INTEGRATED RESEARCH LIMITED — Annual Report 2007

Nov 27, 2007

Integrated Research Limited ABN: 76 003 588 449

Performance monitoring software for business-critical systems

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Company Profile
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• IR was formed in 1988 and listed on the ASX in 2000

• Specialises in the development, sales and marketing of software

• PROGNOSIS is a broad suite of performance monitoring and diagnostics software

• PROGNOSIS is used by many of the world’s largest companies to manage critical technology environments including:

• ATM’s and EFTPOS systems

• High reliability HP NonStop server infrastructure

• Critical applications on Windows, UNIX, LINUX server infrastructure

• Large scale IP telephony and VoIP networks

• Web applications such as internet banking and online shopping

Performance monitoring software for business-critical systems

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Company Profile
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• IR has customers in over 50 countries including banks, stock exchanges, credit card companies, airlines and universities

• Approximately 95% of income earned in a foreign currency

• PROGNOSIS is sold and supported through IR offices in US, UK and Germany as well as resellers and managed service providers

• All marketing, training and R&D is conducted from Head Office in Sydney

• Global staff total of 143 people

• 32 - US

• 16 - UK / Germany

• 8 - AsiaPac

• 87 - Head office

Performance monitoring software for business-critical systems

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FY 2007 performance
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	30 June 2007 AUD $m’s	30 June 2006 AUD $m’s	% change
Licence fees	19.5	18.6	5%
Maintenance fees	15.9	15.4	3%
Other	1.0	0.5	100%
Total revenue	36.4	34.5	6%
R&D expenses	6.4	6.7	(4%)
Gross R&D spending	7.8	7.3	7%
SG&A expenses	23.0	20.3	13%
PBT	7.5	7.9	(5%)
PAT	5.4	*7.0	(23%)

• Includes $806k Franking Deficits Tax offsets

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How We Earn our Revenue
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License fees by platform

• Revenue:

• Recurring (maintenance) revenue – 44%

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IP
Telephony
30%
Windows/ 10%
UNIX/Linux 60%
HP
NonStop
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• New license revenue – 54%

• 95% retention rate

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5-year revenue history
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US$ (millions)
Maintenance Licence Fees Other Revenue
35
30
25
20
15
10
5
0
2003 2004 2005 2006 2007
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A$ (millions)
Maintenance Licence Fees Other Revenue
40
35
30
25
20
15
10
5
0
2003 2004 2005 2006 2007
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80% growth 2003 to 2007

29% growth 2003 to 2007

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Sales by region - FY 2003 – 2007
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Americas – US$ millions

UK/Europe – GBP millions

Asia Pacific – US$ millions

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Americas Europe
10.0 2.5
9.0
8.0 2.0
7.0
6.0 1.5
5.0
4.0 1.0
3.0
2.0 0.5
1.0
0.0 0.0
2003 2004 2005 2006 2007 2003 2004 2005 2006 2007
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Asia Pacific
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2003 2004 2005 2006 2007
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PROGNOSIS Customers
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Performance monitoring software for business-critical systems

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PROGNOSIS Business Partners
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Used by leading IP telephony resellers, MSPs and system integrators

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Performance monitoring software for business-critical systems

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Growth Strategy – IP Telephony
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• Enterprises are moving to IP Telephony

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Nemertes Research 2007
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IP Telephony Requires Management
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Annual Maintenance Per Unit
No IPT Management $1,262.49
IP PBX tool $405.44
Specialty Tool $113.28
$0.00 $200.00 $400.00 $600.00 $800.00 $1,000.00 $1,200.00 $1,400.00
Nemertes Research 2007
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Prognosis a Recognised Leader
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“PROGNOSIS continues to maintain leadership in this space.” Yankee Group, 2007

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IP Telephony Growth Profile
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Revenue $ Market evolving, still early in life cycle:

• Adoption by new enterprises increasing

• Deployments slower than expected (between 10 – 20% deployed)

• More activity from systems integrators, carriers, and industry analysts than 12 months ago

New licences for additional platforms Existing Cisco VoIP customers expanding licences New Cisco VoIP customers

Time

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Summary
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• Quality of customer base

• Demonstrated customer retention rate

• Recurring revenue base

• Strong balance sheet

• Scalability of business

• Leadership position in growth market

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Performance monitoring software for business-critical systems