next generation electronics design investor presentation

Next Generation Electronics Design

Investor presentation

30 October 2008

2Copyright © 2008 Altium Limited

Forward Looking Statements

During the course of this presentation, we may make forward- looking statements regarding future events and the expected performance of the Company. We wish to caution you that such statements reflect our best judgment based on factors currently known to us and that actual events or results could differ materially. For important factors that may cause actual results to differ from those contained in our forward looking statements, we would like to refer you to the documents we file from time to time with the ASX and specifically our most recent Annual Financial Report (2008) and AGM Chairman’s Address dated 23 October 2008. We do not assume any obligation to update any forward looking statements we make to reflect events that occur or circumstances that exist after the date of this presentation.


Summary

Forces of ChangeAltium’s Business Model– Business Model 10-20-30– Profit Outcomes– Foreign Currency Exchange Effects

Questions

Forces of Change


Influencing the future

The way electronics design will be done in the future will change

Altium is leading the change, to define the next generation of electronics design solutions that are required to help designers create the next generation of electronic products.


Why?

There is more computer processing power in the world than ever beforeComputing power now sits on faster and reprogrammable chips, no longer tied to the desktopThe Internet has allowed more people and organizations to be connected to each other than ever beforeUsers – of everything – demand more in the services they receive


The opportunity this creates

Low- price processing power and memory intelligence

High-speed connections from wireless devices, high-speed DSL, cable-modems

Physical objects that have “soft” intelligent designs housed in them (trucks, washing machines, books, phones, medical systems, defence systems…)

Everything becoming intelligent & connected to each other


Examples of what we mean

Rio Tinto:Mine operations in the Pilbara to be controlled 1300 km away at a new centre in Perth; Driverless trains to carry iron ore on most of the 1200 km of track;Driverless ‘intelligent’ truck fleet; and remote control ‘intelligent’ drills

CEO Tom Albanese’s vision for the “mine of the future”, January 2008


Examples of what we mean

Koenig & Bauer:Remote servicing of thousands of commercial printers worldwide, using broadband Internet connectivity

Computer & Automation, June 2007


And this will only get bigger

“The pervasiveness of web-enabled devices will triple the number of worldwide Internet users from one to three billion by 2010...there could eventually be as many as 600 billion devices linked to the web.”Vinton Cerf, Chief Internet Evangelist Google and co-founder of the internet, March 2006

“Today there are about 500 million devices connected to the internet, but by the end of the decade there would be billions of connected devices, including cars, phones and many other electronic devices.”Forrester Research Founder and Chief Executive Officer George Colony, 2003


Through removal of these barriers

Third-generation fibre-optics can now push 10 trillion bits per second down one strand of fibre (equivalent to 1,900 CDs, or 150 million simultaneous phone calls per second)Tripling about every 6 months, for at least the next 20 years

Alcatel-Lucent press release, December 2007


Early adoption of Internet, with huge growth yet to happen


Example: one country -

China

Global update - China added 43 million new Internet users during the first half of 2008 (over 7 million per month) but penetration is still estimated at below 20% of population China manufactures over 80% of electronics, and is in a national objective to move from “made in China” to “designed in China”

CNNIC, July 2007.ICT Council for South Australia, July 2007.


What does all this mean?

Represents both an opportunity AND a responsibility

“Altium is very early in the adoption curve of even the idea. I once compared what Altium is doing to Microsoft Office, because before Office came along we were used to getting all those applications separately from a bunch of different vendors…when Office came along you had all those things integrated in to one thing. It took people a little while to get used to that idea, but once they were…it was hard to go back.”

Kevin Morris, President, Techfocus Media, July 2008


The need for a next-generation electronics design solution

Altium defines this as:Breaking down the barriers of the silo approach, and of having to pre-decide how your design is going to be done - both typical of yesterday's electronics design paradigmA system that makes it easy to explore ideas, and create new functionality and product differentiationFocusing on device intelligence to create connected productsAll within a single unified design system


Australian company, worldwide focus

Altium wants to be the best in the world at harnessing contemporary electronics and software technologies To help all designers easily create and bring to market their next generation of intelligent, connected electronic productsGood ideas can come from anyone, anywhere – Altium will remove barriers so ideas can be explored and new products created And you won’t need to be a hardware engineer to create these products


How do we measure success?

Our next generation electronics design tools make it much easier to design intelligent connected (next generation) devicesOur success will be measured by the proliferation of our software and ultimately by unified electronics design becoming the new standard for electronics designWhich will lead to financial returns for our investors

Altium’s

Business Model

Translating opportunity into financial results


Financial Outlook -

What we will cover

Reconfirm our communication to shareholders at AGM and …Reconfirm our growth model as previously described– 10–20–30 Growth Model

Explore the ranges of the model– What are sales and expenses at the limits of the model

Using a “Middle” Scenario– Show impact of exchange rate movements– Show profit outcomes

Provide some background on why exchange rates have these effects


Business Growth Model 10-20-30

AssumptionsFinancial model comprises -– Growth in Sales of between 20% and 30%

Sales growth modelled 20%, 25% and 30%– Expenses Growth of less than 10%

Expenses growth modelled between 5% and 10%

Business Model 10-20-30


What if we spent two years at the“Bottom End” of the Model Range

Assumptions for Bottom End of Range:Growth in Sales of 20%Growth in Expenses of 10%Ignoring recent exchange rate changes – 0.87 USD to 1.00 AUD


What if we spent two years at the“Top End” of the Model Range

Assumptions for Top End of Range:Growth in Sales of 30%Growth in Expenses of 5%Ignoring recent exchange rate changes – 0.87 USD to 1.00 AUD


What if we spent two years at the“Middle” of the Model Range

Assumptions for “Middle” of the Range:Growth in Sales of 25%Growth in Expenses of 7.5%Ignoring recent exchange rate changes – 0.87 USD to 1.00 AUD


What if we spent two years at the“Middle” of the Range

-

Effect of FX Rate Movements

Assumptions for “Middle” of the Range with new Exchange Rate:Growth in Sales of 25% Growth in Expenses of 7.5%New exchange rate – 0.70 USD to 1.00 AUD

Profit Outcomes


Profit Outcomes at the“Bottom End” of the Model Range

Assumptions for Bottom End of Range:Growth in Sales of 20%Growth in Expenses of 10%Ignoring recent exchange rate changes – 0.87 USD to 1.00 AUD


Profit Outcomes at the“Top End” of the Model Range

Assumptions for Top End of Range:Growth in Sales of 30%Growth in Expenses of 5%Ignoring recent exchange rate changes – 0.87 USD to 1.00 AUD


Profit Outcomes at the “Middle” of the Model Range

Assumptions for “Middle” of the Model Range:Growth in Sales of 25%Growth in Expenses of 7.5%Ignoring recent exchange rate changes – 0.87 USD to 1.00 AUD


Profit outcome at

“Middle” of the Model Range – Effect of FX Movements

Assumptions for “Middle” of the Model Range with new Exchange Rate:Growth in Sales of 25%Growth in Expenses of 7.5%New exchange rate – 0.70 USD to 1.00 AUD

Foreign Currency Exchange Effects


Exchange Rates –

Impact of FX volatility

Euro to U.S. Dollar Australian Dollar to U.S. Dollar


Sales Contribution by Region FY09

Key Impact:

ANZ low Sales contribution accordingly less impact from FX volatility

EMEA higher sales contribution and will have some FX impact

Majority sales – US, China, Asia in USD

Key Impact:

ANZ highest cost base accordingly most (positive) impact from FX volatility

EMEA also high but this is somewhat negated from EMEA high sales contribution

Net is overall benefit to bottom line from FX due to high AUD cost base

Questions

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