Post on 12-Aug-2020
TZ Limited
ABN 26 073 979 272
Sydney (Registered Office) Chicago (Operational Headquarters) ASX: TZL Level 11, 1 Chifley Square 520 West Erie Street, Suite 210 Web: www.tz.net Sydney, NSW 2000 Australia Chicago, IL 60654 United States Email: info@tz.net
29 February 2012 Lodged by ASX Online The Manager Company Announcements Office ASX Ltd. Level 4, 20 Bridge Street Sydney, NSW 2000 Dear Sir/Madam 31 DECEMBER 2011 HALF YEARLY REPORT AND APPENDIX 4D
Please find attached an ASX Appendix 4D and half yearly report for the period ended 31 December 2011. Yours faithfully, TZ LIMITED Mark Bouris Chairman
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1. Company details
Name of entity:
ABN:
Reporting period:
Previous corresponding period:
2.
down 7.5% to
up 260.2% to
up 260.2% to
Dividends
3.
Net tangible asset backing per ordinary security
4.
Name of entities (or group of entities)
Date control gained
Contribution of such entities to the reporting entity's
profit/(loss) from ordinary activities during the period
(where material)
Profit/(loss) from ordinary activities after tax of the
controlled entity (or group of entities) for the whole of
the previous corresponding period
(where material)
TZ Limited
Half-year report
APPENDIX 4D
HALF-YEAR REPORT
The loss for the consolidated entity after providing for income tax amounted to $12,419,000 (31 December 2010:
$3,448,000).
Revenues from ordinary activities $ 9,528,000
Results for announcement to the market
TZ Limited
26 073 979 272
Half-year ended 31 December 2011
Half-year ended 31 December 2010
Loss from ordinary activities after tax attributable to the owners of TZ
Limited
Loss for the period attributable to the owners of TZ Limited
$(12,419,000)
$(12,419,000)
There were no dividends paid or declared during the current financial period.
Control gained over entities
$ -
Comments
$ -
Not applicable.
(14.82) cents (3.95) cents
NTA backing
Reporting period Previous corresponding period
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Page 2 of 3TZ Limited
Half-year report
5.
Name of entities (or group of entities)
Date control lost
Contribution of such entities to the reporting entity's
profit/(loss) from ordinary activities during the period
(where material)
Profit/(loss) from ordinary activities after tax of the
controlled entity (or group of entities) whilst controlled
during the whole of the previous corresponding period
(where material)
6.
Current period
Previous corresponding period
7.
8.
Name of associate / joint venture
Intanova Pty Limited
Group's aggregate share of associates and joint
venture entities' profit/(loss) (where material)
9.
There were no dividends paid or declared during the current financial period.
$(135,266)
Loss of control over entities
Not applicable.
$ -
Dividends
$ -
$ -
Not applicable.
Details of origin of accounting standards used in compiling the report:
period
corresponding
Previous Previous
Current period period
corresponding
Current period
Dividend reinvestment plans
There were no dividends paid or declared during the previous financial period.
Not applicable.
Not applicable.
$(62,735)
$ -
Details of associates and joint venture entities
percentage holding
Contribution to profit/(loss)
(where material)
Reporting entity's
Profit(loss) from ordinary activities before income tax
Income tax on operating activities
50.00% 50.00% $(62,735)
Foreign entities
The following dividend or distribution plans are in operation:
$(135,266)
The last date(s) for receipt of election notices for the dividend or distribution plans:
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Page 3 of 3TZ Limited
Half-year report
10.
11.
12. Signed
Sydney
Director
Mark Bouris
Signed: ________________________________ Date: 29 February 2012
Details of attachments (if any):
The Interim Report of TZ Limited for the half-year ended 31 December 2011 is attached.
Audit qualification or review
The accounts were subject to a review by the auditors and the review report is attached as part of the Interim Report.
Details of audit/review dispute or qualification (if any):
Attachments
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TZ Limited
Interim Report - 31 December 2011
ABN 26 073 979 272
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During the financial half-year the principal continuing activities of the consolidated entity consisted of:
the development of intelligent devices and smart device systems that enable the commercialisation of
hardware and software solutions for the management, control and monitoring of business assets and the
provision of associated value added services through Telezygology Inc, ('TZI'); and
providing a fee for service product design and engineering consulting (services) through Product
Development Technologies Inc, ('PDT').
TELEZYGOLOGY, INC.
TZI started the fiscal year well securing sales to NextDC, Coles and the Australia Post Trial. These projects
underpinned a strong first quarter result with over USD $1 million in purchase orders received. Despite this backlog,
deliveries scheduled in the half year period were delayed due to a number of customers’ implementation programs
running behind schedule. This also pushed out progressive orders that were originally anticipated within the half year
period.
Profitability was also impacted by the previously announced restructuring at Product Development Technologies, Inc.
(‘PDT’). During the half year, PDT invested in several initiatives to refocus its business to pursue multi-million dollar
contracts and to position itself to engage strategically on large scale and complex multi-disciplinary projects. This
investment will underpin on-going revenue growth and profitability at PDT and to position the business to better target
new business opportunities in identified growth segments. The investment has already yielded positive results in
December with an uplift in revenues, strong pipeline growth, improved branch office profitability and overall margin
improvement. This has also continued through the start of the New Year with PDT winning several projects in the
identified growth segments.
Review of operationsThe loss for the consolidated entity after providing for income tax amounted to $12,419,000 (31 December 2010:
$3,448,000).
TZ Limited
Principal activities
Dickory Rudduck
The following persons were directors of TZ Limited during the whole of the financial half-year and up to the date of this
report, unless otherwise stated:
Directors' report
31 December 2011
TZ Limited (‘TZL’) recorded a half year revenue of AUD $9.5 million at 31 December 2011 achieving a similar top line
revenue to the corresponding period from last year. Overall, the consolidated entity recorded an accounting loss of
AUD $12.4 million which includes the negative impact of AUD $3.2 million for derivative liability in relation to the QVT
convertible notes and AUD $2.4 million in finance costs. This represents a 260% increase in losses from last year’s
result.
Mark Bouris - Chairman
The directors present their report, together with the financial statements, on the consolidated entity (referred to
hereafter as the 'consolidated entity') consisting of TZ Limited (referred to hereafter as the 'company' or 'parent entity')
and the entities it controlled for the half-year ended 31 December 2011.
Directors
Kenneth Ting
Telezygology, Inc. (‘TZI’) delivered strong growth over and above last year’s half year results with a top line revenue of
USD $820,000 at its targeted margins starting from a low base. Although a number of purchase orders were secured
during the half year, deliveries have been pushed out due to delays in customers’ implementation programs and have
not been recognized in the results.
All of the operations of the consolidated entity are based in Australia, the United States of America, United Kingdom
and Ukraine.
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TZ Limited
Directors' report
31 December 2011
• On-going scheduled deployments through the balance of this calendar year with early adopter corporate customers,
who have established TZ intelligent lockers as an integral part of their agile workforce strategy and a specified utility
for their facilities.
• Trials underway with a number of very large corporates in the financial services sector which could lead to future
multi-unit, multi-location deployments.
• Focused promotion of the TZ Concierge residential offering leading to secured purchase order for a second
residential complex. In addition, strategic discussions are currently underway with potential distribution partners to
support a far more aggressive and accelerated roll-out.
• Establishment of a Letter of Intent with a leading global shopping centre management group to develop the potential
for intelligent locker deployments at their shopping centres.
• Development of OurPAD, the intelligent mailbox concept which addresses the issue of missed home deliveries and
facilitates the secure delivery of parcels at your home at any time of the day.
• Expansion of the Pitney Bowes relationship into new geographies as well as cross divisional opportunities providing
for higher levels of business integration.
As a result, TZI was only able to recognise USD $820,000 in revenue during the half year, up 219% for the same
period last year, and recorded an overall EBITDA loss of USD $3.8 million. Gross contribution margins remain very
encouraging as a percentage of revenue and are in line with target expectations. Backlog and purchase order
commitments remain strong with around USD $700,000 in the pipeline which should be recognised as revenue in the
March quarter. Addressable opportunities also remain strong with a number of paid trials underway with major
corporates and several major contracts under negotiation or in the tender assessment phase. If TZI is successful in its
efforts, the scale of the projects that could potentially eventuate from these trials, on-going supply contracts and
tenders, will transform the business and ensure sustainable profitability into fiscal 2013.
The Australia Post Trial has also been the catalyst for TZI and Pitney Bowes to develop an end-to-end, fully integrated
parcel locker and management solution. This is an exciting offering that supports an easy to implement B2C last mile
delivery alternative. Since the start of the New Year, the parties have been actively promoting this solution to several
major logistics and retail organisations in the US and Europe and as a result, are currently engaged in a number of
prospective opportunities that could be significant for the business.
Overall our PAD business continues to develop strongly across all sectors, including corporate, residential and most
recently B2C offerings. A few achievements worth mentioning include the following:
Coles refrigerated locker trials represent another customised B2C locker solution due for deployment at a number of
trial locations, with roll-out commencing in mid-March across Queensland, NSW and Victoria. This expanded trial will
assess whether the success of the initial Windsor site deployment in Victoria can be replicated on a broader scale and
provide the commercial validation for a national roll-out.
One of the major focuses for the business this last six months has been the deployment of intelligent parcel lockers as
part of the Australia Post parcel ready trial. These deployments support a major initiative by Australia Post and
demonstrate their commitment to invest in its parcel delivery business to keep up with the strong upsurge in parcel
transactions due to the growth of on-line shopping.
As part of this new initiative Australia Post is launching its “post office of the future” which offers customers greater
access, convenience and choice in the way they transact with Australia Post. The Brisbane GPO is an example of this
and offers a 24/7 self-service zone where parcel lockers are located allowing customers to pick up their parcels at any
time.
The success of the Brisbane GPO has led to an announcement by Australia Post that they will have around 30 of
these ‘super stores’ planted across Australia by June this year, and eventually 300 nationwide. TZI management
remains positive that the business is well positioned to support Australia Post with their requirements for parcel
lockers.
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TZ Limited
Directors' report
31 December 2011
For IXP, the most noticeable development has been the establishment of the NextDC supply contract in Australia.
This currently represents the largest committed deployment for our TZ Centurion System and a solid reference
customer for endorsement and validation of our technology. Focus during the half year has been on the initial
hardware and software deployments into NextDC’s Brisbane and Melbourne data centres and the integration with
NextDC’s management software. With this now fully operational, we expect to see further orders as Brisbane and
Melbourne continue their build-outs and new sites such as Canberra, Sydney and Perth progress.
The adoption of our technology by companies like NextDC in Australia and IBM and others in the US, clearly
establishes TZ’s offerings as a market leading cabinet level security system – a position that the business can now
heavily leverage to accelerate adoption. With the anticipated big data growth over the next 5 to 10 years, we are
seeing enormous investment into data centers (in consolidation, new build-outs and location upgrades). When you
couple this growth with the new compliance and regulatory requirements that are driving a ‘Standard of Care’ liability
for Boards of Directors, CEOs and CFOs for the physical protection of data, TZ IXP products are very well positioned
for market penetration.
In North America, the IXP business continues to see increased system specification and positive sales progression
from the trial and pilot phases to broader deployments. While TZI is constrained by the speed at which our
customers’ roll-out the solution, the business is broadening its channels to markets to increase adoption rates through
the establishment of a nation-wide Certified Integrator program and new distribution relationships with OEM partners
and other prospective system resellers.
Moving into the New Year, TZI has reprioritized its markets, restructured its sales force and brought a much greater
level of discipline and focus to implementation. Integral to this, is the appointment of Keith Schwartz and Bharath
Ram to manage business growth in Asia, North America and Europe. This has already shown positive results and
should continue to provide the company with more effective on-the-ground strategic business building experience.
Both executives have over 20 years of sales and business management experience in relevant industries and bring
with them the necessary competencies to drive new business growth.
PRODUCT DEVELOPMENT TECHNOLOGIES, INC. ('PDT')
Revenue in the half year period was USD $8.9 million impacted by restructuring and the focus on larger scale and
more complex multi-disciplinary projects which have a longer sales cycle.
With the extraordinary revenue growth of the previous years, costs associated with trying to handle the growth
including integrating new staff in large dimensions and managing culture and quality issues have also impacted
profitability, leading to an overall reduction in business returns.
During the first quarter of the fiscal year, the Board and PDT management implemented a number of strategic
initiatives to drive better efficiencies in resources, infrastructure and processes.
The initiatives implemented include the following:
1. A reduction in non-essential manpower, relocation of offices and a cut in overhead and administration costs
resulting in an annual expense reduction of USD $900K as of October 2011.
2. Re-organizing the business to ensure alignment around the three target verticals of Medical, Military and Consumer
Electronics and building the core competencies necessary to support the demands of the large scale engagement
projects in the highly regulated Medical and Military sectors.
3. Building specific knowledge and expertise in identified growth areas such as the Android platform and the
“appcessory” market. The Android platform has been recognized as being the dominant platform for handheld
wireless technology, recently validated by the US military who declared Android as its preferred O/S. Appcessories are
application specific accessories that use a smart device like a tablet or smart phone to enhance function.
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TZ Limited
Directors' report
31 December 2011
TZL and QVT Fund LP and Quintessence Fund L.P. – Series IV Convertible Notes
TZ Limited ('TZL') entered into a Subscription Deed with QVT Fund LP and Quintessence Fund L.P ('QVT') on 23
December 2011. Under this Deed, TZL has agreed, Subject to shareholder’s approval, to issue 1,799 senior
unsecured convertible notes with each having a face value of $1,000. These convertible notes are to be issued in
consideration of QVT waiving the payment by TZL of all interest accruing in respect of the 2011 calendar year on all
convertible notes currently held by QVT.
The key terms of the convertible notes are:
(a) interest at 10% pa accruing from 1 January 2012, and payable on 31 December each year;
(b) repayment of the convertible notes on the fifth anniversary of their issue date unless converted to ordinary shares
at any time prior to the maturity date; and
(c) conversion price of $0.42 per share.
NextDC Supply Relationship
(Announced 7 September 2011) TZL and Telezygology, Inc. ('TZI') entered into an agreement with distribution
partner, Anixter Australia Pty Limited and NextDC Limited ('NextDC') for the supply of the TZ Centurion™ System for
NextDC’s cabinet-level micro-protection solution for its Brisbane and Melbourne data centres. Subject to successful
deployment of the TZ Centurion™ System at these initial sites, NextDC will consider using the TZ Centurion™ System
in each of its proposed new data centres, namely the balance of the Brisbane and Melbourne fit-outs, Sydney, Perth
and Canberra.
Supply for Australia Post Parcel Locker Trial
(Announced 18 August 2011) TZI Australia Pty Limited ('TZIA'), a wholly owned subsidiary of TZL, entered into a
supply contract with Pitney Bowes Australia Pty Limited for the supply of intelligent parcel locker systems to Australia
Post for trial evaluation as part of Australia Post’s Parcel Ready Program. The Intelligent Locker Trial was undertaken
at three sites in Brisbane, Sydney and Melbourne over a period of 3 months from October 2011 to gauge consumer
receptiveness to the increased convenience and accessibility of the system as an alternative means for parcel
distribution. Subject to the success of the Trial, Australia Post will consider deploying additional locker units and a
broader national roll-out.
Significant changes in the state of affairs
For the half year, PDT recorded an EBITDA loss of around USD $600,000. However, the initiatives undertaken have
already yielded positive results in December with an uplift in revenues, strong pipeline growth, improved branch office
profitability and overall margin improvement. This has also continued through the start of the New Year.
The backlog of secured projects is solid and there is a strong pipeline of large scale opportunities developing on the
horizon. Recent successful contracts include the development of hand held devices for a number of prime military
contractors, a new range of revolutionary medical devices and a consumer product in the fast food business which
has global application.
While concerns with the business climate, particularly with the 2012 US presidential elections looming, the prospect of
budget cuts and increased taxes and the on-going economic concerns in Europe, the Directors believe that PDT is
returning not only to improved business profitability on revenues consistent with last year, but is continuing to reinforce
its positioning as one of the leading full service design firms in the USA.
OUTLOOK
With improved bottom line performance anticipated for PDT, the Board and management anticipates to see overall
positive results from PDT for the balance of the year and for the PDT business to return to overall profitability by fiscal
year end.
The TZI business continues to grow steadily delivering consistently with its business model, achieving targeted sales
margins and receiving annuity income through its software and device access licensing and maintenance contracts.
More importantly, this business is primed for growth with a number of large opportunities coming to fruition in the near
term particularly in the on-line retail logistics space. These opportunities have the potential to transform the business
and ensure sustainable profitability into fiscal 2013.
The Board and management remain confident in the Company’s prospects and look forward to an exciting six months
to year end.
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TZ Limited
Directors' report
31 December 2011
Auditor's independence declaration
TZIA and Coles Online – Click and Collect Lockers
(Announced 22 November 2011) TZIA received a purchase order from Coles Online for the supply of a customised
SMArt Device system and TZ Courier™ application software for integration with Coles Click and Collect refrigerated
lockers to be deployed across Queensland, NSW and Victoria in early 2012. This represents an extension of the initial
and successful trial of the Click and Collect lockers at Windsor, Victoria and a move by Coles to a more sophisticated
electronic solution for future deployments.
Joint Venture with Terra Rossa Capital Limited - Establishment of TZ Incubator Investment Fund
(Announced 14 November 2011) TZL entered into Heads of Agreement ('HOA') with Terra Rossa Capital Limited
('TRC') on 11 November 2011. Under the HOA the parties will establish, manage and operate a proposed investment
fund to invest in, monitor and support the commercialisation of early stage technology and information technology
businesses. This venture proposes to use the expertise of TZL and its US based subsidiary, Product Development
Technologies Inc. and TRC to offer a fast track route to market for Australia intellectual property. The proposed fund
will seek additional matching funding sources through programs such as the Australian Government's Innovation
Investment Fund.
Sydney
29 February 2012
DirectorDirector
________________________________
Kenneth Ting
________________________________
Mark Bouris
On behalf of the directors
There were no other significant changes in the state of affairs of the consolidated entity during the financial half-year.
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set
out on the following page.
This report is made in accordance with a resolution of directors, pursuant to section 306(3)(a) of the Corporations Act
2001.
The company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments
Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that Class
Order to the nearest thousand dollars, or in certain cases, the nearest dollar.
Rounding of amounts
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Registered office
Level 11, 1 Chifley Square
Sydney NSW 2000
General information
The financial report covers TZ Limited as a consolidated entity consisting of TZ Limited and the entities it controlled.
The financial report is presented in Australian dollars, which is TZ Limited's functional and presentation currency.
PDT Inc, One Corporate Drive, Suite 110, Lake Zurich IL
60047, USA
Contents
Financial report
Notes to the financial statements
Directors' declaration
Independent auditor's review report to the members of TZ Limited
The financial report consists of the financial statements, notes to the financial statements and the directors'
declaration.
Statement of comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
TZ Limited
For the half-year ended 31 December 2011
Financial report
A description of the nature of the consolidated entity's operations and its principal activities are included in the
directors' report, which is not part of the financial report.
TZ Limited, Level 11, 1 Chifley Square, Sydney NSW
2000
Telezygology Inc., 1017 W. Washington Blvd, Unit 2C,
Chicago IL 60607, USA
The financial report was authorised for issue, in accordance with a resolution of directors, on 29 February 2012. The
directors have the power to amend and reissue the financial report.
TZ Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office
and principal place of business are:
Principal place of business
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Note 31 Dec 2011 31 Dec 2010
$'000 $'000
3 9,528 10,295
4 261 4,265
(1,041) (822)
(3,610) (3,087)
(6,750) (6,959)
(391) (370)
5 (887) (925)
(160) (151)
(1,422) (1,724)
(564) (426)
(710) (240)
(3,293) -
(63) (135)
(203) -
(729) (1,234)
5 (2,371) (1,928)
(12,405) (3,441)
(14) (7)
(12,419) (3,448)
892 (3,872)
892 (3,872)
(11,527) (7,320)
Cents Cents
10 (10.08) (4.41)
10 (10.08) (4.41)
Other comprehensive income
Loss after income tax expense for the half-year attributable to the
owners of TZ Limited
Income tax expense
Other income
Revenue
Depreciation and amortisation expense
Travel and accommodation expense
Communications expense
Development costs
Net loss on movement in fair value of derivative liabilities
Consolidated
Expenses
Impairment of joint venture
TZ Limited
For the half-year ended 31 December 2011
Statement of comprehensive income
Raw materials and consumables used
Subcontractors costs
Employee benefits expense
Professional and corporate services
Share of net losses of joint venture accounted for using the equity method
Occupancy expense
Other expenses
Loss before income tax expense
Finance costs
Diluted earnings per share
Basic earnings per share
Other comprehensive income for the half-year, net of tax
Total comprehensive income for the half-year attributable to the owners
of TZ Limited
Foreign currency translation
The above statement of comprehensive income should be read in conjunction with the accompanying notes
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Note 31 Dec 2011 30 Jun 2011
$'000 $'000
508 1,146
3,808 4,913
443 331
500 5,500
5,259 11,890
121 187
1,801 1,884
20,038 19,750
783 751
180 179
22,923 22,751
28,182 34,641
4,558 4,575
759 729
53 116
441 368
5,811 5,788
11,544 10,206
7,704 4,411
984 945
495 507
20,727 16,069
26,538 21,857
1,644 12,784
6 149,113 149,113
(6,105) (6,997)
(141,364) (129,332)
1,644 12,784
Reserves
Property, plant and equipment
Intangibles
Other
Total liabilities
Liabilities
Other
Total non-current assets
Current assets
Assets
Cash and cash equivalents
Accumulated losses
Trade and other receivables
Inventories
Deferred tax
Total current liabilities
Derivative financial instruments
Current liabilities
Non-current assets
Total current assets
Investments accounted for using the equity method
Investment in short term deposit
Total equity
Total non-current liabilities
Net assets
Other
Deferred tax
Borrowings
TZ Limited
Statement of financial position
As at 31 December 2011
Consolidated
Trade and other payables
Borrowings
Provisions
Total assets
Contributed equity
Equity
Non-current liabilities
The above statement of financial position should be read in conjunction with the accompanying notes
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Total
equity
$'000 $'000 $'000 $'000 $'000 $'000
125,907 4,768 (706) (125,099) 4,870
- - - (3,872) - (3,872)
- - - - (3,448) (3,448)
- - - (3,872) (3,448) (7,320)
18,306 (1,007) - - 17,299
- - 1,161 1,161
- 144,213 3,761 (4,578) (127,386) 16,010
Total
equity
$'000 $'000 $'000 $'000 $'000 $'000
149,113 - (6,997) (129,332) 12,784
- - - 892 - 892
- - - - (12,419) (12,419)
- - - 892 (12,419) (11,527)
- - - 387 387
- 149,113 - (6,105) (141,364) 1,644
Transactions with owners in
their capacity as owners:
Balance at 31 December 2011
Share-based payments
Other comprehensive income
for the half-year, net of tax
Loss after income tax
expense for the half-year
Total comprehensive income
for the half-year
Balance at 1 July 2011
TZ Limited
For the half-year ended 31 December 2011
Statement of changes in equity
Other comprehensive income
for the half-year, net of tax
equity
Contributed
Other
contributed
equity
Loss after income tax
expense for the half-year
Total comprehensive income
for the half-year
Contributions of equity, net of
transaction costs
Share-based payments
Balance at 31 December 2010
Consolidated
Transactions with owners in
their capacity as owners:
Consolidated
Balance at 1 July 2010
Reserves losses
Accumulated
Contributed
equity equity
Other
contributed
Reserves
Accumulated
losses
The above statement of changes in equity should be read in conjunction with the accompanying notes
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Note 31 Dec 2011 31 Dec 2010
$'000 $'000
10,762 9,661
(15,549) (13,326)
(4,787) (3,665)
90 2
254 -
(693) (48)
(14) (6)
(5,150) (3,717)
(200) (200)
(177) (258)
(35) (533)
- (5,500)
- 1
5,000 -
4,588 (6,490)
6 - 12,201
- (500)
423 4,976
(423) (206)
- 16,471
(562) 6,264
1,146 232
(76) (567)
508 5,929
Effects of exchange rate changes on cash
Proceeds from borrowings
Proceeds from short term deposit redemptions
Consolidated
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Interest received
Investments in short term deposits
Payments to suppliers and employees (inclusive of GST)
Interest and other finance costs paid
Net cash used in operating activities
TZ Limited
For the half-year ended 31 December 2011
Statement of cash flows
Other revenue
Cash and cash equivalents at the beginning of the financial half-year
Cash and cash equivalents at the end of the financial half-year
Cash flows from investing activities
Net cash from financing activities
Proceeds from sale of property, plant and equipment
Payment for convertible note redemption
Payments for new joint venture capital invested
Payments for property, plant and equipment
Income taxes paid
Payments for intangibles
Repayment of borrowings
Proceeds from issue of shares
Net increase/(decrease) in cash and cash equivalents
Cash flows from financing activities
Net cash from/(used in) investing activities
The above statement of cash flows should be read in conjunction with the accompanying notes
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31 December 2011
The financial report has been prepared on a going concern basis. Convertible notes with a face value of $12,000,000
are due to mature on 18 February 2013. Unless those notes are converted to shares by the holder prior to maturity
the principal and interest outstanding on maturity will be payable in cash by TZ Limited. The ability of the consolidated
entity to continue as a going concern is dependent on the generation of sufficient profits and positive cash flows, the
conversion of the notes to shares or the raising of additional share capital. TZ Limited has previously raised capital
when required. The directors expect the company will be successful in raising additional capital in future, if required.
These general purpose financial statements do not include all the notes of the type normally included in annual
financial statements. Accordingly, these financial statements are to be read in conjunction with the annual report for
the year ended 30 June 2011 and any public announcements made by the company during the interim reporting
period in accordance with the continuous disclosure requirements of the Corporations Act 2001.
These general purpose financial statements for the interim half-year reporting period ended 31 December 2011 have
been prepared in accordance with Australian Accounting Standard AASB 134 'Interim Financial Reporting' and the
Corporations Act 2001.
The following Accounting Standards and Interpretations are most relevant to the consolidated entity:
The consolidated entity has adopted all of the new, revised or amending Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
The consolidated entity has applied AASB 124 (revised) from 1 July 2011. The revised standard simplified the
definition of a related party by clarifying its intended meaning and eliminating inconsistencies from the definition. A
subsidiary and an associate with the same investor are related parties of each other; entities significantly influenced
by one person and entities significantly influenced by a close member of the family of that person are no longer
related parties of each other; and whenever a person or entity has both joint control over a second entity and joint
control or significant influence over a third party, the second and third entities are related to each other. The adoption
of this revised standard from 1 July 2011 has not had a material impact on the consolidated entity.
Notes to the financial statements
The principal accounting policies adopted are consistent with those of the previous financial year and corresponding
interim reporting period.
New, revised or amending Accounting Standards and Interpretations adopted
TZ Limited
Note 1. Significant accounting policies
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been
early adopted.
Any significant impact on the accounting policies of the consolidated entity from the adoption of these Accounting
Standards and Interpretations are disclosed in the relevant accounting policy. The adoption of these Accounting
Standards and Interpretations did not have any significant impact on the financial performance or position of the
consolidated entity.
Going concern
AASB 2010-4 Further Amendments to Australian Accounting Standards arising from the Annual Improvements
Project
The consolidated entity has applied AASB 2010-4 amendments from 1 July 2011. The amendments made numerous
non-urgent but necessary amendments to a range of Australian Accounting Standards and Interpretations. The
amendments provided clarification of disclosures in AASB 7 'Financial Instruments: Disclosures', in particular
emphasis of the interaction between quantitative and qualitative disclosures and the nature and extent of risks
associated with financial instruments; clarified that an entity can present an analysis of other comprehensive income
for each component of equity, either in the statement of changes in equity or in the notes in accordance with AASB
101 'Presentation of Financial Instruments'; and provided guidance on the disclosure of significant events and
transactions in AASB 134 'Interim Financial Reporting'.
AASB 124 Related Party Disclosures (December 2009)
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Notes to the financial statements
TZ Limited
TZI’s primary role is the development and commercialisation of hardware and
software products primarily in the US and Australia markets.
PDT Group operates its engineering and design division predominantly in the USA,
whilst maintaining a presence in the UK and the Ukraine.
The CODM comprises the executive directors, chief executive officer, chief financial officer and divisional managers.
The CODM reviews both adjusted earnings before interest, tax, depreciation and amortisation (segment result) and
profit before income tax.
The information reported to the CODM is on at least a monthly basis.
Identification of reportable operating segments
The consolidated entity is organised into two operating segments. These operating segments are based on the
internal reports that are reviewed and used by the executive management committee (who are identified as the Chief
Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources.
There is no aggregation of operating segments.
Telezygology Inc ('TZI')
Intersegment loans are initially recognised at the consideration received. Intersegment loans receivable and loans
payable that earn or incur non-market interest are not adjusted to fair value based on market interest rates.
Intersegment loans are eliminated on consolidation.
Intersegment transactions
Major customers
Intersegment transactions were made at market rates. Intersegment transactions are eliminated on consolidation.
Intersegment receivables, payables and loans
The principal products and services of each of these operating segments are as follows:
Types of products and services
During the half year ended 31 December 2011 approximately 48.01% (2010: 37.10%) of the consolidated entity's
external revenue was derived from sales to one customer of PDT.
PDT Holdings Inc ('PDT')
Note 2. Operating segments
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Notes to the financial statements
TZ Limited
unallocated Consolidated
$'000 $'000 $'000 $'000 $'000 $'000
8,606 793 - 9,399
183 - (183) -
- - 8,789 793 (183) 9,399
42 58 290 390
- - 8,831 851 107 9,789
- - (601) (3,747) - (4,348)
- - (357) (523) (7) (887)
- - - 1 89 90
- - (24) - (2,347) (2,371)
- - - (63) - (63)
- - - (203) - (203)
- - - - (4,623) (4,623)
- - (982) (4,535) (6,888) (12,405)
(14)
(12,419)
unallocated Consolidated
$'000 $'000 $'000 $'000 $'000 $'000
- - 9,894 383 - 10,277
- - 123 93 (216) -
- - 10,017 476 (216) 10,277
- - 3 206 4,074 4,283
- - 10,020 682 3,858 14,560
- - 1,024 (2,414) - (1,390)
- - - - (925) (925)
- - - - 18 18
- - - - (1,928) (1,928)
- - - - 4,304 4,304
- - - - (3,520) (3,520)
- - 1,024 (2,414) (2,051) (3,441)
(7)
(3,448)
Intersegment sales
31 Dec 2010
Income tax expense
Profit/(loss) before income
tax expense
Total sales revenue
Interest revenue
Revenue
Sales to external customers
Other income
Depreciation and amortisation
Head office costs
Finance costs
Interest revenue
Intersegment
PDT
eliminations/
Total revenue
TZI
Head office revenue/income
Loss after income tax
expense
Intersegment
Income tax expense
Finance costs
Revenue
Other income
Note 2. Operating segments (continued)
Segment result
31 Dec 2011
PDT
Depreciation and amortisation
Loss after income tax
expense
Intersegment sales
Total sales revenue
Loss from Joint Venture -
Intanova
Impairment of Joint Venture -
Intanova
Operating segment information
Loss before income tax
expense
eliminations/
Sales to external customers
TZI
Head office costs
Total revenue
Segment result
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Notes to the financial statements
TZ Limited
31 Dec 2011 31 Dec 2010
$'000 $'000
9,399 10,277
90 18
39 -
- - 129 18
- - 9,528 10,295
31 Dec 2011 31 Dec 2010
$'000 $'000
6 -
- 4,052
255 213
- - 261 4,265
31 Dec 2011 31 Dec 2010
$'000 $'000
113 114
148 164
91 58
- - 352 336
314 333
221 256
- - 535 589
- - 887 925
Other income
Total depreciation and amortisation
Office furniture and equipment
Amortisation
Total depreciation
Plant and equipment
Re-acquired rights
Net gain on movement in fair value of derivative liabilities
Note 4. Other income
Revenue
Depreciation
Total amortisation
Consolidated
Other intangibles
Leasehold improvements
Interest
Loss before income tax includes the following specific
expenses:
Note 5. Expenses
Consolidated
Other revenue
Royalty
Sales revenue
Sales and services revenue
Note 3. Revenue
Other income
Consolidated
Net foreign exchange gain
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Notes to the financial statements
TZ Limited
31 Dec 2011 31 Dec 2010
$'000 $'000
2,371 1,928
- 367
387 1,161
31 Dec 2011 30 Jun 2011 31 Dec 2011 30 Jun 2011
Shares Shares $'000 $'000
124,131,123 122,731,123 149,113 149,113
No of shares Issue price $'000
122,731,123 149,113
1,400,000 $0.00 -
124,131,123 149,113
Interest and finance charges paid/payable
Finance costs
Consolidated
Consolidated Consolidated
Date
Balance
Note 6. Equity - contributed
1 July 2011
Net foreign exchange loss
Note 5. Expenses (continued)
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in
proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll
each share shall have one vote.
Movements in ordinary share capital
Ordinary shares - fully paid
Balance
Note 7. Equity - dividends
There were no dividends paid or declared during the current or previous financial half-year.
Ordinary shares
Share-based payments expense
Net foreign exchange loss
Share-based payments expense
31 December 2011
Issue of shares on exercise of rights
Details
28 October 2011
Note 8. Related party transactions
Parent entity
TZ Limited is the parent entity.
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Notes to the financial statements
TZ Limited
31 Dec 2011 31 Dec 2010
$ $
129,153 72,398
19,879 18,535
245,950 260,176
1,219 1,159
55,000 38,500
31 Dec 2011 30 Jun 2011
$ $
3,976 -
29,381 36,183
11,000 -
- 38,500
89 47,183
Marketing expenses paid to Yellow Brick Road Group Pty
Limited, a company in which
Mark Bouris is a director.
Receivable from and payable to related parties
The following transactions occurred with related parties:
Accounting fees paid to Yellow Brick Road Accounting and
Wealth Management Pty Limited, a company in which
Mark Bouris is a director.
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Business Insurance Policy arranged by Yellow Brick Road
Wealth Management Pty Limited, a company in which
Mark Bouris is a director.
Payment for other expenses:
Transactions with related parties
Rent and serviced office expenditure paid to State Capital
Property Pty Limited, a company in which Mark Bouris is a
director.
Consolidated
Note 8. Related party transactions (continued)
Administration fees and storage costs paid to YBR
Services Pty Limited, a company in which Mark Bouris is a
director.
Consultancy fee payable to IX Consulting Pty Limited, a
company in which John Wilson is a director.
Administration fees and storage costs paid to YBR
Services Pty Limited, a company in which Mark Bouris is a
director.
Loans to/from related parties
There were no loans to or from related parties at the reporting date.
Terms and conditions
Consolidated
All transactions were made on normal commercial terms and conditions and at market rates.
Rent, phone expense and service office expenditure
payable to State Capital Property Pty Limited, a company
in which Mark Bouris is a director.
Marketing expenses paid to Yellow Brick Road Group Pty
Limited, a company in Which Mark Bouris is a director.
Current payables:
Accounting fees paid to Yellow Brick Road Accounting
and Wealth Management Pty Limited, a company in which
Mark Bouris is a director.
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Notes to the financial statements
TZ Limited
31 Dec 2011 31 Dec 2010
$'000 $'000
(12,419) (3,448)
Number Number
123,225,688 78,254,345
123,225,688 78,254,345
Cents Cents
(10.08) (4.41)
(10.08) (4.41)
The conversion prices applying to each of the Series I Convertible Notes, Series III Convertible Notes, Series IIIB
Convertible Notes, and to any Series IV Convertible Notes to be issued will not be affected by the Placement.
Note 9. Events after the reporting period
No other matter or circumstance has arisen since 31 December 2011 that has significantly affected, or may
significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's
state of affairs in future financial years.
TZL Capital Raising
On 15 and 16 February 2012 TZL undertook a capital raising by private placement ('Placement') to institutions and
other exempt investors who qualify under sections 708(8), (10) and (11) of the Corporations Act 2001 (Cth). The
Placement successfully raised $4,552,089 by the issue of 14,225,279 ordinary shares at $0.32 per share. The
Placement was completed on 23 February 2012. The funds raised are to be used for working capital to position the
company for anticipated supply contracts and new business.
Weighted average number of ordinary shares used in calculating basic earnings per
share
Consolidated
Basic earnings per share
Loss after income tax attributable to the owners of TZ Limited
Weighted average number of ordinary shares used in calculating diluted earnings per
share
Diluted earnings per share
TZL Loan Facility with QVT Fund LP and Quintessence Fund L.P. ('QVT Funds')
On 31 January 2012, TZ Limited ('TZL') and Telezygology, Inc. ('TZI') entered into a loan agreement with QVT Funds
under which QVT Funds provided a stand-by loan facility in an amount of USD$3.0 million to TZI. TZL has provided
an unconditional and irrevocable guarantee in respect of any amounts due and payable by TZI under the stand-by
loan facility. As at 23 February 2012, no funds have been drawn down under the facility and the facility remains
subject to a number of pre-drawdown conditions.
Note 10. Earnings per share
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Directors' declaration
TZ Limited
there are reasonable grounds to believe that the company will be able to pay its debts as and when they
become due and payable.
In the directors' opinion:
the attached financial statements and notes thereto comply with the Corporations Act 2001, Australian
Accounting Standard AASB 134 'Interim Financial Reporting', the Corporations Regulations 2001 and other
mandatory professional reporting requirements;
the attached financial statements and notes thereto give a true and fair view of the consolidated entity's
financial position as at 31 December 2011 and of its performance for the financial half-year ended on that
date; and
Kenneth Ting
Sydney
29 February 2012
Mark Bouris
Director
________________________________
Director
________________________________
Signed in accordance with a resolution of directors made pursuant to section 303(5) of the Corporations Act 2001.
On behalf of the directors
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