TZ LIMITED — Management Reports 2012

Aug 30, 2012

TZ Limited ABN 26 073 979 272

SHAREHOLDER UPDATE – Year End Review

• TZ Limited (TZL) revenue for the fiscal year was approximately 8% d own on last year’s performance. While the B o ard had expected that the pipeline of significa n t sales opportunities harvested by the Telezygol o gy Inc. (TZI) business would effectively drive strong revenue growth this fiscal year, being unsu c cessful for a supply tender for parcel lockers in Australia and the pushing out of several infrastructure projects into 2013 did impact overall sal e s conversion. The Board is confident that m a ny of these infrastructure projects are transf e rring into 2013 and beyond.

• The Group’s profitability wa s also impacted by the lower bottom line perfo r mance from Product Development Technologies Inc. (PDT) for the year. This lower bottom line p e rformance is a direct result of investing in building a substantial software services capability an d Android knowledge platform. These restructu r ing measures implemented in the PDT business were purposely completed in the first half of the year and we are now seeing improved perfor m ance.

• In addition, significant cost r eduction has been instigated over the year in b o th the TZI and PDT businesses delivering a 7 % reduction in annual operating costs. The full cost benefit of the restructuring should reflect i n the 2013 accounts.

• Pleasingly the TZI busines s did achieve solid sales growth in both IXP an d PAD businesses at targeted gross margins wit h increased adoption within chosen market seg m ents and a growing list of high profile corporat e customers. It is worth noting that most of th e PAD business was achieved in the United St a tes at the corporate level and the bulk of th e IXP business was achieved in Australia.

• The Board is confident that the restructuring measures taken during the ye a r will see a return to profitability of the PDT business under more structured and managed gr o wth. Indeed PDT is tracking profitably and well. The Board also maintains a high degree of co n fidence that the TZI pipeline and enabling condi t ions that have been implemented over the last f e w years will support on-going strong and sustain a ble revenue growth for TZI.

TELEZYGOLOGY, INC

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Over the last 12 months, TZI h a s continued to build the foundations to support p roduct adoption and grow its overall sales base. B oth IXP and PAD businesses have shown s ignificant growth on previous year’s revenues, und e rpinned by the establishment of a number o f multi-year strategic supply agreements with end c u stomers. Of particular note are the IXP supply agreements with NextDC and Macquarie Teleco m . There is also a track record of repeated sales success emerging in the US to Colocation Data Ce n ters, MSPs, Cloud Service Providers, Healthc a re, Government and Education, Finance, Telecomm u nication, Technology, Entertainment and Utiliti e s companies. This potential recurring base of sales will support a positive platform for revenue grow t h into 2013.

At a high level, TZI has complim e nted and extended its existing distribution chan n els by recruiting and training a credible network of certified integrators. This network has been developed with the intention of creating long ter m relationships between TZ, the integrator ne t work and end user

TZ Limited Level 11, 1 Chifley Sq u are, Sydney, NSW 2000 Australia Phone: +612 9222 88 9 0 Fax: +612 8208 9937

TZ Limited ABN 26 073 979 272

customers, enabling the broad e r base promotion of the TZ product offering, a s well as providing a service infrastructure to support s olution deployment.

In the IXP business, good prog r ess is being made on developing strategic part n erships with leading IT infrastructure relationships in c luding partnerships with cabinet manufacturers to support and grow TZ Ready cabinet offerings, a l liances with access control companies such a s S2, and bundled offerings with smart data center s olution providers such as Red Wood Systems.

Similarly in the PAD business, TZI has been successful in establishing a number of strategic enterprise accounts, which will support a sustained base flow of locker bank p urchases throughout the next fiscal year. These cor p orate clients represent fortune 100 top tier tech n ology companies as well as major US banks and ser v ice firms in the financial sector.

Despite the loss of the parcel lo c ker tender in Australia, the Company continues t o be invited by other postal organizations to participa t e in RFQ requests and tenders. The Company s hould start receiving notification as to whether it is successful in the RFQ request and tenders that it has participated in shortly. The Board believes th a t the Company has a superior offering to it s competitors and is confident that the Company will b e successful in at least one of its tender bids thi s financial year.

In Australia, the Company will b reak new ground establishing its own commu n ity locker network to provide consumers with a rang e of convenient and public locker locations for p arcel collection and goods return. Teaming agree m ents with freight aggregator Temando, and p a rcel collection point business Parcel Point, are the fi r st of a number of enabling relationships to be formalized.

The strategic customer relatio n ships that are being cultivated in key mark e ts along with TZI’s developing certified integrator network and growing base of high profile cu s tomer successes is establishing TZ’s offerings as th e leading technology solution in their respective m arkets.

PRODUCT DEVELOPMENT TECHNOLOGIES, INC.

PDT top line performance was w ithin 5% of plan expectations this year despite slower sales traction at the start of the fiscal year. Bottom line performance however was disappointin g .

The securing of large and complex Medical and Defense programs over the last two years, have necessitated PDT to scale its s o ftware capability rapidly to serve the needs of t h ese client programs. The investment in these resou r ces and to building robust software engineeri n g infrastructure and processes has been a significa n t undertaking with a high cost of implementati o n. The restructuring program implemented by the B o ard has focused on improving operational effici e ncies including cost reductions through right sizing a n d general program management process impro v ements.

Software development services are an important component in the PDT suite o f offerings as clients increasingly demand seamless c reation and integration of embedded software in parallel with product design to enable efficient and a c curate device development. To better support the on-going business, initiatives are underway to build PDT’s low cost Ukrainian team with a higher co m plement of software engineers to enable more cost e ffective implementation of software projects. A s part of the initiative, PDT Ukraine recently relocated t o a more modern facility closer to high technolo g y businesses and to talent pools to support future recruitment drives.

TZ Limited Level 11, 1 Chifley Sq u are, Sydney, NSW 2000 Australia Phone: +612 9222 88 9 0 Fax: +612 8208 9937

TZ Limited ABN 26 073 979 272

The new fiscal year is off to a strong start with PDT meeting its planned target for July. Work in progress is high and the sales pipeline is strong, with interest from large pri m e contractors in the Defense and Military sector, m a jor players in the Medical Device arena and well known Consumer companies.

The Board remains confident in t he business prospects for the Company and lo o k forward to stronger performance and revenue growt h in the new year.

For further information please contact

Kenneth Ting Executive Director and Compan y Secretary, TZ Limited Email: info@tz.net

TZ Limited Level 11, 1 Chifley Sq u are, Sydney, NSW 2000 Australia Phone: +612 9222 88 9 0 Fax: +612 8208 9937