Future Fibre Technologies (ASX:FFT) A global leader in fibre optic security and safety solutions Investor)Presentation)July)2015 PHYSICAL
Forward Looking Statements This presentation is given on behalf of Future Fibre Technologies Limited (FFT). Information in this presentation is for general information purposes only, and is not an offer or invitation for subscription, purchase, or recommendation of securities in FFT. Certain statements throughout this document regarding the Company s financial position, business strategy and objectives of Company management for future operations, are forward-looking statements rather than historical or current facts. Such forward-looking statements are based on the beliefs of the Company s management as well as assumptions made by and information currently available to the Company s management. Such statements are inherently uncertain, and there can be no assurance that the underlying assumptions will prove to be valid. All data presented in this document reflect the current views of the Company with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to the operations, results of operations, growth strategy and liquidity of the Company. 2
Highlights Successfully listed on ASX in May 2015 raising $21M of new capital. Strong and continued customer demand from core markets. Growing demand from new markets. Increase in pipeline of projects in line with growth in sales headcount. Strong growth in revenue forecast for 2H15 (approx. $12M). Well positioned for FY15 revenue forecast of $17.720M (+34.5%) and EBIT $1.927 (+20%) in line for Prospectus forecast. Strong cash position post IPO, enabling continued roll out of global growth. 3
Share Capital Total Shares on Issue: 121,404,450 Total Options on Issue: 13,535,990 Shares escrowed until 11/05/16: 85,694,820 (70.6%) Top 20 Shareholders hold 89% of Shares Major Shareholders No. Shares %)Shares %)Shares) escrowed until) 11/05/16 Al&Alhia Holding Company 27,000,000 22.2% 100% Pierce&Group&Asia 19,229,940 15.8% 100% Plexis Holdings&Limited 12,978,420 10.7% 100% Seafirst&Australia&Pty&Ltd 8,517,540 7.0% 100% 4
FFT Fibre Optic Intrusion Detection Solutions Future Fibre Technologies (FFT) started as a research company in the 1990s - focused on the development of innovative fibre optic sensors. Today, FFT develops, manufactures, markets and provides technical services for advanced technology laser fibre optic security systems. FFT security systems detect terrorists, criminals and other intruders. Technology deployed by the most security conscious industrial, military and government organisations around the globe. FFT s advanced fibre optic security systems detect and locate: - perimeter intrusions (fence and buried) - third-party interference on oil and gas pipelines, and - attempts to tap sensitive data network communications cables. 5
FFT Fibre Optic Intrusion Detection Solutions 800+ systems in more than 55 countries, first systems sold in 2002. Recognised as the NUMBER 1 provider of fence-mounted perimeter security in the world. Globally Future Fibre Technologies was the market leader for fence-mounted sensors in 2013 with a share of 17.3%. IHS World Market for Electronic Perimeter Security Equipment 6
The Fibre Optic Advantage TURNING A FIBRE OPTIC CABLE INTO A SENSING MEDIUM TAKES A VERY SIMPLE IDEA AND TURNS IT INTO A POWERFUL TOOL No power or electronics are required in the field. High reliability and low maintenance. Consistent over very long distances. Real time sensing performance. Intrinsically safe immune to EMI, RFI and lightning. Can use existing fibre optic infrastructure. Extremely cost-effective security solution. Proven technology and proven performance. 7
How FFT Solutions Work Attempted intrusions of a perimeter, pipeline or data networks typically involve the physical disturbance of the fence, soil at the perimeter or around a buried pipeline, or of the actual fibre optic data cable itself. Using a combination of active laser electronics (requiring power), passive fibre optics (requiring no power) and proprietary software, FFT intrusion detection systems feature advanced sensors that listen for signals associated with an intrusion attempt around the sensor and infrastructure being protected. Active electronics are housed in a safe and secure location, making them immune to tampering and environmental impacts such as lightning strikes that can damage field deployed electronics. 8
How FFT Solutions Work All field-deployed components are passive fibre optics requiring no power or additional infrastructure. When the FFT system determines an event to be an intrusion, FFT CAMS (Central Alarm Monitoring System) records the information in a secure database, converts the location of the event on the fibre to GIS (Geographic Information System) co-ordinates of the physical site and notifies local security staff to verify the intrusion. FFT CAMS can also instruct video surveillance to pan to the intrusion location. Local operational protocols can also be programed into FFT CAMS to alert management via email or smartphone. 9
Perimeter Fence Detecting fence climbing, lifting and cutting intrusion 10
Buried (Covert) Perimeter Hidden detection of walking, crawling and digging using buried cable 11
Pipeline Protecting against theft, fire, explosions and environmental damage 12
Data Network Protecting against cyberattacks and data theft 13
FFT CAMS (Central Alarm Monitoring System) SOFTWARE MANAGEMENT SYSTEM FOR ALL FFT INTRUSION DETECTION SYSTEMS Displays alarms and controls zones on the site map. Interfaces to network management systems and mobile devices. Logs alarms and operator responses. Provides advanced client/server architecture with redundancy. Integrated to more than 25 different Security Management Software Systems 14
CAMS Integration 15
Example of Signal Discrimination RECEIVED SIGNAL FROM THE SENSOR OF FENCE CLIMBS DURING HEAVY RAIN DYNAMIC THRESHOLD PROCESSED SIGNAL SIGNAL DISCRIMINATION IN ACTION CLEAR DETECTION OF CLIMBS DURING HEAVY RAIN HEAVY RAIN RECOGNISED 16
FFT Advantage: Signal Discrimination FFT USES PROPRIETARY TECHNOLOGY TO DELIVER HIGH SENSITIVITY TO INTRUSIONS WITHOUT THE PENALTY OF NUISANCE ALARMS Intelligent event classification processes the signals, identifying and reducing nuisance alarms due to environmental noise such as rain, wind, aircraft, traffic etc. while simultaneously maintaining the same high levels of sensitivity. Advanced multi-parameter signal analysis improves intrusion event signal discrimination by clearly identifying what is a real event and what is a nuisance alarm. 17
FFT Product Applications 18
Product Leader Widest price points and performance range for perimeter security FFT Secure Fence TM FFT Secure Pipe TM FFT Secure Link TM 19
FFT Product Matrix PRIMARY APPLICATION ZONES OR CHANNELS PER CONTROLLER SECURE POINT SECURE ZONE SECURE FENCE 408 SECURE FENCE SECURE PIPE SECURE LINK FFT AURA Small perimeters (<1000m), sliding gates, block valves, field mounted or remote controller options. Small to medium length perimeter fences requiring a centrally installed multi-zone controller Medium sized or remote perimeters requiring a sensitive zone based solution with lead-in cable up to 40km Medium to large perimeter fences requiring a centrally installed controller, location of intrusions, and few nuisance alarms Protection of buried pipelines against third part interference (TPI) or illegal tapping of contents. Protection of fiber optic and data communications networks against physical intrusion. Sites requiring high sensitivity, buried intrusion detection, or cut immunity 2 8 or 16 8 Unlimited Unlimited Unlimited 2,666 SENSOR FIBER TYPE Single mode Multimode Single mode Single mode Single mode Single mode Single mode MAX SENSOR CABLE LENGTH 3.2km (2 zones) 500m 40km 40km straight or 80km perimeter 40km 40km straight or 80km in a ring configuration 16km or 40km INSENSITIVE LEAD IN CABLE LENGTH (MAX.) LOCATION ACCURACY SENSOR OPERATING TEMP CONTROLLER OPERATING TEMP 10km 6km 40km 40km 40km 40km 16km or 40km Within the zone only Std. -30C to +70C Opt. -55C to +85C Within the zone only Within the zone only 10m to 25m 150m or better 10m to 25m 6m to 10m Std. -30C to +70C Opt. -55C to +85C Std. -30C to +70C Opt. -55C to +85C Std. -30C to +70C Opt. -55C to +85C Std. -30C to +70C Opt. -55C to +85C Std. -30C to +70C Opt. -55C to +85C Std. -30C to +70C Opt. -55C to +85C -30C to +65C +5C to +35C +5C to +40C 0C to +45C +10C to +35C +10C to +35C +5C to +40C POWER CONSUMPTION <3W 120W 150W 150W 160W 160W 400W max DIMENSIONS 19" Rackmount 1U, 300x250x70 Wall with Optional NEMA enclosure 19" Rackmount 4U 19" Rackmount 4U 19" Rackmount 4U 19" Rackmount 4U 19" Rackmount 4U 19" Rackmount 4U ALARM OUTPUT Form C contacts, TCP/IP, optional SDK TCP/IP, dry contacts, optional SDK TCP/IP, dry contacts, optional SDK TCP/IP, dry contacts, optional SDK TCP/IP, dry contacts, optional SDK TCP/IP, dry contacts, optional SDK TCP/IP, dry contacts, optional SDK FFT CAMS VERSION FFT CAMS SP & Lite (Optional) FFT CAMS Lite (Optional) FFT CAMS Enterprise (Optional) FFT CAMS Enterprise FFT CAMS Enterprise FFT CAMS Enterprise FFT CAMS Enterprise 20
Factors Driving Demand for Perimeter Security Solutions Global unrest According to the US State Department, terrorist attacks rose 43% worldwide in 2013. The threat of terrorism is continuing to evolve rapidly. Government security mandates and operational legislation Strong growth in perimeter security with the retrofit and new construction of infrastructure including chemical facilities, airports and prisons.* Risks to business continuity Corporations are implementing risk management initiatives to ensure business continuity from deliberate or accidental damage including data theft. Innovation in intrusion technology New cost effective, high performance perimeter detection technologies are supporting industry demand and driving growth of infrastructure upgrades. *IHS World Market for Electronic Perimeter Security Equipment 2013 21
Growing Application Markets Perimeter The world market for perimeter security sensors was estimated to be worth $273 million in 2014 and is forecast to grow to $327 million in 2017 (CAGR 6.2%). US$)million CY14 CY15 CY16 Total&Market&Perimeter Security&Sensors 273 290 308 FFT&Share&of&Total&Market 4% 5% 6% Pipeline The global pipeline safety market is estimated to be $4.35 billion in 2013 and is expected to grow to $6.73 billion in 2018 (CAGR 9.1%). Data Network Worldwide spending on information security will reach $71.1 billion in 2014, an increase of of 7.9% over 2013, with the data loss prevention segment recording the fastest growth at 18.9%. 22
FFT World Market Share IHS: World Market for Electronic Perimeter Security Equipment - 2013 Table&3.45 Market'Shares'for'Perimeter'Security'Fence'Mounted World&201022013&2&$&Revenues Company'Name 2010'Share 2012'Share 2013'Share Difference' 2010>2012 Difference' 2012>2013 1 Future&Fiber&Technologies 14.5% 16.0% 17.3% 1.5% 1.3% 2 Magal 10.4% 11.4% 10.6% 1.0% 20.8% 3 CRH 6.4% 6.0% 5.5% 20.4% 20.5% 4 Optex 3.9% 4.8% 4.8% 0.9% 0.0% 5 Optellios 3.8% 3.9% 3.9% 0.1% 0.0% 6 Gallagher 3.5% 3.3% 3.5% 20.2% 0.2% 7 Fibertron 2.8% 3.0% 3.2% 0.2% 0.2% 8 G4S 3.3% 3.0% 2.9% 20.3% 20.1% 9 El2Far&Electronics&Systems 2.9% 2.9% 2.8% 0.0% 20.1% 10 Haverkamp 2.6% 2.7% 2.7% 0.1% 0.0% Others 45.9% 43.0% 42.8% 22.9% 20.2% Notes (1)&The&market&shares&represent&the&state&of&the&market&in&2012&and&do¬&reflect&acquisitions&made&since. Source:'IHS Sep>13 23
Diverse Market Sectors UTILITIES CHEMICAL, OIL,GAS)&)MINING MILITARY GOVERNMENT TRANSPORTATION COMMERCIAL &)RESIDENTIAL CORRECTION)FACILITIES)&)BORDERS 24
Examples of FFT Customers - System Integrators 25
Examples of FFT Customers End Users 26
FFT Global Support Existing offices Melbourne Singapore New Delhi Dubai Johannesburg London Washington DC San Francisco Proposed new offices Amsterdam Abu Dhabi Brisbane Mexico City Hong Kong 27
Competitive Landscape FFT competes with other fibre optic intrusion detection providers: Fence mounted Optex/Fiber Sensys (USA), Optellios (USA), CRH/Geoquip (UK), Remsdaq (UK) and smaller country based manufacturers. Buried perimeter and pipeline - OptaSense (UK), Fotech Technologies (UK). Data Network- Network Integrity Systems (USA) and Lynx Photonics (Israel). FFT also competes with, and has the opportunity to take market share from, nonfibre technologies including copper cable, buried volumetric, infrared and video based intrusion detection systems. 28
Go to Market Model 29
Growing List of Active Prospects Broad geographic spread FFT s wide range of intrusion detection solutions is driving future sales growth. Identified viable new projects are up from US$7.2M per month (2013) to US$12M per month (2H15). Broad geographic spread of prospects driven by FFT international offices. 30
Substantial Revenue Pipeline FY16/17 total opportunities US$187M Average monthly additions of new opportunities approaching US$12M per month - up 50% on prior year. Sales headcount increased by 30% in the last 4 months, with further additions planned in 1H16. 31
Growing Sales Headcount 32
Outlook Growth outlook World leading technology installed in more than 55 countries with a blue chip user base. Growing global security concerns driving increasing demand and rapid adoption of FFT technology. Attractive industry fundamentals underpin future growth. Prospectus financial guidance Step jump in revenue from 1H15 to 2H15 reflects the deployment of additional resources and gives the Board and Management team confidence in reaffirming Prospectus forecasts: Revenue forecast $17.720M EBIT forecast $1.927M Strong project pipeline continues to grow and convert. $17.6M cash (at 31/06/15) and no debt supports growth initiatives. Strong lift in revenue and earnings as company executes growth strategy. 33
Revenue Split by Application Continued strong demand for Perimeter, growing demand for Pipe and Network. 34
Total Revenue 35
Current Revenue Split Forecast FY15 36
Growth Strategy Summary Invest in sales and support - Add Sales and Technical Support staff to increase geographic and industry coverage. - Establish channel partnerships to address higher volume, lower price markets. - Increase recurring revenues from software and technical services. - Establish product management and GTM strategy for new Secure Link applications. Differentiate on product performance - Enhance current leadership position with continued R&D to expand product applications. - Expand FFT solutions within adjacent safety market segments. Provide exceptional customer service - Expand approved 3rd party integrations and partner with security software companies. - Increase and enhance system integrator training and support offerings. 37
Key Financials Financial Year as at 30 June Profit &)Loss Actual Forecast $AUD ( 000) FY14 FY15 Revenue 12,279 17,300 Gross&Margin % 71.1% 60.2% Operating&Expenses 6,731 7,755 EBITDA 2,005 2,664 Net&Margin&% 16.3% 15.4% EBIT 1,609 2,254 NPBT 1,630 2,269 NPAT 1,630 2,269 Notes: V NPAT&(Net&Profit&After&Tax)&is&EBIT&(Earnings&Before&Interest&and&Taxes)&plus&interest&income,&less&interest&costs&paid&or&payable,&less& Australian&company&taxes&payable&(currently&30%&of&taxable&income). V FFT¤tly&has&unutilised&tax&losses&of&$7.4m&which&is&expected&to&ensure&that&the&company&does¬&need&to&pay&any&taxes&for& the&forecast&period. 38
Financials Pro-forma Balance Sheet as at 30 June 2014 $AUD ( 000) Actual)30)June2014 Pro[forma 30)June)2014 Balance)Sheet) After)IPO)Entries Current Assets Cash& and case& equivalents 879 15,118 Trade and& other&receivables 4,959 4,999 Inventories 1,390 1,390 Other current& assets 576 576 Current& tax& assets 1 1 Total)current)assets 7,805 22,084 Non[current Assets Plant& and&equipment 582 582 Intangibles 1,518 1,518 Other& nonvcurrent assets V V Total&nonVcurrent& assets 2,100 2,100 Total)assets 9,905 24,184 Current Liabilities Trade& and other&payables 1,223 1,223 Provisions 531 531 Interest& bearing& debt 12 12 Current& tax& liabilities V V Total current)liabilities 1,766 1,766 Non[current)Liabilities Provisions 303 303 Interest& bearing& liabilities 32 32 Total&nonVcurrent liabilities 335 335 Total)liabilities 2,101 2,101 Net assets 7,804 22,083 Equity Issue& capital 24,277 38,556 Reserve V V Accumulated& losses (16,473) (16,473) Total equity 7,804 22,083 39
The Team Executives and Board 40