SmartTrans Holdings (ASX: SMA) - Australian Securities … · 2014-10-28 · SmartTrans Holdings...

1SmartTrans Holdings Limited – October 2014 1

SmartTrans Holdings Limited (ASX: SMA) Bryan Carr – Managing Director & CEOASX Spotlight ConferenceOctober 2014

SmartTrans Holdings Limited – October 2014 2

SmartTrans’ three established mobile & online businesses

China mobile & online payments platform • Allows companies to transact and process payments in China

• SMA also sells its own mobile content through payments platform

• Mobile payments preferred payment method for Chinese consumers

Marketing & Sales of Mobile Phone Applications (Apps)•SMA sells its own and third party Apps directly to mobile subscribers

•Receives a royalty, and also revenue through existing billing platforms

•A large (over US$2.9 billion*) and growing market in China

Mobile & online Logistics software provider in Australia• Logistics software to optimise goods delivery

• Recurring revenue from long term contracts – typically 3‐5 years

• Australian focus – opportunity to integrate with mobile payments platform in China

1.

2.

3.

*Source: http://www.pocketgamer.biz/asia/data‐and‐research/58833/18‐key‐trends‐from‐the‐chinese‐mobile‐games‐market/

3SmartTrans Holdings Limited – October 2014

Corporate overview

Dr Geoff RabyNon‐Executive Chairman

Yui (Ian) TangNon‐Executive Director

Ian HawkinsExecutive Director

Andrew ForsythNon‐Executive Director

Bryan CarrManaging Director

Board of Directors

Major Shareholders % Ownership

Directors, management, related ownership 36.31

Top 20 60.06

Dymocks Securities Pty Ltd 21.36

Loyal Strategic Investment Limited 12.99

Jamajon Pty Ltd 4.39

ITS Worldwide Ltd 3.52

Lydian Enterprises Pty Ltd 2.95

Corporate Snapshot

ASX Code SMA

Cash (as at 31 July, 2014) $1.1 million

Market Cap (at $0.014/share) $22.7 million

52 week high ($/share) $0.045

52 week low ($/share) $0.011

Shares on issue 1,628,183,299


2014 Financial Year Achievements

• 2014 has been a transformative year for SmartTrans

• Single‐minded focus on growing the company’s mobile and online revenue stream

• Divestment of non‐core assets – exploration tenements, to focus on core business divisions

• Reduced company cost base and overheads ‐ $600,000 in ongoing costs taken out of the business

• Sharply focused on:

• Mobile and online payments in China

• Mobile and online logistics software and service in Australia

• Solid and growing revenues in China and Australia – Up 90% for the year

• Significant increase in China and Hong Kong Revenue

• New billing agreements in China providing access to ALL mobile phone subscribers in China

• New products and services launched in China

• Exclusive agreement with 123 Education to provide all mobile and online requirements for its Rovio’s

“Angry Bird” educational products in China

• Blue‐chip client list for mobile and web logistics software business in Australia with solid recurring revenue


Three immediate growth drivers

Mobile & Online Logistics Business •Pursuing new long‐term contracts in Australia & expansion opportunities in China

•Integrate with SMA payments platform

Payments Platform•Third parties to licence SMA’s payment platform in China

•Increased revenue from SMA‐owned and licensed content purchased via payments platform1.

2.

3.

Marketing & Sales of Mobile Game Apps•Marketing campaign planned to generate greater uptake from Chinese mobile subscribers

•SMA has the ability to reach ALL mobile subscribers in China via its existing partnerships


Revenue profile

Quarterly revenue FY 2013 ‐ FY 2015 Q1 Annual revenue FY 2012 – FY 2014 + Q1FY15

• FY2015 Q1 revenue of $1 million*

• Revenue well balanced between China and Australian operations

• Overhead cost base continues to reduce

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

FY2012 FY2013 FY2014 Q1 FY15 $0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

Q1 FY13 Q2 FY13 Q3 FY13 Q4 FY13 Q1 FY14 Q2 FY14 Q3 FY14 Q4 FY14 Q1 FY15

Quarterly Revenue

*Includes revenue from a prior period


1. Mobile & online payments platform

Consumer makes purchase on mobile device or online

• Revenue derived from Chinese consumers making micro‐purchases through mobile devices and online

Consumer makes purchase on mobile device or online

• Revenue derived from Chinese consumers making micro‐purchases through mobile devices and online

Transaction processed through SMA’s payment platform

•SMA earns revenue from transaction:• Fee for use of payments platform• Purchase of online content

Transaction processed through SMA’s payment platform

•SMA earns revenue from transaction:• Fee for use of payments platform• Purchase of online content

Direct settlement to SMA’s bank account

• 24 hours with Union Pay and Alipay

• 80‐90 days with China Mobile, China Unicom, China Telecom (standard terms for China telcos)

Direct settlement to SMA’s bank account

• 24 hours with Union Pay and Alipay

• 80‐90 days with China Mobile, China Unicom, China Telecom (standard terms for China telcos)

Examples of micro payments using SMA platform Transaction value SmartTrans

Third party game or education App provider ¥18 ($3.27) ¥7.20 ($1.31)

Chinese consumer purchase of mobile app/content ¥6 ($1.09) ¥3.60 ($0.65)

Third party corporate using billing platform to bill its customers ¥100 ($18.18) ¥3.00 ($0.54)


1. Mobile & online payments platform – China Market

PAYMENTS DISTRIBUTION

Brand sites

Celebrity Endorsement

Influencer Outreach

Blogger Reviews

WeChatTargeted Media Ads

Social Media Ads

Email Direct Marketing

Uprising Social Media

UGC

Mobile Marketing

China Forums

Baidu

RenRen

Kaixin

Weibo

Youku

Product Review sites

Tencent

Qihoo 360


Smartphone use and export growing rapidly in China

Source: www.theguardian.com/technology/2014/jan/13/smartphone‐explosion‐2014‐india‐us‐china‐firefoxos‐android

Shipments of smartphones in China from 2010 to 2015

721015210

25857

2010 2012 2014

Source: Publically available data of iResearch

3550

1125020153

40000

3000020000

10000

2011 2013 2015Shipments of smartphones by (10,000)Growth rate

103.1%56.0% 35.2% 32.5% 28.3%


Mobile payments growing rapidly in China

The turnover of Chinese mobile payment industry rocketed 317.56% year‐over‐year to 9.64 trillion yuan ($1.59 trillion) in 2013, while the number of orders hiked 212.86% year‐on‐year to 1.67 billion, according to the bank‐level data released by Chinese central bank‐People’s Bank of China.Source: http://technode.com/2014/02/17/chinas‐mobile‐payment‐turnover‐soared‐317‐yoy‐to‐1‐59‐trillion‐dollars‐in‐2013‐pboc/


2. China’s Mobile Game App Market

• SMA markets mobile game apps to customers through social media platforms and distribution partners in China

• SMA licences and sells mobile game apps developed by China’s mobile game developers

• SMA can market to a large number of mobile game users in China via existing billing agreements

• SMA’s embedded billing platform in game apps also provides additional revenue streams

Mobile subscriber purchases an App for which SMA receives a royalty

•SMA also processes payment for third party App sellers through its existing mobile payments platform – another source of revenue

Mobile subscriber purchases an App for which SMA receives a royalty

•SMA also processes payment for third party App sellers through its existing mobile payments platform – another source of revenue


SmartTrans Mobile Game App Revenue

Third‐party Application Billing

SMARTTRANS

¥7.20 ($1.31)

¥27.20 ($4.95)

¥39.20 ($7.13)

¥79.20 ($14.40)


SmartTrans Mobile Game App Revenue

SmartTrans In‐Application Billing

SMARTTRANS

¥3.60 ($0.65)

¥18.00 ($3.27)

¥58.80 ($10.69)

¥172.80 ($31.42)


China’s Mobile Game App Market

• Mobile game Apps account for the majority of growth in China ‐ anticipated to reach US$7.4 billion by 2018*

• SMA has agreements with AliPay and UnionPay, who have a collective share of 80% of mobile game market*

• Through partnerships with leading Chinese game developers – revenue from game upgrades and repeat business

*Source: http://www.pocketgamer.biz/asia/data‐and‐research/58833/18‐key‐trends‐from‐the‐chinese‐mobile‐games‐market/


3. Logistics software business

Client Logistics Operation Centre

SMA distribution platform sends information to drivers

Delivery information sent to handheld devices

Driver information monitored through logistics platform

• SMA logistics software used by blue chip companies to optimise goods delivery and reduce logistics costs

• Electronic Proof‐of‐Delivery, bar code & signature record keeping, cash reconciliation systems

• Typically 3‐5 year contracts with circa 50% of contract value billed in first year – very high customer retention

• Strong recurring revenue streams with good margins

• Pursuing expansion in Australia and China + integration with billings platform


Logistics sector market dynamics support growth prospects

• Annual revenues of China’s logistics industry is A$533 billion in 2014

• By 2020 China’s e‐commerce sector will be larger than the US, Britain, Japan, Germany and France combined

• $22 billion earmarked by US funds Carlyle and Blackstone to invest in warehousing and logistics in China

Value of e‐commerce transactions in the US and China, 2009‐2015

Forecast

2010 2012 2014

Source: KPMG analysis of US and Chinese e‐commerce data from Statista Bain & Company

600

500

400

300

2011 2013 2015

China USA

2009

200

100

US$

Billions

Parts of the value chain carried out in China

Procurement

Transport and logistics

Manufacturing / assembly

Marketing / sales

Design

Research and development

After‐sales services

76%

60%

57%

54%

49%

15%

13%

Source: Logistics in China: An All‐inclusive Market PriceWaterhouseCoopers


Financial Summary ‐ FY 2014/2013 comparison

30 Jun 2014 ($) 30 Jun 2013 ($) Difference

Revenue – Australia 1,266,380 982,336 284,044

Revenue – Asia 927,989 87,574 840,415

Employee salaries and benefits expense (1,578,289) (1,347,204) *231,085

Depreciation expense (7,623) (8,735) (1,112)

Material & installation costs – Australia (300,072) (190,793) *109,279

Material & installation costs – Asia (886,712) (111,922) *744,790

Other Expenses (1,157,600) (1,254,483) (96,883)

Loss before income tax ‐1,735,927 ‐1,843,227 107,300

* These figures represent the expected increase of cost of sales in line with increase revenue


Financial Summary – Balance Sheet

30 June 2014$

30 June 2013$

CURRENT ASSETS Cash and cash equivalents Trade and other receivables Intangible asset Other current assets

813,913230,801122,74219,902

2,410,232104,244

‐28,613

TOTAL CURRENT ASSETS 1,187,358 2,543,089

NON‐CURRENT ASSETSTrade and other receivables Property, plant and equipmentExploration, evaluation and development costs

13,79621,463

‐

29,47421,356

2,086,640

TOTAL NON‐CURRENT ASSETS 35,259 2,137,470

TOTAL ASSETS 1,222,617 4,680,559

CURRENT LIABILITIES Trade and other payables Provisions Other borrowings

613,155126,056700,000

422,032302,859

‐

TOTAL CURRENT LIABILITIES 1,439,211 724,891

NET ASSETS (216,594) 3,955,668

EQUITY Issued capital Reserves Accumulated losses

64,927,987586,229

(65,730,810)

64,805,669504,530

(61,354,531)

TOTAL EQUITY (216,594) 3,955,668


In Summary

3. Growth in logistics business in Australia and China will strengthen recurring revenue base

1. Continuing uptake by third parties of SMA’s mobile payments platform is a key growth driver

2. Marketing and sales of Mobile Game Apps in China market represents a significant opportunity for SMA

Three businesses now well established and ready to deliver strong revenue growth


Appendix: China Mobile & Online Billings Platform Agreements

• Direct‐to‐phone billing and In Application billing with China Mobile

• China Mobile has 784 million customers*

• Agreement with China Mobile – retains 30% as a fee

• Over 1 billion UnionPay account holders in China*

• Annually auto renewing agreement to utilise UnionPay in its platform

• UnionPay charges SMA 0.65% of transaction fee to access its platform

• Annually auto renewing agreement in place with Alipay

• Circa 600 million subscribers*

• AliPay charges SMA 1% of transaction fee to access its platform

• Agreements in place with all China’s leading payments providers – Alipay, UnionPay, China Mobile, China Unicom and China Telecom

• High Barriers to Entry: SMA has the agreements, licences and registrations – very hard to secure

• Direct‐to‐phone billing and In Application billing with China Unicom

• China Unicom has 285 million customers*

• Agreement with China Unicom ‐ retains 30% as a fee

• Direct‐to‐phone billing and In Application billing with China Telecom

• China Telecom has 190 million customers*

• Agreement with China Telecom ‐ retains 30% as a fee* Source: www.chinamobileltd.com, www.chinaunicom.com, www.chinatelecom.com.cn, www.alipay.com, www.unionpay.com


This document does not, and does not purport to, address any or all issues which are or may be material or of interest to the Recipient in connection with its own due diligence review of the Company, the Business or otherwise. The Recipient may not, and by receiving this document the Recipient acknowledges that it is not entitled to and agrees not to, rely on any part of this document (whether as to a matter of fact, forecast, opinion or belief) for any purpose whatsoever.

Certain statements in this document relate to the future. These forward looking statements involve known and unknown risks, uncertainties, assumptions and other important factors that could cause the actual results, performance or achievements of the Company and the Business to be materially different from future results, performance or achievements expressed or implied by such statements. Such forward looking statements are based on numerous assumptions regarding present and future business strategies and the environment in which the Company will operate in the future. No representation, assurance or guarantee is given that the occurrence of the events expressed or implied in any forward looking statements in this document will actually occur. The forward looking statements in this document reflect views held only at the date of this document.

Past performance information given in this document is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance. By accepting this document, the Recipient agrees that it will make and rely solely upon its own due diligence investigations and enquiries and will not in any way rely upon any of the information in this document or use this document for any purpose other than as information to assist the Recipient and its advisers to undertake its own due diligence investigations and enquiries.

None of the statements, opinions, projections, forecasts or other forward‐looking information contained in this document have been independently verified and no commitment, representation or warranty, express or implied, is made in relation to their accuracy, reasonableness or completeness. Furthermore, where statements in this document are taken from or attributed to sources created by third parties, the Recipient should have regard to those sources and rely on its own enquiries.

SmartTrans has prepared this document based on information available to it at the time of preparation and subject to the qualifications in this document. To the maximum extent permitted by law, neither the Company nor any of its respective related bodies corporate or other affiliates, directors, officers, employees, representatives, agents, advisors or their respective advisors’ affiliates or partners, directors, officers, employees or contractors (each a Limited Party and together the Limited Parties) takes any responsibility for the contents of this document or any action taken by the Recipient or any other person on the basis of any information in the document. The Limited Parties disclaim any obligation or undertaking to disseminate after the date of this document any updates or revisions to any forward looking statements to reflect any change in expectations in relation to those statements or any change in events, conditions or circumstances on which any such statement is based. To the maximum extent permitted by law any and all liability in respect of this document and the information contained within it is expressly excluded including without limitation any direct, indirect or consequential liability, expenses, losses, damages or costs incurred by the Recipient or any other person as a result of their receipt or use of this document or arising from the information in this document being inaccurate or incomplete in any way for any reason, whether by negligence or otherwise. No Limited Party makes any representation or warranty, express or implied, as to the currency, accuracy, completeness, reliability, fairness or correctness of the information contained in this document or about SmartTrans generally or any opportunity to invest in SmartTrans in the future.

Disclaimer


Contact:

Bryan Carr Managing Director+61 412 111 968 +86 [email protected]

SmartTrans Holdings (ASX: SMA) - Australian Securities … · 2014-10-28 · SmartTrans Holdings...

Documents

Transcript of SmartTrans Holdings (ASX: SMA) - Australian Securities … · 2014-10-28 · SmartTrans Holdings...