Citadel and Tech Market Trends April 2016 Important Notice and - - PowerPoint PPT Presentation

Citadel and Tech Market Trends

April 2016

The information contained in this presentation prepared by The Citadel Group Limited (ASX:CGL) is not investment or financial product advice and is not intended to be used as the basis for making an investment decision. This presentation has been prepared without taking into account the investment

• bjectives, financial situation or specific needs of any particular person. Potential investors must make

their own independent assessment and investigation of the information contained in this presentation and should not rely on any statement or the adequacy or accuracy of the information provided. To the maximum extent permitted by law, none of the CGL Group of Companies, its directors, employees or agents accepts any liability, including, without limitation, any liability arising out of fault or negligence, for any loss arising from the use of the information contained in this presentation. In particular, no representation or warranty, express or implied, is given as to the accuracy, completeness

• r correctness, likelihood of achievement or reasonableness of any forecasts, prospects, statement or

returns contained in this presentation. Such forecasts, prospects, statement or returns are by their nature subject to significant uncertainties and contingencies. Actual future events may vary from those included in this presentation. The statements and information in this presentation are made only as at the date of this presentation unless otherwise stated and remain subject to change without notice.

Important Notice and Disclosure

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Who is Citadel 4 Example Technology & Innovation case studies 6 Technology market trends & drivers 10 Emerging future opportunities 14 Appendices 17

Contents

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Who is Citadel?

4

Citadel Overview

We manage information securely anywhere-anytime-any device

5

Case Studies of Our Tech Innovation

6

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Delivering to Government Clients

Leveraging trusted provider status to deliver tangible

• utcomes
• Chosen because of pedigree as a security specialist.
• Provided an ‘end-to-end’ solution: scoping, training,

migration, integration, security & service support.

• Now over 110,000 users (30,000 log in every day).
• Users access and manage over 350 million electronic
• bjects from across the globe.
• Size and complexity of this deal usually reserved for

global SIs, but in this domain we are seen as an

• bvious Strategic Partner.

Enterprise Content Management Lifecycle

8

Enabling complex e-health integrations

Optimising service delivery in a disconnected sector

• Solution includes amongst others:
• Order placement and management
• Positive patient identification
• Specimen and Image handling
• Point of care testing (POCT)
• Biochemistry, microbiology and haematology
• Molecular diagnostics and molecular genetics
• Immunology and anatomical pathology.
• Largest Australian-based LIMS supporting over 3500

laboratory staff on a 24/7 basis.

• Over 25,000 daily transactions (approx. 40% of all public

hospital tests nationwide).

• Leveraging this case study into other health areas.

Highly configurable lab information management system (LIMS)

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Enabling unified collaboration

Anytime-anywhere-any device

• World’s largest multi-point video conferencing

deployment: entire student-teacher-staff population can connect real-time from anywhere using any device.

• Designed and delivered through combining

proprietary software and hardware.

• Integrates seamlessly with scheduling,

timetabling, audio visual and recording solutions.

• Done at significantly less cost.
• Students are happier with their learning

experience.

• Device and application-agnostic solution has

enabled a true “BYOD” culture.

Tech Market Trends & Drivers

10

Where the Tech World is going

Overall Industry Trends

• Increasing convergence [the IOTT/device mesh] and

ability to share information between devices.

• Desire for mobility, functionality and Information

availability: anytime – anywhere – any device.

• Unprecedented information flows resulting in big data

issues: storage, search, awareness, mass drowning.

• Increasing number of competitors.
• Blurring lines between individual and the corporation

in social media and apps.

• ‘First mover’ advantage still of benefit.
• Entire approach to enterprise architectures, security

and sharing is changing.

• Still a trade-off between cost, benefit and exposures.

11

Where Tech World is going (2)…

Application Trends

• Demand for open source, ‘plug-n-play’, or ability to

integrate with other apps.

• Rise in AI, 3D, augmentation, visualisation and

immersion capabilities…all lead to disruption...

• Number of competitors and applications increasing

exponentially.

• Because of this proliferation, search engines,

marketplaces, app stores and social media referrals are now the start point for awareness.

• Users often ignorant of the IP or information they hand
• ver as part of signing up for ‘free’ apps.

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Where Tech World is going (3)…

Device Trends

• Greater number of interoperable platforms and smart

sensors.

• Highly commoditised at lower end.
• But still a place for advanced manufacturers.
• Users are happy to adopt devices if these add

perceived value.

Network Trends

• Can source experts and expertise from anywhere.
• Original giants predominate. Strength of their position

allows them to bundle offerings.

• But more agile teams are ‘swarming’ to make rapid

advances.

• Increasing criticality of securing data and identities: it

gets harder to hide and easier to steal information.

• The next war is likely to be won or lost in cyberspace.

13

Emerging future opportunities

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Advancing Healthcare

• Advances are enabling innovations across

health ecosystem.

• A data explosion, accompanied by new

processing power and cognitive technology, is fuelling software intelligence.

• Ecosystem is moving from one of sickness to
• ne of wellness.
• Not only is it proactive, it is also personalised.
• But where there’s a healthcare

advance…then issues with interoperability, payments/processing, privacy and information security won’t be far behind…

• This is where Citadel will continue to play…

Technology is innovating faster than the marketplace

Virtual dissections DIY biotech Home diagnostics Digital pathology Opto- genetics Semantic Health record Nanorobots In blood Wearable e-skins Robotic assistants 3D printed biomaterials AI in decision support Virtual trials & databases Gamification

• f healthcare

Digestible sensors Remote monitoring Anti-ageing drugs Body part regeneration Capability augmentation

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Federating Information

• Developing next generation of Secure

Content & Collaboration.

• Currently designing the prototype.
• Solution combines:
• Collaboration & search via shared web front-end
• Standardised reports and templates
• Fully integrated information back-end (linking

2200 disparate document stores) and ensuring ‘single version of the truth’ always available

• Increased resilience when unreliable connectivity
• Security to operate across sensitive and

restricted networks globally

• Low bandwidth/mixed bearer solutions
• Managed service to ensure solution is always

supported.

Demonstrating ability to extend information boundaries securely

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Appendices

17

1H Results:

• Statutory total revenues of $46.77m (up 57%);
• EBITDA of $12.61m (up 515%);
• Business acquisitions, contract wins and renewals

have increased profit before income tax of $8.65m (up 432%);

• Net Profit After Tax of $5.57m (up 312%);
• Cash and cash equivalent reserves remain strong at

$42.98m (up from $37.22 million in FY2015);

• An increase in the balance sheet by $3.26m with net

assets of $60.25m; and,

• Earnings per share 11.9 cents (up 222%).

Market data as at close 15 February 2016:

• Share price up from $2.20 (15 Feb 2015) to $4.60

(up 109%);

• 46.7m shares on issue; and,
• Market capitalisation circa $215m.

Statutory Results 1H2016 (v PCP)

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$46.77m

total revenue

57%

$12.61m

EBITDA

515%

$8.65m

profit before income tax

432%

$5.57m

net profit after tax

312%

11.9¢

earnings per share

222%

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People and Advisory Integration and Technology

Private Sector Education

Lockheed Martin Australia Tatts Group Australian Federal Police Leading Australian Telco

Defence & Secure Agencies

Australian Government Department of Defence Australian Government Department of Defence Australian Government Department of Defence

Government

Australian Government Solicitor

Health Sector

Big Data & Knowledge Management

Strong Client List

Managing complexity across multiple verticals

Long-standing relationships with multiple clients providing stable revenue streams

Commentary

• Only material, long-term contracts shown in the chart above.
• Evidences strong track record of winning and retaining clients.
• Managed service contracts prolong the average duration of client relationships.
• Concurrent managed service contracts provide stable, recurring revenue streams.
• All managed service contracts ongoing until at least end of 2017 (with a strong history of renewal).

Managed Service Contract Tenures

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Contract 1 Contract 2 Contract 3 Contract 4 Contract 5 Contract 6 Contract 7 Contract 8 Contract 9

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Transaction highlights Strategic rationale Key outcomes for CGL

Board of Directors

Mr Kevin McCann, AM Chairman & Independent Non-Executive Director

• Former Chairman of Macquarie Group and Macquarie Bank
• Chairman of Dixon Hospitality Group
• Partner of Allens Arthur Robinson from 1970 to 2004 and was Chairman of Partners

from 1995 to 2004

• Member of the Order of Australia in 2005
• Bachelor of Arts and Law (Honours) from Sydney University and Master of Law from

Harvard University

Dr Miles Jakeman Managing Director

• Managing Director since CGL’s inception
• Highly skilled in business strategy, program management, security risk management

and staff development

• Extensive experience working overseas with multinational companies with full P&L

responsibility

• PhD Asian Studies and a PhD in Business Leadership

Lieutenant General Peter Leahy, AC (Rtd) Independent Non-Executive Director

• Retired from the Army in 2008 after a 37 year career as a soldier. He concluded his

career with a six year appointment as the Chief of Army.

• Professor and foundation Director of the National Security Institute at the University of

Canberra

• Member of the Australian Institute of Company Directors and has been appointed to

Boards of Codan and Electro Optic Systems Holdings

Ms Deena Shiff Independent Non-Executive Director

• Extensive executive experience in the communications industry, serving as Group

Managing Director at Telstra Corporation between 2005 and 2013

• Chair of Regional Telecommunications Independent Review Committee and Sydney

Writers Festival

• NED Appen, CRC Alertness Safety & Productivity, and BAI Communications
• Bachelor of Science (Economics) from the London School of Economics and Political

Science and a Masters of Arts (Law) from the University of Cambridge

Mr Mark McConnell Executive Director

• Founder of New Territories Investments (NTI), a private equity fund focussed on

clients in Hong Kong and China

• Experienced in acquisitions, capital raising and strategy
• Member of multiple private boards and previously served on several public company

boards

• BSc and MBA and is a fellow of AICD

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Company Highlights



Matrix Organisation

• Citadel operates five brands across the growing industry sectors of technology, health & education
• Structure generates cross-selling opportunities and cost synergies across business segments / client base
• High quality business offerings rewarded with numerous quality awards over many years



Defensive and Diversified

• Long-standing relationships with government and corporate clients providing high level of recurring revenue
• Unique IP that can be leveraged further
• Over 240 Panel, endorsed supplier or exclusive supplier arrangements
• Trusted advisor with outstanding reputation for complex project delivery and superior outcomes



Strong Financial Profile

• Profitable since inception with strong cash generation and dividend payment history
• Revenues and EBITDA growing strongly
• Strong booked pipeline of future revenue
• The Company has strong cash reserves and is executing on its growth strategy



Attractive Industry Sectors

• Large target markets with strong growth drivers
• Continued opportunities as a result of strong industry fundamentals and increased outsourcing
• Supportive regulatory and policy environment



Highly Regarded Management & Board

• Key management has deep experience in the business and hold substantial continuing investments
• High-quality Board of Directors including Kevin McCann AM as Independent Chairman, Deena Shiff and Lieutenant-General Peter

Leahy AC (Retd) (former Chief of Army) as Independent Non-Executive Directors

Investor/Media Inquiries

Mark McConnell, Executive Director Tel: +61 2 6124 0800 Mark.McConnell@citadelgroup.com.au Andrew Burns, Chief Financial Officer / Company Secretary Tel: +61 2 6124 0800 Andrew.Burns@citadelgroup.com.au

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