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www.tz.net
TZ LIMITEDFY14 FULL YEAR PRELIMINARY RESULTS27th August 2014
“FY14 was a milestone year …TZ is demonstrating and delivering the characteristics of a true high growth, global technology business.”
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What We Will Cover
1 2 3 4
Business Strategy, Growth Drivers,
Competitive Strengths
OperationalHighlights
2014 FinancialPerformance
TZ BusinessOverview
5
2015 Key Prioritiesand Outlook
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Countries whereTZ Products are Sold
208%2014 Revenue Growth
12Large Corporate
Customers
> 40
76Total Patents Granted
102014 New HW +SWProducts Launched
Number of Staff42
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TZ Business Overview TZ is the market leader in SMArt Device technology – SMA actuated, IP enabled, intelligent fastening and
locking devices controlled remotely via software.
TZ technology provides enhanced security and asset protection through remote monitoring and software control.
FY14 was a milestone year: verified market opportunities, proven business model, major global contract wins, achieved revenue guidance, significant momentum going into FY15.
Two business segments – IXP (data centre cabinet locking) and PAD (automated parcel lockers). Leveraging global growth trends in E-commerce and Cloud computing.
Proprietary IP with strong patent protection. Unique integrated hardware + software model. Low cost base outsourced contract manufacturing.
Recognised Product leader, building presence in Asia, EU and US through cornerstone contracts
Strategy to leverage IP through partnerships and major contract opportunities
TZ is beginning to show the true characteristics of a true high growth global technology business
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TZ Snapshot
TZ is the leader in SMArt Device™ technology combining state-of-the-art SMA actuated intelligent fastening and locking devices with TZ remote software control:
Enables Granular Security and Protection
Enables Remote Monitoring and Compliance
Reduces and Manages Security Risk
Eliminates Manual Work Practices
Allows Workflow Management / Optimisation
Improves System Productivity
infrastructureprotection
packaged asset delivery
Business Streams
Company Purpose
Revenue Model
Data Centre Rack Security
Intelligent Lockers
market size: ~ 25M installed base+ 2M new cabinets per year
addressable opportunity: > US$120M (estimated)
hardwaresale
softwarelicense
softwaremaintenance
supportservices+ + +
once off once off annuity service fee
corporate lockers: > 250,000 Locker Units per yearpostal lockers > 5,000 Locker Banks per year
addressable opportunity: Global, Large > US$500M
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Financial Performance – Continuing Operations
Normalised EBITDA
EBITDA
2014Preliminary
2013*Audited
REVENUE
(A$8.5M)
(A$5.6M)
(A$11.8M)
(A$6.3M)
A$8.5M A$2.8M
NPAT (A$11.8M) (A$16.5M)
Normalised NPAT (A$8.9M) (A$11.1M)
Change %
EPS (cents)
Normalised EPS (cents)
(4.4) (9.7)
(3.3) (6.4)
28%
11%
208%
28%
20%
55%
48%
* Excludes PDT
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Normalised EBITDA and NPAT
2014 Preliminary(A$’000s)
2013 Audited(A$’000s)
Add Back:
Net loss on movement in fair value of derivative liabilities
Net loss on renegotiation of convertible notes
Loss on debt/equity conversion
Impairment of assets – TZI Goodwill
Less:
Net gain on movement in fair value of derivative liabilities
(8,479) (11,803)
- 380- 1,125
4,356 -
- 4,010
(1,508) -
2014 Preliminary(A$’000s)
2013 Audited(A$’000s)
(11,789) (16,524)
EBITDA NPAT
- 380- 1,125
4,356 -
- 4,010
(1,508) -
(5,631) (6,288) (8,941) (11,009)NORMALISED
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Revenue Growth Accelerating
FY2010 FY2011 FY2012 FY2013 FY2014 FY2010 FY2011 FY2012 FY2013 FY2014
infrastructureprotection
packaged asset delivery
A$1M
A$2M
A$3M
A$4M
A$5M
A$6M
A$2.4M
A$5.4M
A$1.2M
A$1.6M
A$1.2M to A$2.4MBacklog: A$0.3M
A$1.6M to A$5.4MBacklog: A$3.0MBacklog means purchase orders received but goods not yet dispatched
Backlog means purchase orders received but goods not yet dispatched
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Sales by Business Unit
INFINITY REVENUE
PAD REVENUE
2014Preliminary
2013Unaudited
IXP REVENUE
A$5.4M
A$0.7M
A$1.6M
N/A
A$2.4M A$1.2M
TOTAL A$11.8M A$3.4M
Change %
238%
100%
247%
TOTAL BACKLOG A$3.3M A$0.6M 450%
TZ met guidance of >$A8M in sales as outlined in the 2013 Annual Report
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Investing for Growth2014 2013
GROSS MARGIN
COST OF GOODS
OPERATING REVENUE
50%
50%
A$8.48M
COMMUNICATIONS EXPENSE
OCCUPANCY EXPENSE
EMPLOYEE BENEFITS EXPENSE
A$0.28M
A$0.11M
A$5.74M
TRAVEL AND ACCOMMODATION
PROFESSIONAL/CORPORATE EXPENSE A$1.60M
A$0.84M
50%
50%
A$2.75M
A$0.22M
A$0.13M
A$3.85M
A$1.93M
A$0.72M
DEVELOPMENT COSTS A$0.07M A$0.38M
Change %
208%
50%
27%
18%
17%
17%
82% No Change
No Change
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FY14 Major EventsAUG Acquisition of Infinity Design to support internal development initiatives
Intelligent Locker contract wins as TZ pursues US University and College marketAccelerated roll-out of Sing Post POPStation Locker Network – 100 Locker Banks by YE 2014
NOV Large IXP contract win with Defense Agency for European major project
JAN Secure Parcel Locker supply contract for Poste Italiane Pilot Program – Significant Tender WinSecure Parcel Locker supply contract for Pos Indonesia Pilot ProgramReceive A$800,000 IXP purchase order for major South American data centre deployment
FEB Conversion of QVT Convertible Notes – TZ debt free
MAR Launch of TZ Day Locker Management System to the Australia Market
APR Share placement to raise working capital to support expanding sales baseMajor PAD contract wins in the US Corporate Accountable Mail SectorWestpac Banking Corporation specify TZ’s Solution as its preferred Day Locker Management System
MAY Supply of Day Locker Solution to Westpac Kent Street and Collins Street OfficesSecure Parcel Locker supply contract with major US Logistics and Transportation Company
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IXP Sales Highlights
North America Strong growth into US Govt,
Defense, Banking and Financial Sectors
Expanding business with world recognised IT and technology corporations
South America Largest single PO received
for large South American data centre
Africa New Distribution Partner
– Bytes Technology Group
Europe and the Middle East Major supply contract for significant
Defence Agency project
Expanding business with major IT service providers
Asia New Distribution Partner
– LanTroVision
Australia On-going sales with
NextDC, MacTel and others
IXP specification secured on new data centres
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““The electronic locking system we deployed didn’t provide the full accountability that we need to meet our customers’ strict security standards, so we went shopping for a new solution.
We considered solutions offered by dedicated rack manufacturers and we also looked at TZ. Once we experienced the TZ system, we were sold on two key points – cost and functionality.” ”
Control Circle
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PAD Sales Highlights
North America Expanding business with
world recognised IT and technology corporations for Accountable Mail offering
Secured wins for Locker supply to large University and College campuses
Strong sales growth with major Property Developers / Managers for Residential Locker offering
Won Parcel Locker supply contract for major logistics company
Europe Won supply contract for Poste
Italiane Parcel Locker pilot Asia On-going supply contract for
100 Locker Banks for Sing Post
Won supply contract for PosIndonesia Parcel Locker pilot
Australia Secured specification as Westpac’s
Day Locker Management System
Expanded ADAM Locker deployment and service offerings
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“Poste Italiane selected TZ, following an extensive evaluation lasting over a year and involving several stages of qualification.
TZ was judged to be the best provider because the solution represented the best value in terms of reliability, ease of use, customisation possibilities and, last but not least, a strong benefit‐to‐cost value proposition.”
FBA Press Release
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IXP Product Development
Launch TZ SwingHandle™ to target traditional handle market
Introduced world’s first in-situ electronic upgradable mechanical swinghandle lock
Improve software capability to support larger DC deployment needs:
Upgraded IXP Bridge Firmware
Extended Centurion Server Software Capability
Launch annual support and maintenance offering
Established annual maintenance and support package offering through integrator partners
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PAD Product Development
Launch Day Locker Management System offering:
Secured specification as Westpac’s preferred Day Locker Management System
Expand PAD platform software capability to support Postal offering:
Built new Client Software engine
Extended Asset Manager Server Offer
Established Reservation Capability
Expand Corporate Mail software offering:
Extended Corporate Mail Software capability to support new corporate client needs
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Other Initiatives
OurPAD Development:
Development of production version of OurPAD based on partner and courier feedback
Expand PAD platform software into mobile applications:
New mobile phone app for Postal Networks
New C2C mobile phone app for ADAM Locker Network
Next Generation NFC Devices:
Extend TZ SMArt Device thinking to leverage NFC (near field communication) opportunities
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Execution Strategy, Growth Drivers and Sensitivities
5
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1 2 3 4 5
Explore and contract licensing and partnership
opportunities
Expand technologyoffering and pursue
new sectors.
Drive market leadershipin selected segments
Eliminate debt, improve financial position,
build competencies, business systems and
processes
Fixed corporate structure and legacy issues
Execution Strategy
Remedial Strengthen Innovate,New Product Development
Develop and launch new HW and SW System Solutions
Awareness,Marketing,
Commercialisation
Accelerated Growth
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IXP Growth Drivers
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
FY2013
FY2014
FY2015
FY2016
FY2017
FY2018
FY2019
FY2020
Rac
ks D
eplo
yed
Per A
nnum
OTHER
APAC
EMEA
CALA
NA
Frost & SullivanProjections
TZ ManagementEstimates
Where adopted, there are two TZSmart Locking Devices on every cabinet in the data centre …
25,000,000 installed base of data centre cabinets globally
2,000,000 date centre cabinets sold each year globally
200,000 cabinets per year estimated to want electronic locking
Increasing market preference for electronic locking due to compliance requirements …
HIPAAHealth information security
PCI-DSSPayment card security
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PAD Growth Drivers
E-commerce growth rates vary widely but the general trend is upwards and significant …
Postal organisations and logistics companies are exploring automated parcel locker to:
Improve operational efficiency and address the increasing costs associated with unsuccessful first try deliveries to households
Provide cost effective and convenient physical distribution of goods to the consumer.
Improve the delivery experience for consumers.
Benchmark – DHL Germany:
870M Domestic Parcels per year Total of 2,500 Parcel Lockers (Packstations) deployed over seven (7) years
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Sensitivities TZ sales highly dependent on infrastructure roll-out … Delays in deployment could impact timing of revenue
recognition. TZ only recognises sales revenue when the product is dispatched.
A number of major postal tender submissions are pending where TZ is short listed as a possible supplier. This could have a material impact on the TZ’s forecast revenues.
Day Locker sales projections are based on supply of the electronic hardware and software solution. TZ is also actively pursuing turn-key supply inclusive of supply of the Locker Unit as well. This has the potential to double revenue.
Manufacturing transition currently underway to expand production capacity and reduce manufacturing cost base. Anticipated high production demand could push current production to maximum thresholds in the near term until Asian base manufacturing is fully commissioned.
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1
Key Priorities
focus on revenue growth … >$15M FY15 sales target
2 improve manufacturing cost … target 15% overall GM gain
3 build annuity revenue stream … higher value SW offerings
4 explore partnership opportunities to leverage TZ IP and technology
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Focus on Revenue Growth Infrastructure Protection:
Secure OEM supply relationships for TZ SwingHandle to penetrate existing mechanical lock market and build opportunities for future TZ electronic upgrade. Increases total available market substantially.
Build sales momentum with Government, Banking and Finance customers leveraging increasing PCI-DSScompliance requirements
Expand sales focus to emerging growth markets such as South America and Asia
Packaged Asset Delivery:
Become the dominant Day Locker Offering for Corporate Australia targeting those corporates who are embracing agile workplace practices … i.e. Westpac >19,000 employees
Introduce Day Locker Offering to US market targeting established TZ Corporate Clients … Cisco >15,000 employees, Microsoft >40,000 employees
Proactively pursue Postal Parcel Locker tender opportunities in Asia, Europe, USA and South America as Postal organisations rapidly embrace parcel locker strategies to support e-commerce business
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Improve Manufacturing Cost Base
Successfully transition primary manufacturing of proprietary TZ components to China to materially improve manufacturing cost base
Build sourcing capability in Asia to improve purchasing economies for off-the-shelf hardware components that support system offerings
Establish scalable inventory management and logistics capability in Asia to ensure product availability and reduced freight costs through efficient consolidation and dispatch scheduling
GMGain
Dev
ice
Uni
t Cos
t
Current UnitCost Base
New UnitCost Base
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Build Annuity Revenue Streams
Move from single software license to higher value custom Application / Server / Integration software package offering
Establish new enterprise software licensing models to support major Client – Server deployments
Expand software offering to include hosted SaaS offerings to drive higher value licensing revenue
Build service and support maintenance packages to increase $ value of on-going annuity revenueAv
erag
e So
ftwar
e Sa
le
ApplicationSoftwareSell Value
Integrated Software/Service
Sell Value
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Explore Partnership Opportunities A.D.A.M. Parcel Locker Network
Proof of concept Pilot has been established to prove Locker Network viability to potential partners.
Explore partnering opportunities for A.D.A.M. Parcel Locker Network to enable end-to-end B2C and C2C offerings including integrated logistics
Explore Click & Collect offering with Retail Property Partners … focus roll out to targeted retailers.
Regional Parcel Locker Network
Explore PAD partnering options in Asia to leverage opportunity to build a regional Parcel Locker Network
Homebase OurPAD Network
Progress OurPAD partnering options to establish national channel for broad base commercialisation
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Outlook and Conclusions FY14 milestone year: verified market opportunities, proven business model, disciplined execution and cost control,
global customer endorsements and contract wins, strong momentum into FY15
FY14 revenue guidance achieved. New guidance for FY2015 >$15M revenue
Strategic focus on revenue growth, manufacturing costs, annuity income streams, and leveraging proprietary IP through partnerships and licensing deals
Exponential growth – TZ’s data centre cabinet locking sales growing at over 100% per annum and TZ’s parcel locker sales up over 238% per annum leveraging e-commerce and cloud global growth trends.
Extensive IP portfolio – 76 patents granted protecting TZ’s technology position in SMA actuated electronic locking and fastening devices including areas of technology application.
Clients are AAA rated - Cisco, Microsoft, Westpac, Singapore Post, Poste Italiane. Contract wins demonstrate TZ’s competitive strengths. Roll out programs underpin growth.
Business is scalable, debt free and well placed to support rapid growth with experienced board and management.
TZ is currently engaged in strategic discussions with a number of potential partners. A strategic deal, should it come to fruition, could have a significant impact on the business of TZ.
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“I believe that remotely controlled devices with integrated intelligence capable of manipulating things in space will be integral to building and maintaining the infrastructure of the built world … There are no other devices like ours in production and we are out in front of the technological curve.”
Dickory Rudduck, AGM 2010
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Important NoticeThe information contained in this presentation is given in good faith and has been prepared from information believed to be accurate and reliable. The information presented does not take into account your individual financial circumstances and it is not designed to be a substitute for specific financial or investment advice or recommendations and should be relied upon as such. You should consider talking to your financial adviser before making an investment decision. So far as the law allows, TZ Limited excludes all liability for any loss or damage whether direct, indirect or consequential.
This presentation includes forward-looking statements that are based on information and assumptions known to date and are subject to various risks and uncertainties. Actual results, performance or achievements could be significantly different from those expressed in, or implied by, these forward-looking statements. Such forward-looking statements are not guarantees of future performance. They involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of TZ Limited, and which may cause actual results to differ materially from those expressed in this presentation.
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