asia pacific digital limited

1

September 2016

ASIA PACIFIC DIGITAL LIMITED

FY16 Results Presentation

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2ASIA PACIFIC DIGITAL

DISCLAIMER

FY16 FULL YEAR RESULTS PRESENTATION

Not an offer This Presentation is not a prospectus, product disclosure statement or other offering document under Australian law or any other law. This Presentation is for information purposes only and is not an invitation or offer of securities for subscription, purchase or sale in any jurisdiction (and will not be lodged with the U.S Securities Exchange Commission).

No AdviceThis Presentation does not constitute investment or financial product advice (nor tax, accounting or legal advice) or any recommendation to acquire entitlements or shares in the Company and does not and will not form any part of any contract for the acquisition of shares in the Company. Each recipient of this Presentation should make its own enquiries and investigations regarding all information in this Presentation including but not limited to the assumptions, uncertainties and contingencies which may affect future operations of the Company and the impact that different future outcomes may have on the Company. Before making an investment decision, prospective investors should consider the appropriateness of the information having regard to their own investment objectives, financial situation and needs and seek legal, accounting and taxation advice appropriate to their jurisdiction.

Foreign JurisdictionsThis Presentation may not be released or distributed in the United States. This Presentation does not constitute an offer to sell, or the solicitation of an offer to buy, any securities in the United States.

Future performance This Presentation contains certain ‘forward looking statements’. Forward looking statements can generally be identified by the use of forward looking words such as, ‘expect’, ‘anticipate’, ‘likely’, ‘intend’, ‘should’, ‘could’, ‘may’, ‘predict’, ‘plan’, ‘propose’, ‘will’, ‘believe’, ‘forecast’, ‘estimate’, ‘target’ ‘outlook’, ‘guidance’ and other similar expressions within the meaning of securities laws of applicable jurisdictions. You are cautioned not to place undue reliance on forward looking statements. The statements, opinions and estimates in this Presentation are based on assumptions and contingencies subject to change without notice, as are statements about market and industry trends, projections, guidance and estimates. The forward looking statements contained in this Presentation are not guarantees or predictions of future performance and involve known and unknown risks and uncertainties and other factors, many of which are beyond the control of the Company, and may involve significant elements of subjective judgement and assumptions as to future events which may or may not be correct. There can be no assurance that actual outcomes will not differ materially from these forward-looking statements. A number of important factors could cause actual results, achievements or performance to differ materially from the forward looking statements, including the risk factors set out in this Presentation. The forward looking statements are based on information available to the Company as at the date of this Presentation.

Past performance Investors should note that past performance is given for illustrative purposes only and cannot be relied upon as an indicator of (and provides no guidance as to) future the Company’s performance. The pro forma historical information is not represented as being indicative of the Company’s views on its future financial condition and/or performance.

Disclaimer Neither the Company or its advisers or any of their respective affiliates, related bodies corporate, directors, officers, partners, employees and agents, have authorised, permitted or caused the issue, submission, dispatch or provision of this Presentation and, except to the extent referred to in this Presentation, none of them makes or purports to make any statement in this Presentation and there is no statement in this Presentation which is based on any statement by any of them. To the maximum extent permitted by law, the Company and its advisers, affiliates, related bodies corporate, directors, officers, partners, employees and agents make no representation or warranty, express or implied, as to the currency, accuracy, reliability or completeness of information in this Presentation.

Statements made in this Presentation are made only as the date of this Presentation. The information in this Presentation remains subject to change without notice.

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3VALUATION & INVESTMENT HIGHLIGHTSVALUATION & INVESTMENT HIGHLIGHTS


INVESTMENT HIGHLIGHTS

After platform build,

on track to move to sustained profitability

in FY17

p.24

South East Asia

is the world’s highest growth

digital market

p.19

APD is uniquely

positioned to participate in this

growth

p.20

Largely de-risked

with regional platform established

p.11-12

Expert team with

deep industry experience and tech

track record

p.7-8

Valuation

undemanding relative to market peers and transaction metrics

p.29

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OVERVIEW OF APD

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OVERVIEW OF APD

OVERVIEW OF APD

APAC’s largest

independent digital services company

ASX: DIG ~400-strong team in

nine countries

$55m FY16 revenues


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6OVERVIEW OF APD

DIGITAL STRATEGY

DEVELOPMENT & TECHNOLOGY

PERFORMANCE MARKETING

CRM SOLUTIONS

360˚Across the spectrum of the digital landscape, APD offers services to deliver digital growth throughout

customer journey.

360 DEGREE DIGITAL


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EXECUTIVE TEAM

Newton SmithSingapore

Chief Executive Officer

Formerly Head of Emerging Markets eCommerce for IBM,

Partner with PWC

Damien O’DonohoeSingapore

Chief Financial Officer

Formerly CFO for Sapient Nitro (Asia), Nitro (Global)

and Proximity (Global)

Significant experience in integration and profit

improvement

Roger SharpSingapore

Peter HyndSydney

Executive Director

Over 20 years experience in advising, financing and

investing in emerging

companies

Executive Chairman

25 years investing in, financing and running

growth businesses

Formerly Global Head of Technology for ABN AmroBank (London) and CEO of

ABN Amro Asia (HK).

OVERVIEW OF APD


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MAJOR SHAREHOLDER

OVERVIEW OF APD


• North Ridge Partners is an active investor and advisor to technology companies across Asia Pacific

• 63% shareholder in Asia Pacific Digital

• Strong track record in building SX-listed technology companies: TVL.ASX

Active Role: Major shareholder, board & semi-executive, corporate advisorStatus: Sold to Wotif in takeover, 85% IRR

SOE.NZX

Active Role: Major shareholder, board, corporate advisorStatus: Sold to Henry Schein in takeover, 57% IRR

GEO.NZX

Active Role: Major shareholder, board, corporate advisorStatus: NRP built private SaaS company, recently merged with GEO, strong

running IRR and high forward growth prospects

DIG.ASX

Active Role: Major shareholder, board, executiveStatus: Unique regional platform built, trending to profitability, partial sale

process underway

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9OVERVIEW OF APD

SERVICES

STRATEGY & TECHNOLOGY

DIGITAL

STRATEGY

DEVELOPMENT

& TECHNOLOGY

DESIGN &

USABILITY

MARKET

RESEARCH

CREATIVE

SERVICES

eCOMMERCE

PERFORMANCE MARKETING

AFFILIATE

MARKETING

DISPLAY

ADVERTISING

PAY PER

CLICKCONVERSION RATE

OPTIMISATION

LEAD

GENERATION

SEARCH ENGINE

OPTIMISATION

CRM

CRM

SOLUTIONS

DATA &

INSIGHTS

EMAIL

MARKETING

SOCIAL

MEDIA


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10OVERVIEW OF APD


(1) TNS Marketing Monitor Study (2016)

The number of digital platforms on which brands can engage consumers is causing confusion among marketers

Companies don’t know which platforms their customers are using and how best to engage with them

Only a third of APAC marketers feel in control of the online and offline channels they're using to reach consumers (1)

That’s why APD has developed its 360 Degree Digital Services approach

24%

29%

30%

32%

33%

35%

36%

50%

NZ

Singapore

Australia

Philippines

China

Indonesia

Malaysia

Thailand

% of marketers who say digital channel fragmentation is manageable

FRAGMENTATION OF DIGITAL MEDIA DRIVES APD's 360 DEGREE APPROACH

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Building capability in Asia since 2012

Now 60% of personnel and ~30% of revenues

Serving local blue chip and MNC clients with integrated approach across geographies, cultures and disciplines

Scaling through a combination of local relationships and offshore delivery

Partnering with MNC clients across APAC in the FMCG, telco, banking, insurance, hotels, technology and building materials sectors

Velocity is growing: from one to six regional mandates across 15 countries in FY16

PRC

Malaysia

Singapore

Australia

New Zealand

Indonesia

GEOGRAPHIC REACH

Serving clients in these countries from APD locations

Korea

Taiwan

Philippines

Vietnam

Brunei

CambodiaBangladesh

India

UAE

Technology & operations hub

360 degree digital services

OVERVIEW OF APD


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• Proven ability to integrate and scale small acquisitions

• Progressive build of infrastructure and capabilities is now driving regional mandates

SUCCESS IN SCALING VIA INTEGRATION

OVERVIEW OF APD


Kuala Lumpur

Singapore

Manila

2012: acquired five person team in Malaysia.

2016:Revenues have grown 10x. 80+ team. Market leader

2014: Regional Operations Centre opened in Manila to scale the business

2016: 85 person team, double shift planned.

2015:acquired small team in Singapore.

2016:Revenues up 2.5x in 12 months. Winning regional clients

2016: Option agreement to buy in Jakarta

Jakarta

Shanghai

Chinese language operations hub

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13OVERVIEW OF APD

20 YEARS OF CLIENT SUCCESS STORIES


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14OVERVIEW OF APD

REVENUE SNAPSHOT

Other APAC31%

Australia69%

Solutions38%

Performance54%

CRM7%

Other1%

Recurring61%

Project39%

By Geography

By Service

By Tenure


Project: campaign-based + technology projects

Recurring: medium term contracted, open-ended contracts

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is the world’s largest publicly traded property and casualty insurer. With operations in 54 countries, Chubb provides

commercial, personal property and casualty insurance, personal accident and supplemental health insurance, reinsurance and

life insurance to a diverse group of clients.

Transforming the way Chubb deals with its partners and customers

Our partners & our customers are changing, how do we

change with them?

PROBLEM:

CASE STUDY

OVERVIEW OF APDF

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In 2015, Chubb Travel Insurance (then known as ACE Travel Insurance) was seeking to achieve aggressive business growth and recognised

that intensive use of digital to do so was the right move.

An RFP to identify an agency partner to help meet this objective was initiated. APD won the account and was appointed in July 2015

Tasked to develop a robust, comprehensive digital strategy for Chubb Travel Insurance in Singapore in the initial RFP, this relationship has

been extended to operations across Asia Pacific in 2016. APD’s services to Chubb Travel Insurance include website design, email

marketing and media buy, among others.

Site refresh withUX/UI overhaul

Responsivedesign

SEO best practice

Integrated acquisition & CRM

ROI-focusedmedia plan

Analytics to optimise results

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Traffic to conversionpage increased

RESULTS:

Bounce rate reduced

Chubb has retained APD to roll out its digital strategy

across 12 APAC markets. Policy value increased

AND THE JOURNEY CONTINUES…F

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MARKET & OPPORTUNITY

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MARKET OPPORTUNITY

World’s Fastest Growing Internet Region

SEA is adding 3.8m new internet users per month

14 14

4

1 1

ASEAN India China US EU

2015-20 Growth in Internet Users (CAGR )

0.8

6.4

2015 2025

eComm as % of Total Retail Spend

SEA eCommerce Spend Rapidly Expanding

eCommerce spend will grow 16x from 2015-20

Online Advertising Increasing as a Result

SEA online advertising will grow 5x by 2025

0.2

0.7

0.1

0.30.4

0.3

0.91

1.51.6

2.3

2.7

MY SG PH VN TH ID

Online Ad Market ($b)

2015 2025(f)

Source: Google | Temasek: e-conomy SEA Report (2016)

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APD is positioned at the crossroads of technology and digital marketing

The global technology companies are moving into digital services

The global advertising companies are investing heavily in digital

The consulting and professional services firms have entered the market

Asia is the next battleground; everyone has a mandate to grow there

Organic growth is difficult and slow - and there is little of scale to acquire

APD is the only scale independent in the region

COMPETITIVE LANDSCAPE / MARKET POSITION


Advertising and marketing companies

Consultants and technology companies

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FY16 RESULTS OVERVIEW

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PROGRESS v 3 YEAR KPIs


Completed

~35% - on track

~60% - completed

25% in H1

Breakeven in June 2016

Targeting sustained profit during FY17

1. Build core capabilities in Asia

2. 50% of revenues outside Australia

3. Locate 50% of employees in Asia

4. 30% growth rate in Asia

5. Profit

KPI OUTCOME



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49%

-1% -21%

2%

Asia (ex. Gl.Clients)

AU / NZ Global Clients Total Group

Revenue Growth

REVENUES



Asia (ex Global Clients) : Up 49%

Asia (excluding Global Clients division) revenues up 49% year-on-year.

MY - continuing multi-year top and bottom line growth trend

SG - heavy investment in team and infrastructure. Q4 major regional engagement

with Chubb Insurance will drive significant revenue growth in FY17.

PH - Regional Operations Centre operated well (moving to double shift to

accommodate growing volumes). First Philippines client won.

Australia/NZ: Flat

AU - revenues increased moderately as market conditions remained subdued and

360 Degree Digital integration took longer than anticipated.

NZ - revenues down as Enterprise clients migrated from legacy technology

platform to the IBM Marketing Cloud. APD launched its 360o Digital Services

business unit.

Global Clients: Down 21%

Revenues from largest account declined by 21% due to a major technology re-

platforming that has constrained broader digital activity.

Declines offset by new business wins. 69%4%

26%

Geographic Split

Australia

Asia

NZ

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PROFITABILITY



$2m

$3m

$4m

J F M A M J

H2Y16 Financial Progression

Revenue, net of direct variable costs

Other Expenses

H2 Progression towards Breakeven Target

APD’s build phase is nearly complete. Infrastructure and teams are now

in place and operating at scale across the region.

At completion of first half, APD outlined target to bring cost base in line

with current revenue levels.

Investment has been scaled back and businesses that will not achieve

target profitability have been exited.

~$4m of sustained cost savings delivered. With improving revenues,

led to a breakeven EBITDA result in June 2016.

Next Steps and Outlook

APD is integrating premises, financial and HR systems to deliver a

single, streamlined delivery and support platform to enable the business to scale with attractive margins.

The process will be completed by the end of CY16.

APD now has the ability to scale revenues and drive more incremental

margin to the bottom line (given that regional management, teams and infrastructure are already established).

New management team has a mandate to deliver sustained profitability

in CY17. The path from breakeven to profitability will not be linear because of seasonal variations.

Forward Revenue Growth Required to Achieve Range of Margins

Annual Revenue Growth to

June 20185% 11% 18% 27%

360o Digital Revenue 61,000 68,000 77,000 89,000

360o Digital EBITDA 3,000 5,100 7,700 11,100

EBITDA Margin 5.0% 7.5% 10.0% 12.5%

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FINANCIAL RESULTS

Commentary on FY16 result:

Costs of integration and upgrading of financial and support systems to

allow improved resource planning, margin transparency and speed of reporting to ensure future growth is delivered at appropriate margins.

Mix of revenues resulted in higher direct costs relative to PCP.

Revenues from Global Clients division decreased as client

commenced a major technology re-platforming. APD maintained experienced bench strength and redeployed into Asia at a short term cost to margin.

Completion of the regional APD network cost more than anticipated

but 360 Degree Digital moved into profitability in Q4.

Management is now focused on achieving industry level margins as

the business scales.

$’000 FY16$m

FY15$m

360 Degree Digital

Revenues 55.2 54.3

Operating Expenses (57.9) (52.6)

Operating EBITDA – 360 Degree Digital (2.7) 1.7

Restructuring Costs (0.5) (0.3)

Venture (discontinued) (1.1) (0.6)

Profit on Sale of Investment - 0.7

Listed Company Corporate Costs (2.8) (3.0)

Share Option Expenses (non-cash) (0.2) (0.3)

EBITDA (7.0) (1.8)

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26FY16 RESULTS OVERVIEW

BALANCE SHEET

$’000FY16

$m

FY15

$m Note

Cash & equivalents 2.3 1.0

Trade and other receivables 11.6 12.0 (1)

Other current assets 0.8 1.3 (2)

Fixed assets 1.0 0.7 (3)

Goodwill and other intangibles 12.5 13.0 (4)

Other non current assets 2.4 2.2 (5)

Total Assets 30.6 30.2

Trade and other payables 8.8 7.7 (6)

Current loans 3.6 2.0 (7)

Other current liabilities 3.0 3.1 (8)

Non current loans 5.1 4.7 (7)

Other non current liabilities 0.8 0.5 (8)

Total Liabilities 21.3 18.1

Net Assets 9.3 12.1

• [x]


Receivables balances flat in alignment with revenues. Balance represents ~ 70

receivables days. Project underway in early FY17 to improve contract-to-cash processes and deliver material improvements in working capital requirements.

Other Current Assets reduced as term deposits supporting premises were reduced through integration processes and largely re-classified as non-current

Primarily represented by office equipment and leasehold improvements

Intangibles reduced as amortisation of existing intangibles exceeded new capitalised

investment (cash).

Includes $0.7m minority shareholding in SEA end-to-end eCommerce logistics provider,

deferred tax assets, and property lease deposits

Payables balances increased year-on-year as mix of revenues in May & June led to higher

direct costs.

Loan balances increased as a result of new convertible note funding that completed in

November 2015 from professional investors associated with Prime Partners in Singapore. Notes carry a 10% interest rate, convert at 45 cents per share and expire in November 2017. Offsetting this issue was decreases in the balance of secured working capital

facilities and prior tranches of convertible notes.

Includes provisions associated with employees, database member rewards, taxation and

leasehold make-goods.

Increased largely due to shift of leasehold make good provisions from current to non-

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$’000FY16

$m

FY15

$m

EBITDA (7.0) (1.8)

Non cash share option expense 0.2 0.3

Gain on sale of investments - (0.7)

Interest payments (1.1) (0.6)

Income tax paid (0.1) (0.2)

Increase in trade and other receivables (0.5) (2.0)

Increase in trade and other payables 1.1 1.0

Net other working capital movements (0.3) (0.3)

Operating Cash Flows (7.7) (4.4)


CASH FLOWS

Working capital managed to ensure any increases in receivables are matched or

exceeded by movements in payables – further improvements identified as available in bringing down receivables balances and freeing up working capital in FY17

Increase in interest due to timing of payments

$’000FY16

$m

FY15

$m

Operating Cash Flows (7.7) (4.4)

Payments for plant & equipment (0.5) (0.5)

Payments for intangibles (0.4) (1.0)

Acquisition of subsidiaries - (0.5)

Proceeds from sale of investments 1.0 -

Other investing cash flows 0.4 0.3

Total Investing Cash Flows 0.4 (1.6)

Proceeds from share issues 5.7 3.2

Net proceeds from borrowings 3.5 1.8

Other financing cash flows (0.6) (0.5)

Total Financing Cash Flows 8.6 4.6

Net Cash Flow 1.4 (1.4)

Operating cash outflows and payments associated with acquisitions (i.e. investment in

rollout & expansion of regional network) were funded via the sale of an investment asset and two capital markets initiatives:

• Convertible Note issue in November 2015 ($4.1m);

• Rights Issue in April 2016 ($5.8m).

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VALUATION & INVESTMENT HIGHLIGHTS

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29VALUATION & INVESTMENT HIGHLIGHTS

29

• [x]


PEER GROUP VALUATIONS

-

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

Trading Transactions APD (Current)

• Relatively few accurate proxies due to unique service and geographic nature of APD

offering (most comps focus on part of the digital value chain / e -commerce only)

• Broad-based comps include (a) ASX companies that focus on digital economy / digital

marketing (b) international companies exposed to digital marketing and e -commerce (c) international advertising agencies.

• Significant proportion of comps not profitable, therefore data on earnings limited

• Traded revenue multiples sit between 0.3x – 5.0x; average of 2.0x

• Regular corporate activity in the digital and e-commerce sectors in the past three years

• Transaction revenue multiples in the range 2x – 8x (majority of target companies were unprofitable); 2x - 4x baseline range for strategic assets, with average of 4.3x

• APD currently trading at ~0.7x historical revenues

Comparable Revenue Multiples

Multiple Range

Average = 2.0x

Average = 4.3x

0.7x @ 31 cps

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30VALUATION & INVESTMENT HIGHLIGHTSVALUATION & INVESTMENT HIGHLIGHTS


INVESTMENT HIGHLIGHTS

After platform build,

on track to move to sustained profitability

in FY17

South East Asia is the

highest growth digital market in the

world

APD is uniquely

positioned to participate

in this growth

Largely

de-risked withregional platform

established

Expert senior team

with deep industry experience and

tech track record

Valuation

undemanding relative to peer group and

transaction

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APPENDIX

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APPENDIX - MARKET OPPORTUNITY (DETAILED)

World’s Fastest Growing Internet Region

SEA is adding 3.8m new internet users per month

What is driving growth in SEA?

Young population: 70% under age of 40 (vs 57% in China)

Rapidly growing middle class (forecasted GDP growth of 5.3% over next 10 years)

Lower availability of physical retail (1/3 the number of retails stores per capita vs US)

Improving payments systems and increased access to financial system

14 14

41 1

ASEAN India China US EU

2015-20 Growth in Internet Users (CAGR )

0.8

6.4

2015 2025

eComm as % of Total Retail Spend

eCommerce Spend Rapidly Expanding

SEA eCommerce spend to grow by 16x from 2015 –20 to ~$90b as 1) total retail market grows, and 2)

eCommerce increases share

Current Challenges / Future Opportunities

Infrastructure:

All SEA markets (except SG) have internet speeds lower

than global average

Last mile delivery remains challenging outside SG

Banking & Payments:

60-70% of adults are unbanked in PH and ID (US = 5.2% unbanked)

Need to build consumer trust online – ID, MY and PH

have higher levels of fraud than global average

Online Advertising Benefiting

SEA online advertising market expected to increase 5x by 2025

0.9

1

1.5

1.6

2.3

2.7

0.2

0.7

0.1

0.3

0.4

0.3

MY

SG

PH

VN

TH

ID

Online Ad Market ($b)

2015 2025(f)

Source: Google | Temasek: e-conomy SEA Report (2016)

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THANK YOU

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asia pacific digital limited

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