TZ : Appendix 4D Half-Year Report

TZ Limited

Appendix 4D

Half-year report

1. Company details

	Name of entity:	TZ Limited
	ABN:	26 073 979 272
only	For the half-year ended 31 December 2021
	Reporting period:
	Previous period:	For the half-year ended 31 December 2020
	2. Results for announcement to the market
						$
	Revenues from ordinary activities		down	5.4%	to	8,158,020
use
	Earnings before interest, tax, depreciation and amortisation, adjusted for
	impairment ('adjusted EBITDA')		down	704.6%	to	(1,130,992)
	Lo from ordinary activities after tax attributable to the owners of TZ
	Limited		up	166.6%	to	(1,788,178)
	Loss for the half-year attributable to the owners of TZ Limited	up	166.6%	to	(1,788,178)
	Dividends
personal
	There were no dividends paid, recommended or declared during the current financial period.

Comments

The loss for the consolidated entity after providing for income tax amounted to $1,788,178 (31 December 2020: $670,685).

The earnings before interest, tax, depreciation and amortisation adjusted for impairment ('adjusted EBITDA') was a loss of $1,130,992 (31 December 2020: profit of $187,077).

Adjusted EBITDA is a financial measure which is not prescribed by Australian Accounting Standards ('AAS') and represents the profit under AAS adjusted for non-specificnon-cash and significant items. The directors consider adjusted EBITDA to reflect the core earnings of the consolidated entity.

Refer to 'Review of operations' in the Directors' Report for further commentary on the results for the half-year ended 31 December 2021.

3. Net tangible assets

	Reporting		Previous
	period		period
	Cents		Cents
Net tangible assets per ordinary security	0.34	(11.97)
For

The net tangible assets presented above is inclusive of right-of-use assets and lease liabilities.

4. Control gained over entities Not applicable.

5. Loss of control over entities

Not applicable.

TZ Limited

Appendix 4D

Half-year report

6. Dividends

Current period

There were no dividends paid, recommended or declared during the current financial period. onlyPrevious period

There were no dividends paid, recommended or declared during the previous financial period.

7. Dividend reinvestment plans N t applicable.

use8. Details of associates and joint venture entities Not applicable.

9. Foreign entities

Details of origin of accounting standards used in compiling the report: personalNot applicable.

10. Audit qualification or review

Details of audit/review dispute or qualification (if any):

The interim financial statements were subject to a review by the auditors and the review report, which contains an Emphasis

f Matter paragraph relating to going concern, is attached thereto.

11. Attachments

D tails of attachments (if any):

The Interim Report of TZ Limited for the half-year ended 31 December 2021 is attached.

12. Signed

For	Date: 24 February 2022
Signed ___________________________
Peter Graham
Chairman
Sydney

onlyTZ Limited

ABN 26 073 979 272

useInterim Report - 31 December 2021 personalFor

TZ Limited Directors' report 31 December 2021

The Directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'consolidated entity' or 'TZ') consisting of TZ Limited (referred to hereafter as the 'Company' or 'parent entity') and the entities it controlled at the end of, or during, the half-year ended 31 December 2021.

onlyDirectors

The names of Directors who held office during or since the end of the half year are:

Peter Graham - Chairman

John D'Angelo - Non-Executive Director

Simon White - Non-Executive Director (appointed on 26 August 2021)

Sc tt Beeton - Managing Director (resigned on 17 September 2021)

Dividends

There were no dividends paid, recommended or declared during the current or previous financial half-year.useR view of operations

General overview

Over the course of the last six months, the consolidated entity has continued to implement the changes necessary to transform the business into a cloud-based services business, moving our traditional smart device and software licensing platforms into reshaped subscription-based offerings underpinned by long term contractual relationships and predictable rec rring revenue.

personalBa ance sheet restructuring complete

Restructuring of the balance sheet has been completed with the repayment of $2.1 million of the loan facility that was due to expire at the end of July 2021. The remaining $2 million of debt with First Samuel was converted into shares with shareholder pproval at the Company's EGM in August 2021, leaving the consolidated entity in a significantly improved financial position. A ew 12-month facility of $2.5 million has been established with First Samuel at a coupon rate of BBSW + 4.5% which matures on 31 July 2022. These funds will support the operating capital requirements and help manage cash needs through

the peaks and troughs of TZ's largely project based business.

Transformational quarter - September 2021 to December 2021

To support the reshaping of TZ's product offering and to drive recurring revenue growth and overall profitability of the con olidated entity, the Board appointed Mario Vecchio, an experienced and successful technology entrepreneur and previous TZ Board member, as CEO in September 2021, taking over the reins from outgoing CEO and Managing Director, Scott Beeton.

In associated Board changes, Simon White joined Peter Graham, Chairman and John D'Angelo, Non-Executive Director, as a n w Non-Executive Director in August 2021.

The consolidated entity has continued to simplify and streamline all facets of the business including making key appointments to strengthen management capability. Specifically, Helen Gilmartin joined TZ in July 2021 as Head of Marketing and Herb To joined as Finance Director in November 2021.

ForTo facilitate the transformation of the consolidated entity's offering and market positioning, appropriate investments are being made in technology, resourcing, and market presence to lay the foundation for the company's expansion. These investments have impacted the short-term financial results but are critical to the achievement of the longer-term ambition.

The management changes, the new Delhi office in India and the significant expansion in personal, saw the cost associated with these changes, expensed in the 2nd quarter - hence the cash outflow and the half year EBITDA loss of $1.1 million

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TZ Limited Directors' report 31 December 2021

Financial results

For the reporting period, the consolidated entity recorded:

● Revenue to 31 December 2021 of $8.2 million, down 5.4% with the revenue recorded for the previous half year.

● Adjusted EBITDA for the half year was a loss of $1,130,992 compared to a loss of $187,077 in the corresponding period onlylast year.

● The overall loss for the consolidated entity for the half year was $1,788,178 against last year's $670,685 for the same

period.

● The net loss included the "one off costs" associated with establishment of the new office in Sydney, the growing

operation in India, restructuring costs (clearing tax liabilities and redundancy payments).

● TZ ended the calendar year with over $9 million of purchase orders that are scheduled for delivery over the next six

months.

Note that the consolidated entity's R&D Grant submission is still outstanding and will be lodged in this next six-month period. This has resulted in a timing difference decrease in Other Income of $0.7 million from the previous half year.

useTZ received $225,000 of COVID-related government support in this half year in relation to JobKeeper/JobSaver.

Sales Overview

The consolidated entity has seen a major uplift in sales performance in the last six months however this is not reflected in the half year revenue result, which shows a slight decreasing performance to that of the corresponding period in the previous year.

The revenue of $8.2 million for the half year was below forecasts due to the "transformation" outlined above and:

● Direct COVID impact leading to project delays due to business closures, i.e. NSW and VIC were effectively shut down personalfor over two months from October to December.

● Major disruptions to logistics due to COVID manifesting in delays to shipments, port congestion and goods processing. ● Associated raw material and component shortages leading to longer supply lead-times.

The bulk of the backlog of purchase orders include the following:

● Over $1.2 million in new contracts in Australia for supply of smart locker electronics and software services for Chevron's new high-rise headquarters in Perth and the new global headquarters for CSL in Melbourne, and smart locking devices

for the fit out of secure data cabinets at NextDC S3 and MacTel IC3 locations.

● A US$2 million order for the further expansion of the DSV Locker network in South Africa to over 550 locations. Delivery

of the bulk of this order is scheduled for March 2022.

● The US business has seen a significant uplift in its business with an increase of almost 40% in the number of written orders received over the same period last year. Currently $5.2 million of orders are schedule for delivery over the six

months to 30 June 2022.

Annual recurring revenues for the first half of the year was $1.4 million. Our proactive push towards subscription-based service offerings will continue to have a significant impact on the annuity growth rate. In FY22, we expect to achieve subscription/recurring revenue growth in the mid-30% range year-on-year.

Technology Update

R&D investment has been focused on the TZ Cloud and with the migration needed to make sure our on-premises customers can succeed in the Cloud. The consolidated entity is well progressed in transitioning from selling perpetual software to

ForWe are determined to build an API centric architecture that allows us to control our competitor's electronic locking devices using a simple, low cost and non-disruptive process. To this end, work has been undertaken on our Device Connect and Gateway offerings. This work will enable the consolidated entity to pursue new opportunities that help us access a previously closed segment of the market.

c ntemporary subscription services and building a comprehensive new TZ Cloud platform that existing customers and new pr spects can fully leverage.

The consolidated entity is committed to developing a world-class platform with a unified architecture that is built for automation.

Operations

The consolidated entity has continued to progress the major upgrade of its business systems which was initiated last year.

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