TZ LIMITED — Interim / Quarterly Report 2013

Oct 30, 2012

TZ Limited ABN 26 073 979 272

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31 October 2012

Lodged by ASX Online

The Manager Company Announcement Office ASX Ltd Level 4, 20 Bridge Street Sydney, NSW 2000

Dear Sir/Madam

SHAREHOLDER UPDATE & APPENDIX 4C – SEPTEMBER QUARTER 2012

Please find attached the shareholder update and ASX Appendix 4C (unaudited) – Quarterly Report for entities admitted on the basis of commitments for TZ Limited for the quarter ended 30 September 2012.

Yours faithfully, TZ LIMITED

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Kenneth Ting Director

TZ Limited Level 11, 1 Chifley Square, Sydney, NSW 2000 Australia Phone: +612 9222 8890 Fax: +612 8208 9937

TZ Limited ABN 26 073979 272

TZ LIMITED – SHAREHOLDER UPDATE September Quarter 2012

TZI Update:

• As expected with normal business seasonality (US and European summer vacation perio d ), sales during the quarter have been slow. The sluggish US and European economies have also impacted on a number of anticipate d projects which will see the procurement process mo v e into Q2. Despite this, TZI saw a sales growth of over 60% in comparison with the same quart e r of last year.

• The business has made considerable progress towards the development of an integrator c hannel and now has a total of 25 trained and certified partners supporting the IXP and PAD busi n esses across our regions from North Ame r ica, EMEA to Australia. Sales through this channel r e present new project specific revenue and s a les should grow substantially over the course of this fiscal year to account for at least 50% of p lan targets.

Infrastructure Protection (IXP)

• On the IXP front, TZI has succe s sfully secured two large orders from US government agencies and anticipates sizabl e orders from two additional government projects in Q 2

• The business has also been su c cessful in securing IXP deployments into both Latin A merica and the Middle East. These pr o jects represent high visibility deployments for IXP an d have already prompted several new l e ads and enquiries from new customers.

• The Company also received th e first of four IXP orders for a large end user located in the Nordics. The additional orders a re expected over the next three quarters, bringing th e total number of TZ SlideHandles™ t o be deployed in this project to over 1200.

• In Europe, the team is actively e ngaged with two cabinet OEMs and are working tow a rds formalising definitive distributio n agreements in Q2. These OEM partnerships will su p port growth in the EMEA region with initial sales commencing in late Q2 / early Q3.

• In Australia, the IXP business c o ntinues to develop strongly on the back of the established business with NEXTDC and Ma c quarie Telecom. The establishment of a collaborative partnership with SRA out of the ACT should also facilitate traction into Government p r ograms.

Packaged Asset Delivery (PAD)

• Q1 saw five new fully funded P A D trial deployments to large, US multi-national Fortu n e 100 accounts. Collectively these tri a ls have the potential to generate a PAD roll-out to ov e r 50 new locations with associated r e venue of USD $2.5 million over the next 24 months. Since the launch of TZ Courier™ (the PAD offering to the corporate sector), the company h a s been highly successful in converting trials into multi-site deployments and early indications suggest a strong and positive customer r esponse.

• The team has also been succe s sful in securing supply agreements for an additional 20 banks of intelligent lockers to two pro m inent technology leaders. These additional banks of lockers will be delivered by the end of our fiscal year, 2013.

TZ Limited ABN 26 073979 272

• Progress has also been made i n Europe with the appointment of two integrator partn e rs to support PAD promotion and prospecting. Currently, the team are working on a numb e r of tangible opportunities that inclu d e Postal, Retail, Logistics, Residential and Online Gr o cery initiatives. Pilot programs are t a rgeted to commence in early 2013 with commercial deployment likely to proceed, if s uccessful, within 6 months of trial.

• In the APAC region, the compa n y has been awarded the contract to supply Singapor e Post with their Smart Parcel Locker r e quirements. Singapore Post has indicated a desire to rollout up to 100 Smart Parcel Loc k ers across Singapore together with a number of plan n ed and phased functionality upgrades o ver the next 24 months to accommodate first and last mile parcel transactions, returns, sm a rtphone retrieval and secure payment integration. All in all, this represents a major achieve m ent for TZI and puts the company firmly on the map as a competitive contender in this se c tor.

• Enquiry levels are strong in Australia, with the company also pursuing PAD initiatives in the corporate and high density resi d ential sectors. In addition, early stage discussions ar e underway with residential property developers exploring possible ourPAD deploymen t s.

• The primary focus for the Austr a lian market is the establishment of an independent P a rcel Locker Network which the com p any has aggressively pursued in conjunction with a s y ndicate of several partners.

Australia Parcel Locker Network

• In May 2012, TZ Limited an n ounced its intention to compete head on in the on-line delivery logistics segment b y pursuing destination footprints for placing its own T Z SMArt Locker banks to enable Au s tralian consumers to have clear choice when it come s to where they would like to ha v e their goods shipped to for collection.

• The TZ SMArt Locker Netw o rk initiative is based on a transactional model where t he Company receives a fee or annuity subscription based on each and every parcel transaction through the net w ork.

• The model is driven by thre e key factors:

• Generating parcel lock e r volume at the point of the on-line retail check-out experience;

o Relationships with logis t ic operators to use the parcel locker network on a transactional or subscri p tion fee basis to support a failed delivery channel an d to optimise carrier options ; and

o Access to suitable real e state to support locker deployment (i.e. corporate offices, shopping malls, convenience stores, gas stations, ..etc..) based on a share o f the revenue with the prope r ty owner.

• Over the course of the last s ix months, TZ Limited has established several teami n g relationships and invested i n technology development to create the conditions for enabling deployment. To d a te relationships with Temando, ParcelPoint, GPT an d Dexion have been announced.

TZ Limited ABN 26 073979 272

• A critical element to the success of the TZ SMArt Locker network is the ability to d rive parcel locker volume at the point of the on-line retail check-out experience. To th i s end, the relationship with Temando will be instrumental in this delivery.

• Temando currently provide a n on-line fulfilment platform that presents on-line customers with real-time freight quotin g , on-line booking, tracking, shipping document produ c tion, insurance of goods-in-trans i t, carbon off-set options and charitable donations. This platform is designed to easily plug into shopping carts (such as Magento, Interspi r e and eBay) and to provide on-lin e retailers, both large and small, with access to an ent e rpriselevel, fully-scalable system. Temando will make available through its engine, the ability for on-line retailers to offer the choice of ‘SMArt Locker Collection Points’ to Consumers at the check-out point of th e on-line transaction experience. Consumers can opt t o have their package shipped to a c onvenient locker location and to collect it at a time th a t suits them.

• The Temando platform will integrate with TZ’s Asset Manager Server platform to p rovide visibility on locker availabilit y and for end-to-end transaction management ensuri n g that any and all carriers can acc e ss the lockers and the security of the parcel transact i on can be properly managed.

• By giving customers the op t ion to have their on-line purchases shipped to a safe, convenient and accessible location, on-line retailers should experience increased orders, loyalty and repeat business . This end-to-end offering gives Consumers a differe n tiated service that fits into their lif e style and makes doing on-line business easy. TZ an d Temando charge the on-lin e retailer or the Consumer for the use of the delivery s e rvices and to have access to the S MArt Locker Network.

• This is a major initiative for T Z Limited requiring a structured syndicate of partner s to support the establishment and growth of an infrastructure platform that is competitive, flexible and responsive to m arket needs and which ultimately offers consumers c h oice and options other than thos e currently available through Australia Post.

• TZ Limited currently plans t o start deployment of its SMArt Locker Network in January 2013.

PDT Update

• Unaudited management accounts s h ow that PDT achieved revenue of USD$5.5 Million f o r the fiscal quarter. This figure marks an 18% increase over the same period from the previou s year and represents a 4% positive variance over the PDT’s internal plan targets. PDT currentl y has a book of firm orders in excess of US D $5.0 Million.

• The unaudited accounts also show a n achieved EBITDA of USD$277,000 for the current q uarter in comparison to a USD$ -356,000 E BITDA result for the quarter ending September 2011. Effectively the quarter demonstrate s continued revenue growth and a return to profitabilit y for the PDT business.

TZ Limited ABN 26 073979 272

• The upcoming US election has cau s ed many companies to slow down or stop hiring and p ut off major projects. This is particularly n oticeable in the Military/Defense sector. PDT has focused its efforts on targeting Defense project s where the end user is looking for smaller, faster, lighter communications devices, leveragin g PDT’s reputation in the Android space and for execution excellence. PDT continues to be a w arded contracts for design work for these types of de v ices.

• As part of a structured organization a l development plan, PDT opened a new office in Ukr a ine in August and has commenced the e m ployment of engineering resources to improve its lab o ur cost base. In addition, external contract o r expenses have been reduced by directly employing those contractors whose skill-set matches business needs and by more diligent control of contr a ct labour and time.

TZ Group:

• A good start to the new fiscal year, s upported by increased revenues and a return to profi t ability for PDT.

• TZI sales were down against intern a l plan targets with a number of deployments pushed into Q2, however overall sales did represent a significant increase in comparison to sales in the e q uivalent quarter last year. TZI management is still confident of meeting its sales targets for the ha l f year.

• TZ Limited continues to implement i t s plans for restructuring and cost reduction within their operating business units.

• TZ Limited also successfully conclu d ed a rights issue raising working capital of approxim a tely AUD$4 Million.

Appendix 4C Quarterly report for entities admitted on the basis of commitments

Appendix 4C

Quarterly report for entities admitted on the basis of commitments

Introduced 31/3/2000. Amended 30/9/2001, 24/10/2005

Name of entity
TZ Limited
ABN 26 073 979 272	Quarter ended(“currentquarter”)
26 073 979 272	30 September 2012

Consolidated statement of cash flows

Consolidated statement of cash flows
Receipts from customers Payments for (a) staff costs (b) advertising and marketing (c) research and development (d) leased assets (e) other working capital 1.5 Interest and other costs of finance paid 1.6 Income taxes refund/(paid) 1.7 Other (proceeds from settlement of litigation announced to ASX on 17 August 2011) Net operating cash flows Cash flows related to operating activities 1.2 1.1	Current quarter $A’000	Year to date (3 months) $A’000
	5,978 (3,220) (89) (17) (211) (3,018) (7) - -	5,978 (3,220) (89) (17) (211) (3,018) (7) - -
	(584)	(584)

• See chapter 19 for defined terms.

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Appendix 4C Quarterly report for entities admitted on the basis of commitments

	$A’000	(3 months) $A’000
1.8 Net operating cash flows (carried forward)	(584)	(584)
Payment for acquisition of: (a) businesses (b) equity investments (c) intellectual property (d) physical non-current assets (e) other non-current assets 1.10 Proceeds from disposal of: (a) businesses (item 5) (b) equity investments (c) intellectual property (d) physical non-current assets (e) other non-current assets 1.11 Loans to other entities 1.12 Loans repaid by other entities 1.13 Other (provide details if material) Net investing cash flows 1.14 1.9 Cash flows related to investing activities Total operating and investing cash flows	- - (18) (53) - - - - - - - - -	- - (18) (53) - - - - - - - - -
	(71)	(71)
	(655)	(655)
1.15 1.16 1.17 Proceeds from borrowings 1.18 Repayment of borrowings 1.19 Dividends paid 1.20 Other - Share issue Cost Net financing cash flows Cash flows related to financing activities Proceeds from issues of shares, notes, etc. Proceeds from sale of forfeited shares	- - - (16) - -	- - - (16) - -
	(16)	(16)
1.21 Cash at beginning of quarter/year to date 1.22 Exchange rate adjustments to item 1.21 1.23 Cash at end of quarter/year to date Net increase (decrease) in cash held	(671) 904 (20)	(671) 904 (20)
	213	213

• See chapter 19 for defined terms.

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Appendix 4C Quarterly report for entities admitted on the basis of commitments

Payments to directors of the entity and associates of the directors

Payments to related entities and associates of the related entities

• Current quarter $A'000

• 1.24 Aggregate amount of payments to the parties included in item 1.2 231 1.25 Aggregate amount of loans to the parties included in item 1.11 -

• 1.26 Explanation necessary for an understanding of the transactions Being directors' fees & allowances, accounting fees, insurance, marketing and rent paid to the directors and their related entities during the period.

Non-cash financing and investing activities

• 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows

• N/A

• 2.2 Details of outlays made by other entities to establish or increase their share in businesses in which the reporting entity has an interest

N/A

Financing facilities available

Add notes as necessary for an understanding of the position. (See AASB 1026 paragraph 12.2).

3.1 Loan facilities 3.2 Credit standbyarrangements	Amount available $A’000	Amount used $A’000
	929	929
	-	-

• See chapter 19 for defined terms.

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Appendix 4C Quarterly report for entities admitted on the basis of commitments

Reconciliation of cash

Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.	Current quarter $A’000	Previous quarter $A’000
4.1 Cash on hand and at bank 4.2 Deposits at call 4.3 Bank overdraft 4.4 Other – Foregin currencies held overseas	59 - - 174	59 - - 174
Total: cash at end of quarter(item 1.23)	233	233

Note: on 26 October 2012, the Company received the $4.6 million proceeds of the rights issue as announced on 14 September 2012.

Acquisitions and disposals of business entities

Acquisitions and disposals of business entities
5.1 Name of entity/business 5.2 Place of incorporation or registration 5.3 Consideration for acquisition or disposal 5.4 Total net assets 5.5 Nature of business	Acquisitions	Disposals
	(Item 1.9(a))	(Item 1.10(a))
	N/A	N/A
	N/A	N/A
	N/A	N/A
	N/A	N/A
	N/A	N/A

Compliance statement

• 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act (except to the extent that information is not required because of note 2) or other standards acceptable to ASX.

• 2 This statement does / ~~does not*~~ (delete one) give a true and fair view of the matters disclosed.

Sign here: ................................................................ Date: 31 October 2012 (Director/Company secretary) Print name: Kenneth Ting

• See chapter 19 for defined terms.

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Appendix 4C Quarterly report for entities admitted on the basis of commitments

Notes

• 1 The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

• 2 The definitions in, and provisions of, AASB 1026: Statement of Cash Flows apply to this report except for the paragraphs of the Standard set out below.

• 6.2 - reconciliation of cash flows arising from operating activities to operating profit or loss

• 9.2 532

• 9.4 - itemised disclosure relating to disposals

• 12.1(a) - policy for classification of cash items

• 12.3 - disclosure of restrictions on use of cash

• 13.1 - comparative information

• 3 Accounting Standards. ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

• See chapter 19 for defined terms.

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