Vivid Technology : Market Update

ASX ANNOUNCEMENT, 24th October 2018

MARKET UPDATE

Vivid Technology Limited (ASX: VIV) commenced FY19 year extremely positively and is on track to deliver significant growth year-on-year off the back of a range of corporate and market initiatives focused on improving customer orders, new product developments and exploring a range of new market opportunities.

• • Strong Q1 Order book, with over $2.2m of orders secured

• • FY19 Order book target of between $10.5m-$15.8m

• • Origin Partnership Signed with solid prospects emerging

• • International Business opportunities expanding across Asia and Europe

• • Continued investment in technology expanding the Vivid product range

• • B Corp and EcoVadis accreditation achieved

• • Finalist for Optus Business Energy Business of the Year Award

Q1 ORDER BOOK

On the back of a strong close to the last financial year, which saw company revenues increase over 200% year on year to $7.3m, Vivid Technology commenced the year with strong order book growth into the start of FY19 with over $2.2m of new orders closed in the first quarter. These orders were won from a combination of new customers and existing repeat customers across the Healthcare, FMCG and Logistic market segments.

Major new customers included the subsidiary of a Fortune 500 company specialising in commercial truck distribution and supported by a national network of branches and dealer locations across Australian and New Zealand. The Vivid contract will involve the installation of its new MATRIXX® Synergy range (detailed later in this update) across these sites.

The company continued to build on extending its success in the growing Healthcare market segment, with installations of energy efficient lighting at ACH Assisted Care facilities around Australia. The installations highlight Vivid Technology's capability and expertise in providing energy efficient solutions for this specialised market segment.

As highlighted in previous market updates, a key premise of Vivid Technology's corporate strategy is to target and establish partnerships with large, multi-site blue chip customers. This has allowed Vivid technology to demonstrate, and customers to benefit from, the full range of energy efficiency and data reporting opportunities afforded by the company's technology. This approach is now a key generator of new repeat orders from existing customers including partners like Coca-Cola Amatil.

Vivid Technology Limited ABN: 60 120 710 625 ASX: VIV

Level 14, 500 Collins Street. Melbourne Vic 3000 | PO Box 24, Collins Street West, Vic 8007 T: [phone] F: [phone] E:[e-mail] Vividtechnology.com.au

Based on all the current customer activity underway, the company is anticipating FY19 orders of between $10.4m - $15.8m across multiple sales channels.

The Order Growth Opportunity, provides insight into the pipeline of sales orders Vivid Technology is targeting for the FY19 year, across current, new and evolving market opportunities. Of specific note is the conservative estimate around Lighting-as-a-service (LaaS) targets prior to the start of the FY19 year. The Company looks forward to update the market on its tracking to target progress on a regular basis throughout the financial year.

INTERNATIONAL GROWTH

Central to the development ethos around the company's MATRIXX® intelligent IoT lighting platform, was that the guiding principal be that the system be designed for global market deployment. Over the last two years, the company has successfully trialled, installed and validated the system in overseas markets including Central America and Asian markets, with key sales in Hong Kong with blue-chip customers including Kerry Logistics.

Asia:

Additional discussions and trials have also taken place with groups over this period, including Hong Kong International Airports. These discussions have led to an exclusive invitation as one of a select group of exhibitors invited to attend and showcase Vivid's MATRIXX® intelligent IoT lighting platform at the annual Hong Kong International Airport (HKIA) Smart Airport - Technovation Conference & Exhibition 2018 to be held in November 2018. This year's theme "Internet of Things" focuses on the latest trends in innovative technology. HKIA's

Technovation Conference and Exhibition offers a platform for airport community members and industry experts to exchange ideas to improve passengers' experience and optimise airport operations through the application of technology(www.hkairport-technovation.com), alongside groups including CISCO, Honeywell, Huawei, Microsoft, Schneider and Siemens.

The exhibition provides delegates from global airports with a unique opportunity to see and experience the latest technologies, products and solutions from exhibitors for service optimisation and excellence. Vivid Technology is very proud to have been invited with such established groups, providing the company with an excellent opportunity to showcase its multi-award-winning world class MATRIXX® technology on a truly global scale.

Europe:

The first quarter also saw Vivid Technology begin testing the European market around needs, acceptance, pricing and requirements of our Matrixx® range. Validation of this market has been assisted by referrals from existing multinational customers who have facilitated introductions into their European counterpart offices.

The market can be best characterised as having a more mature understanding and greater appreciation for efficiency at all levels to remain more competitive than local markets, especially given energy costs are more expensive than found locally, often averaging greater than €0.15 ($0.24c) per kW/h. As a comparison, it is common for Vivid's large industrial customers to be paying ~$0.12c to ~$0.14c per kW/h on the East Coast of Australia.

Following an exploratory visit to both referred and targeted customers, the company is very encouraged by direct growth opportunities identified, with some customers interested in moving to implementation of staged implementation projects. Customers expressed real interest around the efficiency benefits that an intelligent IoT lighting platform could deliver to their organisation and again validated Vivid Technology's unique technology.

In August, Vivid Technology received notification of a successful application to the Victorian

Government for a grant under Advanced Manufacturing 'Boost Your Business Voucher' program. The grant provides additional funding for the Company to further progress identification of partners and growth opportunities in Europe and will be received in instalments over the next 12 months.

Vivid Technology will continue to evaluate international opportunities as an integral part of the overall growth of the company and seek to continue existing blue-chip partnerships to facilitate expedited entry into these new markets where possible.

PARTNERSHIPS

Select Partnerships continue to be a significant component of Vivid Technology's growth, allowing greater market reach and opportunities without the need to grow internal resources.

The partnership with Origin Energy, which was announced early in this quarter continues to build momentum. Under this partnership, Origin will offer its customers "LightingFlex", lighting-as-a-service over an agreed number of years using Vivid Technology's MATRIXX® intelligent IoT lighting platform. Over this last quarter, key new prospects have been identified and are currently now in an evaluation stage for prospective future deployments. It is expected that as evaluation and identification processes are jointly refined, rapidity of identifying new opportunities will lead to expanded growth under this partnership model.

(https://www.originenergy.com.au/business/commercial-and-industrial/monitor/lightingsolution.html)

Vivid Technology also continued to strengthen its technology partnerships with key blue-chip companies outside of Origin, where the company's agile and disruptive technology development capability assists to directly solve customers' unique requirements for their own businesses. This additional partnership is with an ASX top 20 company, which will see Vivid Technology jointly develop a customised smart lighting solution for the LNG sector, to deliver improved efficiency, reliability, safety and cost savings in a unique environment. The developed technology will provide Vivid Technology and the Corporate with a unique service proposition within that market segment and we look forward to updating the market in due course.

In August, the company again re-signed a technology development partnership agreement with an existing global partner, reflecting the acknowledgement of Vivid Technology's technology capabilities. To date, the partnership has already realised tangible revenue results and is expected to continue to be accretive to the continuing growth of Vivid Technology.

TECHNOLOGY DEVELOPMENT

The first quarter of 2019 saw Vivid Technology launch its enhanced MATRIXX® intelligent IoT lighting platform family of products, in response to customer needs for a wider range of intelligent lighting.

Responding to the market, the new MATRIXX® systems provides smart lighting solutions for a wide range of customers, at a lower price point.

MATRIXX® Synergy and MATRIXX® Array, were developed to be able to offer customers a lower cost, entry and the potential for a scalable and upgradable path to a full MATRIXX® Genesis intelligent IoT lighting platform which has been successfully rolled out over the past few years. Both new additions provide market leading energy efficient savings, with various levels of inbuilt intelligence. MATRIXX® Array is the starting point which offers enhanced energy efficiency, whilst MATRIXX® Synergy offer the next level including intelligent reporting.

These new MATRIXX® ecosystem additions create a robust portfolio and allows customers increased choice based on affordability and site requirements.

By investing in a MATRIXX® Synergy and MATRIXX® Array, customers have full capability of up-grading to MATRIXX® Genesis, as and when their business requires, without having to replace the entire lighting system. The new MATRIXX® systems, allows Vivid Technology to capture customers whose budget constraints or current business requirements restricts them from implementing a full MATRIXX® Genesis solution. MATRIXX® Synergy and MATRIXX® Array deliver immediate results and can be a complete solution or a potential stepping stone towards a full MATRIXX® Genesis.