TESSERENT LIMITED (ASX:TNT) AUGUST 2016 Disclaimer This - - PowerPoint PPT Presentation

TESSERENT LIMITED (ASX:TNT)

AUGUST 2016

Disclaimer

This presentation has been prepared by Tesserent Limited (the "Company"). It does not purport to contain all the information that a prospective investor may require in connection with any potential investment in the

• Company. You should not treat the contents of this presentation, or any information provided in connection with it, as financial advice, financial product advice or advice relating to legal, taxation or investment matters.

No representation or warranty (whether express or implied) is made by the Company or any of its officers, advisers, agents or employees as to the accuracy, completeness or reasonableness of the information, statements, opinions or matters (express or implied) arising out of, contained in or derived from this presentation or provided in connection with it, or any omission from this presentation, nor as to the attainability of any estimates, forecasts or projections set out in this presentation. This presentation is provided expressly on the basis that you will carry out your own independent inquiries into the matters contained in the presentation and make your own independent decisions about the affairs, financial position or prospects of the Company. The Company reserves the right to update, amend or supplement the information at any time in its absolute discretion (without incurring any obligation to do so). Neither the Company, nor its related bodies corporate, officers, their advisers, agents and employees accept any responsibility or Liability to you or to any other person or entity arising out of this presentation including pursuant to the general law (whether for negligence, under statute or otherwise), or under the Australian Securities and Investments Commission Act 2001, Corporations Act 2001, Competition and Consumer Act 2010 or any corresponding provision of any Australian state or territory Legislation (or the Law of any similar Legislation in any other jurisdiction), or similar provision under any applicable law. Any such responsibility or liability is, to the maximum extent permitted by Law, expressly disclaimed and excluded. Nothing in this material should be construed as either an offer to sell or a solicitation of an offer to buy or sell securities. It does not include all available information and should not be used in isolation as a basis to invest in the Company. Future Matters This presentation contains reference to certain intentions, expectations, future plans, strategy and prospects of the Company. Those intentions, expectations, future plans, strategy and prospects may or may not be achieved. They are based on certain assumptions, which may not be met or on which views may differ and may be affected by known and unknown risks. The performance and operations of the Company may be influenced by a number of factors, many of which are outside the control of the Company. No representation or warranty, express or Implied, is made by the Company, or any of its directors, officers, employees, advisers or agents that any intentions, expectations or plans will be achieved either totally or partially or that any particular rate of return will be achieved. Given the risks and uncertainties may cause the Company's actual future results, performance or achievements to be materially different from those expected, planned or intended, recipients should not place undue reliance on these intentions, expectations, future plans, strategy and prospects. The Company does not warrant or represent that the actual results, performance or achievements will be as expected, planned or intended. US Disclosure This document does not constitute any part of any offer to sell, or the solicitation of any offer to buy, any securities in the United States or to, or for the account or benefit of any "US person" as defined in Regulation S under the US Securities Act of 1993 ("Securities Act"). The Company's shares have not been, and will not be, registered under the Securities Act or the securities Laws of any state or other jurisdiction of the United States, and may not be offered or sold in the United States or to any US person without being so registered or pursuant to an exemption from registration including an exemption for qualified institutional buyers.

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2015/16 DELIVERED

SOLID G GROWTH TH

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GROWTH driven by strategy

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Key Business Highlights:

• Revenue increased 30.2% YoY
• IPO completed February 2016
• Blue Reef business acquired May 2016
• Business strategy developed to drive revenue growth.

Strategic revenue growth

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Tesserent’s business strategy is focused on building systematic and sustainable revenue growth. Key elements to drive business success:

• Experienced leadership team appointed.
• Highly experienced and proven sales team recruited

⎼ Presence in Victoria, New South Wales and Queensland. Sales team is committed to their territory and is driving high-level engagement with their customer base. ⎼ Other states are covered remotely with regular inter-state visits to build pipeline and customer base.

• Marketing strategy developed to optimise sales across key market segments through

lead generation, brand recognition and thought leadership initiatives.

• New US channel partner signed-on during August, targeting education sector.

High Performing Team

Proven PERFORMERS

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Tesserent Board of Directors

Tesserent has a highly competent and experienced Board of Directors. The Board and Leadership Team work closely to develop and execute our strategy in response to market opportunities.

Chairman Russell Yardley 35 year IT sector experience and company director since 1985. CEO & Executive Director Keith Glennan Founder with over 30 years international IT experience and 15 years in managed security. Non-Executive Director Steve Bertamini CEO of Al Rajhi Bank and career in global financial services markets. Non-Executive Director Gregory Baxter Global Head Digital at Citibank with global consulting and technology experience. Non-Executive Director Paul Brandling Previously non-exec director Vocus Communications Ltd and

• ver 30 years IT experience.

High Performing Team

Proven PERFORMERS

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Experienced Leadership Team

Since June, Tesserent has appointed a highly experienced Leadership Team to drive Tesserent’s business strategy moving forward. This team have been carefully selected based on proven performance in each of their areas of expertise. The Tesserent Board of Directors and Leadership Team are conducting a 2-day strategy workshop in September to optimise company strategy and executables. CEO Keith Glennan Global Head of Sales Kurt Hansen Chief Technical Officer Nick Conolly Chief Financial Officer Justin Owen Head of Marketing Karen Negus Operations Manager Appointment TBA commencement on 4/10/16

THE MARKET IS

GLOB GLOBAL

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The Market is Global

Users in:

• USA
• Australia
• New Zealand
• UK
• Germany
• Gibraltar
• South Korea
• Hong Kong
• China
• UAE
• Singapore

Tesserent and its Channel Partners service around 350 organisations across 11 countries and territories

Channel Partners in: UK South Korea Hong Kong UAE US

Sales led strategy to

drive g growth th

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Our business

Key Areas of Business

Tesserent’s core business is providing managed security services and specialised cyber safety software to corporate clients, local governments and the education sector. Our business strategy focuses on each of these markets. We will deliver growth through an expanded geographical presence and by extending our offering to incorporate complementary products and services such as connectivity and colocation. Core Business Areas:

1. Corporate and Government Managed Security Services ⎻ Client base in Australia and Asia Pacific. 2. Specialised Education Cyber Safety Offering ⎼ Servicing schools in Australia and overseas. 3. Wholesale Opportunities - Tesserent Proprietary Platform ⎼ Addressing global markets, including Asia, UK, US and UAE.

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Our strategy

Key elements to drive business growth:

• 1. Blue Reef acquisition enhanced our cyber safety product offering within the education sector.
• 2. Significant growth to Sales Team with local presence in Victoria, New South Wales and

Queensland.

• 3. New sales processes and tools engaged to develop strong sales disciplines, transparency and

performance based management.

• 4. New marketing strategy implemented incorporating retention and acquisition activities to

maintain existing revenue and grow revenue through our new customer base.

• 5. Increased investment and capabilities in our R&D team following the Blue Reef acquisition and

the imminent appointment of our NOC manager.

• 6. Continue to evaluate Security Consulting and acquisition opportunities based on their strategic fit

to the company.

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Summary of

financial r results ts

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Financial Summary

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Financial Summary

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Revenue

Revenue for the year increased by 30.2%. Continued growth of the MSS business, recognising the impact of contracted revenue – Limited revenue impact for FY16 from Blue Reef business acquisition.

Cost of sales

Cost of infrastructure to support growing revenues through internal and strategic acquisition. Costs specific to OEM and data centre capacity.

Gross profit

Reduction in GP% a direct result of the investment for growth with capacity in place for future expansion.

Operating expenses

Significant increase in personnel costs – representing 53% of operating expenses. Specific items including

• ption and share based expense re KMP’s $201k, Directors fees $202k and 1.5 months of Blue Reef employees

$191k.

Underlying Earnings

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Underlying Earnings

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EBITDA adjustments

Cost associated with IPO and executive recruitment costs and restructure costs were incurred as part of basing the company for IPO and ASX listing Share based payments represent a non cash impact and were incurred through issuing options to the non- executive directors as a non cash employment cost in sourcing high caliber internationally experienced

• directors. Prior to the listing the directors also subscribed for their shareholding

Investment for growth

The group has made a significant investment in communication and internet infrastructure along with key contracts with OEM’s that support the underlying technology. These contracts have a minimum spend components and are negotiated based on existing and forecast growth within the business.

Operating Expense Bridge FY15 - 16

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IPO IPO Co Costs

Expenses associated with the capital raising ($1.0m) have been

• ffset directly against funds raised whereas costs associated

with the ASX listing have been expensed.

Blu Blue Reef sala laries

Expenses for 1.5 months incurred since acquisition.

Directors fees and d opt ptions

Director fees and non cash expense relating to amortisation of director options and KMP deferred shares over vesting period.

Audi dit tax accounting

Restructuring and compliance costs incurred as transition to listed entity.

Communications and d Internet

Additional costs associated with growth of underlying MSS business.

Lega gal & in insurance

Additional costs including, D&O premiums and legal fees relating to restructure activities.

1,800 2,300 2,800 3,300 3,800 $'000's

Operating Expense Analysis

Annuity Based Revenue

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Total Contract Value

Due to the initial cost of set up, Tesserent customers engage for a contract period of 3 years with key internal metrics defined around Total Contract Value (TCV). Revenue recognition requires the TCV to be spread over the contract term with cash flows based on the terms of the contract but vary from monthly, annual or upfront.

Blue Reef

Blue Reef customers were acquired mid contract with no revenue recognised for previously invoiced contracts. Customers under contract are being invoiced in line with existing contractual relationships and customer renewals occurring as anticipated.

Future Annuity Revenue

Revenue growth has been achieved through the realisation of Managed Security Services with limited impact of Blue Reef business acquisition. However the combined customer base has a solid base of future annuity income which is forecast to grow significantly with the substantial investment being undertaken across sales & marketing and development initiatives.

Annuity Based Revenue

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Contacts

Company

Keith Glennan Tesserent Ltd Level 2, 683 Burke Rd Camberwell, VIC 3124 T: +61 3 9880 5559 M: +61 433 143 214 keith.glennan@tesserent.com

Media

Karen Negus Tesserent Ltd Level 2, 683 Burke Rd Camberwell, VIC 3124 T: +61 3 9880 5512 M: +61 409 129 816 Karen.Negus@tesserent.com

Investors

Benjamin Yeo Novus Capital Limited Level 8, 330 Collins St Melbourne Vic, 3000 T: +61 3 8602 1713 M: +61 403 351 836 ben.yeo@novuscapital.com.au