with over 94% of turnover from contracting

6

Successful renewal of long term contracts and new client contract wins across all areas of recruitment 7

Positive industry dynamics and multiple paths to growth

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HiTech Group Australia 2016 AGM

Business Snapshot

Recruitment and Consulting firm specialising in the placement of permanent and contract personnel in:

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office
ICT
support
SPECIALIST
SCREENING
CANDIDATES SELECTION
Information Communications Technology
SECTOR
RECRUITMENT
RE SOURCING REQUIREMENTS
COMPANY SEARCH
EXTERNAL
EMPLOYER AGENCIES RESUMÈ
PERSON
sales and
finance
marketing
JOB
EXPERTISE
HIRING
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HiTech Group Australia 2016 AGM

Corporate Overview

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Board Share Price Corporate
0.80 1,800
Raymond Hazouri ASX.HIT
Chairman 0.70 1,600
1,400
0.60
1,200 31.0 million shares issued
Elias Hazouri 0.50
1,000
CEO, Executive Director 0.40
800
0.30
600 5.5 million options issued
0.20
George Shad 400
Non Executive Director 0.10 200
0.00 0 Last close $0.58
Market Cap - $17.9m
Top Shareholders
Ray Hazouri 59.5%
Salem Hazouri 6.4%
Cash - $4.4 million
John Snell 4.0%
(as at 30 June 2016 )
Clapsy Pty Ltd 3.8%
Berne No 132 Noms Pty Ltd 2.4%
Volume '000
Share Price ($)
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HiTech Group Australia 2016 AGM

Company Overview

• HiTech is a specialist provider of recruitment and ICT consulting services, predominantly in the IT sector, in areas such as system development, infrastructure support and networking and operations

• The majority of HiTech’s revenue is generated from IT contracting placements, providing a source of growing recurring revenue

• HiTech is leveraged to the growth trends of the expanding ICT jobs market, rapid growth of certain ICT professions, the increased use of contractors and large scale public and private IT transformation projects

• Business revenues are being supplemented by an expanding candidate and client base and diversification through the provision of recruitment services in areas of office support, financial services and sales an marketing

• Strong balance sheet enabling the Board to pursue growth opportunities including a focus on gaining greater share of the substantial State and Federal Government IT contracting and services market and potential acquisitions of complimentary businesses (e.g. recruitment and workforce management platforms)

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HiTech Group Australia 2016 AGM

Our Customers

Sample clients Private

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Government – Federal & State

Preferred supplier to several Government (Federal and State) and private sector corporations

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HiTech Group Australia 2016 AGM

FY 2016 Financial Summary

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Operating Revenue Net Tangible Assets
$18.3 million $0.19 per share
up 22.4% up 58.3%
EBITDA Earning per Share
$3.1 million $0.07 cps
up 132.8% Up 168.6%
Profit after Tax Cash
$2.2 million $4.4 million
up 168.9% Zero debt, up 139.8%
Dividend
$0.02 per share
fully franked, 3.6% yield
Shareholder returns
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HiTech Group Australia 2016 AGM

Key performance metrics

	Revenue	Revenue
	$'000
	0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000
		FY 2014	FY 2015 FY 2016
			Revenue	Gross Profit
			FY 2014	FY 2015	FY 2016
	Revenue($m)		8,037	15,105	18,772
	Growth			87.9%		24.3%
	Gross Income($m)		1,210	3,180		3,893
	Growth			162.9%		22.4%
	Gross Margin		15.1%	21.1%		20.7%

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• Permanent placement income (higher margin revenue) 10% higher in 2016

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• Contracting revenue (stable recurring revenue stream) 23% higher in 2016

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EBITDA
$m
3,500
3,000
2,500
2,000
1,500
1,000
500
0
FY 2014 FY 2015 FY 2016
-500
FY 2014 FY 2015 FY 2016
EBITDA ($m) -178 1,349 3,140
EBITDA growth 858.5% 132.8%
EBITDA margin 8.9% 16.7%
Net Profit After Tax
$m
2,500
2,000
1,500
1,000
500
0
FY 2014 FY 2015 FY 2016
-500
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HiTech Group Australia 2016 AGM

Business Model

Source Placement Revenue

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• Access HiTech’s proprietary data base (HiBase) developed over more than 23 years for candidates and clients

• Advertising on major recruitment sites and all leading online media

• Headhunting of candidates with rare talent and skill sets

• Team of experienced HiTech recruitment consultants

Permanent Recruitment

• Search and selection of candidates for full time permanent employment

• Contract / Temporary Recruitment

• Provision of staff for temporary , contract or other non-permanent staffing needs of clients for projects

• Selection and placement of the best candidates for client needs

• Contracts term is 6 months to 1 year, and normally extend for another year, 2 or 3 or may be ongoing

Permanent Placements

• One off payment for permanent job placements

• Characterised by higher profit margins

Contract/ Temporary Placements

• Recurring revenue stream

• Revenue is generated by HiTech billing the clients certain rates either hourly, daily or on a project basis, paying subcontractors a corresponding pay rate and making a margin in the process

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HiTech Group Australia 2016 AGM

Growth Strategy

Significant opportunities to grow both organically and through acquisitions

Continue to grow number of clients and proprietary database (HiBase) of skilled candidates

1

Enhance service offering to existing clients by providing a complete recruitment solution in addition to ad hoc contracting engagements 2

Build on existing ICT expertise to expand into the high margin Consulting/Services space

(e.g. cloud, Security, SaaS, Project-As-A-Service) 3

Potential to expand services into other geographic markets including overseas

4

Capitalise on economies of scale achieved from proven business model and long term client relationships 5

Significant opportunity to continue to grow market share in the large NSW and Federal Government IT contracting and services market

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Opportunity to pursue strategic acquisition opportunities in highly fragmented industry

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HiTech Group Australia 2016 AGM

Company Outlook

Government ICT Expenditure of $5.6 billion in 2015 is forecast to increase to

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• $6.2 billion by 2018

• Within the ICT market, certain professions are growing at a rapid rate[1] : – ICT Managers +25.0%

• – Support and Test Engineers +26.5%

• – Software Programmers +18.4%

• Employment prospects particularly in the ICT sector are positive, with 9,000 new jobs predicted to be created by 2019[1]

• Our focus is on the sizeable ICT Government contracting sector where we already have strong established relationships and preferred supplier agreements which will continue to provide further organic growth

• HiTech’s business model continues to be supported by large scale IT transformation projects in both public and private sectors. For instance, the Federal Government’s Digital Transformation Initiative designed to drive changes in the way the community accesses Government Services ( MyGov, MySchool) and the NBN[2]

• Information and Communication Technology is HiTech’s niche and continues to top the list of employment growth with ICT jobs contributing around 6% of Australia’s GDP and generating $85 billion revenue per year[1]

• Australian Government Department of Employment forecasts the ICT employment market to grow 15% by 2020[3]

• HiTech on track to deliver significant gross profit, operating profit and revenue growth in FY2017

• H1 FY2017 profit and revenue results expected to increase between 10%-20% over previous corresponding period

Sources:

1. www.joboutlook.gov.au 2. www.dta.gov.au 3. http://lmip.gov.au/default.aspx?LMIP/EmploymentProjections

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HiTech Group Australia 2016 AGM

ICT Market Snapshot HiTech’s business is leveraged to the positive dynamics of the ICT employment market

• The digital economy which demands the skills of ICT workers is forecast to grow from $79 billion in 2014 to $139 million in 2020, representing a growth rate of 75% and 7.3% of GDP[1,2]

• Skilled high value ICT professionals (such as Digital Security Experts) are in high demand and short supply, and Australian companies continue to use overseas workers to fulfil their ICT skills requirements[1]

• Australia’s ICT workforce is forecast to rise from 628,000 workers in 2015 to 695,400 in 2020, representing an average annual growth rate of 2.0% (compared to 1.4% for the workforce as a whole) and will account for 5.4% of the total workforce[1]

• There is a trend towards contracting vs permanent placements. On average 80% of the workforce in ICT is contracted[3]

• The ICT industry : Nearly A$100 billion (www.austrade.gov.au)

Australia’s Historical and Forecast ICT Employment, 2010 - 2020[1]

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84,531
ICT industry admin and logistics 98,708
105,808
4,155
Electronic trades and professional 3,639
3,712
70,491
ICT trades 73,872
80,050
32,003
ICT sales 32,594
36,211
196,462
ICT technical and professional 225,393
251,592
143,352
ICT management and operations 194,604
217,992
0 100,000 200,000 300,000
2010 2015 2020
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Sources:

• 1.Deloitte Report, Australia’s Digital Pulse, 2016

• 2.Deloitte Access Economics, The Connected Continent II, 2016

• 3.ITCRA Employment Trends Report Q4 2015

HiTech Group Australia 2016 AGM

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ICT Employment Market

The ICT employment market encompasses a wide range of professions outside of those traditionally associated with the ICT industry. Most ICT specialists (97%) work outside the ICT industry itself.

[:]  [:]  [:]  [:]  [:]  [:] 

[:]  [:] 

[:]  [:] 

• [:] 

• [:] 

Accountants Accounting Clerks Advertising,public relations, sales managers Office Managers Bookeepers Software and applications programmers CEO's and MD's Personal assistants Advertising and marketing professionals Solicitors Secretaries Keyboard operators General Managers Management and organisation analysts Production managers Bank workers ICT support technicians Civil engineering professionals Finance managers ICT managers Financial investment advisors and managers Electronic trades workers Human resources managers Database and systems administrators, and ICT security specialists Payroll clerks credit and loan officers supply and distribution managers Insurance, money market and statistical clerks

Computer network professionals Industrial, mechanical and production engineers ICT business and systems analysts Policy and planning managers architects and landscape architects Engineering and production workers Engineering managers Financial brokers Electrical engineers

Other information and organisation professionals Environmental scientists Auditors, company secretaries and corporate treasurers Intelligence and policy analysts Transport services managers Medical laboratory scientists Practice managers Medical imaging professionals Multimedia specialists and web developers Surveyors and spatial scientists ICT sales professionals Mining engineers ICT sales assistants Insurance agents Financial dealers Geologists and geophysicists Agricultural and forestry scientists Electrical engineering draftspersons and technicians Librarians

Judicial and other legal professionals Telecommunications engineering professionals Urban and regional planners

ICT support and test engineers

Archivists, curators and records managers Other accommodation and hospitality managers Life scientists

Other natural and physical science professionals Barristers

Electronic engineers

Electronic engineering draftspersons and technicians Chemists, and food and wine scientists Actuaries, mathematicians and statisticians Economists

Auctioneers, and stock and station agents Telecommunications technical specialists ICT trainers

Other sales support workers Chemical and materials engineers

Source: Deloitte Access Economics, The Connected Continent II, 2016

*Bolded occupations are included in the narrow definition of ICT jobs, by OECD

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HiTech Group Australia 2016 AGM

Disclaimer

The information contained in this Presentation (“Presentation”) has been prepared by HiTech Group Australia Limited (“the Company”) and is being delivered for informational purposes only.

The Company has prepared the Presentation Materials based on information available to it at the time of preparation. No attempt has been made to independently verify the information contained in this Presentation. The Presentation does not purport to contain all information that a prospective investor may require. While the information contained herein has been prepared in good faith, neither the Company nor its shareholders, directors, officers, agents, employees, or advisors give, has given or has the authority to give, any representations or warranties (express or implied) as to, or in relation to, the accuracy, reliability or completeness of the information in this Presentation, or any revision thereof, or of any other written or oral information made or to be made available to any interested party or its advisors (all such information being referred to as “information”) and liability therefore is expressively disclaimed. Accordingly, neither the Company nor any of its shareholders, directors, officers, agents, employees or advisors take any responsibility for, or will accept any liability whether direct or indirect, express or implied, contractual, tortuous, statutory or otherwise, in respect of the accuracy or completeness of the information or for any of the opinions contained herein or for any errors, omissions or misstatements or for any loss howsoever arising from the use of this Presentation. In furnishing this Presentation, the Company does not undertake or agree to any obligation to provide the recipient with access to any additional information or to update this Presentation or to correct any inaccuracies in, or omissions from, this Presentation which may become apparent.

This Presentation should not be considered as the giving of investment advice or recommendations by the Company or any of its shareholders, directors, officers, agents, employees or advisors. 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. In particular, any estimates or projections or opinions contained herein necessarily involve significant elements of subjective judgement, analysis and assumption and each recipient should satisfy itself in relation to such matters.

This Presentation may contain “forward looking statements”. Where the Company expresses or implies an extension or belief as to future events or results such expectation or belief is expressed in good faith and believed to have reasonable basis. However, “forward looking statements” are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such “forward looking statements”. The Company does not undertake any obligation to release publicly any revisions to any “forward looking statement” to reflect events or circumstances after the date of this Presentation or to reflect the occurrence of unanticipated events, except as may be required under applicable laws.

All forward looking statements contained in this Presentation is qualified by the foregoing cautionary statements. Recipients are cautioned that forward looking statements are not guarantees of future performance and accordingly recipients are cautioned not to put undue reliance on forward looking statements due to the inherent uncertainty therein.

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HiTech Group Australia 2016 AGM