TZ LIMITED — AGM Information 2017

Nov 28, 2017

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FY2017 AGM Presentation

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FY 2017

OPERATING HIGHLIGHTS

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Business Performance

	2013	2014	2015	2016	2017
REVENUE	A$2.8M	A$8.4M	A$15.1M	A$20.8M	A$21.5M
GROSS MARGIN	50%	49%	44%	30%	46%
ADJUSTED EBITDA	(A$16.74M)	(A$8.55M)	(A$4.47M)	(A$5.28M)	(A$2.95M)
LOSS AFTER TAX	(A$23.20M)	(A$11.80M)	(A$6.44M)	(A$7.03M)	(A$6.48M)
EPS (cents)	(13.57)	(4.39)	(1.57)	(1.51)	(1.29)

 Marginal increase in revenue (with Postal and Logistics projects in roll-out phase)

 Improvement in EBITDA due to improved gross margins as sales mix shifts to higher value offerings

 Net Loss includes A$2.2M in depreciation and amortization and a A$1.3M impairment

FY2017 Results

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Our Business

IXP

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• Data Centre Cabinet Security business

POSTAL

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PAD (Smart Locker)
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• Smart Lockers for Corporate,  Smart Lockers for Postal and Educational, Residential Logistics customers and retail (Click and Collect) customers

• Includes Package Lockers, Day Lockers, Inventory Lockers  Usually tender driven

• Higher margin business  High volume, lower margins

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Shift in Sales Mix

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Design Services Design Services
(5%) (6%)
IXP
IXP
(7%)
(10%)
Postal
Corporate
PAD
Postal
Corporate PAD
(40%)
PAD
PAD (34%)
(50%)
(48%)
FY 2017 Sales Mix FY 2016 Sales Mix
(46% GM) (30% GM)
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Improved Product Margins

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Growth in PAD

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EU (1%)
$9,000
87% Growth
ASIA
$8,000
(12%)
$7,000
ANZ
$6,000
(21%)
USA
$5,000
(66%)
$4,000
$3,000
$2,000
$1,000
 USA success is key to revenue growth
$0
 Strong USA growth in high margin offerings
2016 2017 2016 2017
 ANZ and ASIA sales consistent
US POSTAL US PAD
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 EU – no participation as yet

Where is the Growth?

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			Inventory
			Management
Day	Locker					Postal and
						Logistics
Mail
Management
Residential						University
						Campus

Segment Specific PAD Offerings

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FY2017 Takeaways

• Focused on commercialising Smart Locking Device technology in two main sectors … Data Centre Cabinet Locking (IXP) and Smart Lockers (PAD and POSTAL)

• The primary business directive has been revenue growth to establish market presence, create market awareness and deliver track record of application performance.

• The Company has successfully established itself as a leader in these two areas of participation with a retained customer base of credible global brand leaders.

• Investment has been ahead of the curve to support growth ambitions including but not limited to transition to low cost, scalable device manufacturing ex–China, Asian sourcing and supply, standardisation of software platforms and system engineering designs.

• Revenue growth has come through large volume tender based supply contracts which has proven track record but were secured at lower margins.

• Due to the scale of the projects, this has driven the need for further investment in resources and product development (HW and SW) to support implementation which has impacted the Company’s operating cash requirements and profitability.

Key Business Insights

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FY 2018

BUSINESS OUTLOOK

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FY2018 Board Restructure

• Restructure of the Board …

• Ken Ting resignation – September 2017

• Paul Casey retirement at FY2017 AGM

• Mark Bouris transition to non-executive chairman with retirement at FY2018 AGM

• Appointment of Managing Director, John Wilson in September 2017

• Appointment of Non-Executive Director, Graham Lenzner in September 2017

• Appointment of Company Secretary, Craig Sowden (CFO) in September 2017

• Establishment of Risk and Audit Management Committee under chair, Graham Lenzner

• Establishment of Remuneration and Nomination Committee under chair, Graham Lenzner

• Seeking new Non-Executive Director to join the Board

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FY2018 Focus – EBITDA Positive

1

Grow Revenue Profitably

• Grow existing business:

• Focus on US market – Corporate, Educational, Retail, Residential

• Establish EU market

• Grow AU market beyond Day Locker business

• Expand ASIA beyond POSTAL offering – Singapore Post, Pos Malaysia

• Expand into new sectors outside IXP and PAD.

• Explore licensing partnerships

2 Maximise Gross Margin  Implement stronger Supply Chain management principles

• Implement manufacturing cost reduction initiatives:

• Proprietary Products Radial, New Devices

• System Solutions IXP, PAD, POSTAL

• Upgrade electronics to next generation device standards … provide for more efficient implementation

• Improve visibility on project margins … project accounting

3 Manage Operating Cost Base

• Board restructure … savings in corporate overhead

• Align organisational structure to business … reduction in head count

• Implement stronger fiscal controls and policies

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