TZ LIMITED — Interim / Quarterly Report 2018

Oct 18, 2017

TZ Limited ABN 26 073 979 272

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19 October 2017

Lodged by ASX Online

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

Dear Sir/Madam

TZL - SHAREHOLDER UPDATE & APPENDIX 4C – SEPTEMBER QUARTER 2017

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 2017.

Yours faithfully

TZ LIMITED

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Craig Sowden Company Secretary

TZ LIMITED

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TZ Limited ABN 26 073 979 272

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September 2017 Quarterly Performance and Business Update

Key highlights for the quarter up to the date of this release include:

•  Quarterly cash receipts from customers were A$6.00M with a net cash inflow from operating activities of a positive A$0.54M compared to A$6.44M and -A$3.52M respectively for the same period last year.

•  Approximately A$0.46M was reinvested during the quarter in ongoing product development resulting in a small increase in the cash balance of $68,000.

•  Expenses were in line with current run rate, although recent corporate changes will show some savings in the fiscal Q3 and Q4 results.

•  The cash position at the end of the quarter was $736,000. The Company has an unutilised A$1.0M loan facility in hand as part of the loan funds provided by First Samuel.

•  Despite the positive cash result for the quarter, given the unpredictability of project timings and the challenges in accurately forecasting timing of large cash receipts, the Company has launched a fully underwritten pro rata 2 for 5 non-renounceable rights issue on 6 October 2017 to raise approximately $5.5M and strengthen the Company’s financial position.

BUSINESS UPDATE

•  Revenues for the first quarter were A$3.6M, which is significantly down compared to the A$7.6M in the same period last year. The difference is the lack of postal and logistics sales which boosted revenues last year .

•  Quarterly sales were 20% down on forecast expectations of $4.4M with a number of Locker projects slipping in the USA and Australia. These projects are now forecast for supply before the end of the calendar year.

•  Gross margins continue to track in line with expected improvements at 60% for the quarter against 40% for the same period last year.

•  With the deployment slippages, PAD sales came in at A$2.5M which is on par with the same period last year. Traction continues to be positive in all geographies and we are anticipating year-on-year PAD revenue growth again this year.

•  IXP sales came in at A$0.3M for the quarter, an improvement of 11% on last year’s results. Sales were strengthened by new business activity in Australia as NextDC expands its operations with the opening of its new Brisbane B2 facility.

OUTLOOK

The Company maintains its focus on the achievement of some clear objectives that will demonstrate progress:

•  Achieve positive EBITDA this fiscal year; and

•  Establish profitable revenue growth; and

•  Leverage our technology platform to expand into new areas of participation.

TZ LIMITED

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Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

+Rule 4.7B

Appendix 4C

Quarterly report for entities subject to Listing Rule 4.7B

Introduced 31/03/00 Amended 30/09/01, 24/10/05, 17/12/10, 01/09/16

Name of entity

Name of entity	Name of entity
TZ Limited
ABN 26 073 979 272	Quarter ended (“current quarter”)
26 073 979 272	30 September 2017

Consolidated statement of cash flows	Current quarter $A’000	Year to date (3 months) $A’000
1. Cash flows from operating activities 1.1 Receipts from customers 1.2 Payments for (a) research and development (b) product manufacturing and operating costs (c) advertising and marketing (d) leased assets (e) staff costs (f) administration and corporate costs 1.3 Dividends received (see note 3) 1.4 Interest received 1.5 Interest and other costs of finance paid 1.6 Income taxes refunded 1.7 Government grants and tax incentives 1.8 Other (provide details if material) 1.9 Net cash from / (used in) operating activities	6,004 (2,540) (103) (133) (2,089) (592) 1 (5) (4)	6,004 (2,540) (103) (133) (2,089) (592) 1 (5) (4)
	539	539
2. Cash flows from investing activities 2.1 Payments to acquire: (a) property, plant and equipment (b) businesses (see item 10) (c) investments	(3)	(3)

• See chapter 19 for defined terms

1 September 2016

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Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

Consolidated statement of cash flows	Current quarter $A’000	Year to date (3 months) $A’000
(d) intellectual property (e) other non-current assets 2.2 Proceeds from disposal of: (a) property, plant and equipment (b) businesses (see item 10) (c) investments (d) intellectual property (e) other non-current assets 2.3 Cash flows from loans to other entities 2.4 Dividends received (see note 3) 2.5 Other (provide details if material) 2.6 Net cash from / (used in) investing activities	(461)	(461)
	(464)	(464)
3. Cash flows from financing activities 3.1 Proceeds from issues of shares 3.2 Proceeds from issue of convertible notes 3.3 Proceeds from exercise of share options 3.4 Transaction costs related to issues of shares, convertible notes or options 3.5 Proceeds from borrowings 3.6 Repayment of borrowings 3.7 Transaction costs related to loans and borrowings 3.8 Dividends paid 3.9 Other (provide details if material) 3.10 Net cash from / (used in) financing activities
	-	-
4. Net increase / (decrease) in cash and cash equivalents for the period 4.1 Cash and cash equivalents at beginning of quarter/year to date 4.2 Net cash from / (used in) operating activities (item 1.9 above) 4.3 Net cash from / (used in) investing activities (item 2.6 above) 4.4 Net cash from / (used in) financing activities (item 3.10 above)	668 539 (464) -	668 539 (464) -

• See chapter 19 for defined terms 1 September 2016

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Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

Consolidated statement of cash flows	Current quarter $A’000	Year to date (3 months) $A’000
4.5 Effect of movement in exchange rates on cash held 4.6 Cash and cash equivalents at end of quarter	(7)	(7)
	736	736
5. Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts	Current quarter $A’000	Previous quarter $A’000
5.1 Bank balances 5.2 Call deposits 5.3 Bank overdrafts 5.4 Other (provide details) 5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above)	736	668
	736	668
6. Payments to directors of the entity and their associates Current quarter $A'000 6.1 Aggregate amount of payments to these parties included in item 1.2 289 6.2 Aggregate amount of cash flow from loans to these parties included in item 2.3 - 6.3 Include below any explanation necessary to understand the transactions included in items 6.1 and 6.2
		Current quarter $A'000
		289
		-

Being directors’ fees and allowances, office rent, accounting fees, administration and marketing costs paid during the period to entities related to the directors of the entity.

7.	Payments to related entities of the entity and their	Current quarter
	associates	$A'000
7.1	Aggregate amount of payments to these parties included in item 1.2		-
7.2	Aggregate amount of cash flow from loans to these parties included		-
	in item 2.3
7.3	Include below any explanation necessary to understand the transactions included in
	items 7.1 and 7.2

• See chapter 19 for defined terms 1 September 2016

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Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

8. Financing facilities available Add notes as necessary for an understanding of the position Total facility amount at quarter end $A’000 Amount drawn at quarter end $A’000 8.1 Loan facilities 5,000 4,000 8.2 Credit standby arrangements - - 8.3 Other (please specify) - - 8.4 Include below a description of each facility above, including the lender, interest rate and whether it is secured or unsecured. If any additional facilities have been entered into or are proposed to be entered into after quarter end, include details of those facilities as well.	Total facility amount at quarter end $A’000	Amount drawn at quarter end $A’000
	5,000	4,000
	-	-
	-	-

The entity has a secured loan facility of $5 million with First Samuel in two tranches with terms of 24 and 36 months. The interest rate of the facility is 90 day BBSW plus 4% p.a. on the $3m tranche and 90 day BBSW plus 9% p.a. on the $2m tranche.

9. Estimated cash outflows for next quarter	$A’000
9.1 Research and development 9.2 Product manufacturing and operating costs 9.3 Advertising and marketing 9.4 Leased assets 9.5 Staff costs 9.6 Administration and corporate costs 9.7 Other (provide details if material) 9.8 Total estimated cash outflows	(2,750) (100) (150) (2,100) (700) (100)
	(5,900)

10. Acquisitions and disposals of business entities (items 2.1(b) and 2.2(b) above)	Acquisitions	Disposals
10.1 Name of entity	N/A	N/A
10.2 Place of incorporation or registration	N/A	N/A
10.3 Consideration for acquisition or disposal	N/A	N/A
10.4 Total net assets	N/A	N/A
10.5 Nature of business	N/A	N/A

• See chapter 19 for defined terms 1 September 2016

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Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

Compliance statement

• 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

• 2 This statement gives a true and fair view of the matters disclosed.

Sign here: Date: 19 October 2017 (Company Secretary)

Print name: CRAIG SOWDEN

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 that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report.

2. If this quarterly report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 107: Statement of Cash Flows apply to this report. If this quarterly report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standard applies to this report.

3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

4. See chapter 19 for defined terms 1 September 2016

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