smarttrans investor presentation - october 2014
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1"SmartTrans"Holdings"Limited"–"October"2014"" 1"
SmartTrans)Holdings)Limited)(ASX:)SMA)))Investor"presenta=on""October""2014""
2"SmartTrans"Holdings"Limited"–"October"2014""
Corporate)overview))
Dr)Geoff)Raby)Non?Execu=ve"Chairman"
Yui)(Ian))Tang)Non?Execu=ve"Director""
Ian)Hawkins)Execu=ve"Director""
Andrew)Forsyth)Non?Execu=ve"Director"
Bryan)Carr)Managing"Director"
Board)of)Directors))
Major)Shareholders))))))))))))))))))))))))))))))))))))))))))))))))))%)Ownership)
Directors,"management,"related"ownership""""""""""""""""""""""""36.31"
Top"20""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""60.06"
Dymocks"Securi=es"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"
SmartTrans"Holdings"Limited"–"October"2014"" 3"
SmartTrans’)has)three)established)businesses))
China)mobile)&)online)payments)plaPorm))• Allows)companies!to)transact)and)process)payments)in)China)))
• SMA)also)sells)its)own)mobile)content)through)payments)plaPorm))
• Mobile)payments)preferred)payment)method)for)Chinese)consumers))))
)
MarkeQng)&)Sales)of))Mobile)Phone)ApplicaQons)(Apps))• SMA)sells)its)own)and)third)party)Apps)directly)to)mobile)subscribers))
• Receives)a)royalty,)and)also)revenue)through)exisQng)billing)plaPorms)
• A)large)(over)US$2.9)billion*))and)growing)market)in)China)
)
Mobile)&)online)LogisQcs)so[ware)provider)in)Australia)• LogisQcs)so[ware)to)opQmise)goods)delivery)
• Recurring)revenue)from)long)term)contracts)–)typically)3^5)years))
• Australian)focus)–)opportunity)to)integrate)with)mobile)payments)plaPorm)in)China))
1.))
2.))
3.))
)�
*Source:"h^p://www.pocketgamer.biz/asia/data?and?research/58833/18?key?trends?from?the?chinese?mobile?games?market/"
4"SmartTrans"Holdings"Limited"–"October"2014""
Three)immediate)growth)drivers)
)Mobile)&)Online)LogisQcs)Business))• Pursuing)new)long^term)contracts)in)Australia)&)expansion)opportuniQes)in)China)
• Integrate)with)SMA)payments)plaPorm))
)Payments)PlaPorm)• Third)parQes)to)licence)SMA’s)payment)plaPorm)in)China)
• Increased)revenue)from)SMA^owned)and)licensed)content)purchased)via)payments)plaPorm)1.))
2.))
3.))
))MarkeQng)&)Sales)of)Mobile)Game)Apps)• MarkeQng)campaign)planned)to)generate)greater)uptake)from)Chinese)mobile)subscribers)
• SMA)has)the)ability)to)reach)ALL)mobile)subscribers)in)China)via)its)exisQng)partnerships)
5"SmartTrans"Holdings"Limited"–"October"2014""
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)operaQons))
• Overhead)cost)base)conQnues)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"
6"SmartTrans"Holdings"Limited"–"October"2014""
1.)Mobile)&)online)payments)plaPorm))
Consumer)makes)purchase)on)mobile)device)or)online)))• Revenue"derived"from"Chinese"
consumers"making"micro?purchases"through"mobile"devices"and"online"
)
TransacQon)processed)through)SMA’s)payment)plaPorm)
• SMA"earns"revenue"from"transac=on:"• Fee"for"use"of"payments"placorm"• Purchase"of"online"content""
)Direct)seflement)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)plaPorm)� TransacQon)value)� SmartTrans�
Third"party"game"or"educa=on"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"placorm"to"bill"its"customers"� ¥100"($18.18)"� ¥3.00)($0.54))
)�
7"SmartTrans"Holdings"Limited"–"October"2014""
1.)Mobile)&)online)payments)plaPorm)–)China)Market))
PAYMENTS) DISTRIBUTION)
Brand"sites"
Celebrity"Endorsement"
Influencer"Outreach"
Blogger"Reviews"
WeChat"Targeted"Media"Ads"
Social"Media"Ads"
Email"Direct"Marke=ng"
Uprising"Social"Media"
UGC"
Mobile"Marke=ng"
China"Forums"
Baidu"
RenRen"
Kaixin"
Weibo"
Youku"
Product"Review"sites"
Tencent"
Qihoo"360"
8"SmartTrans"Holdings"Limited"–"October"2014""
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))
7210)15210)
25857)
2010" 2012" 2014"
Source:"Publically)available)data)of)iResearch)
3550)
11250)20153)
40000)
30000)20000)
10000)
2011" 2013" 2015"Shipments"of"smartphones"by"(10,000)"Growth"rate"
103.1%"56.0%"
35.2%" 32.5%" 28.3%"
9"SmartTrans"Holdings"Limited"–"October"2014""
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:"h^p://technode.com/2014/02/17/chinas?mobile?payment?turnover?soared?317?yoy?to?1?59?trillion?dollars?in?2013?pboc/�
10"SmartTrans"Holdings"Limited"–"October"2014""
2.)China’s)Mobile)Game)App)Market)
• SMA"markets"mobile"game"apps"to"customers"through"social"media"placorms"and"distribu=on"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"exis=ng"billing"agreements"
• SMA’s"embedded"billing"placorm"in"game"apps"also"provides"addi=onal"revenue"streams"
)Mobile)subscriber)purchases)an)App)for)
which)SMA)receives)a)royalty))))
• SMA""also"processes"payment"for"third"party"App"sellers"through"its"exis=ng"mobile"payments"placorm"–"another"source"of"revenue"
�
11"SmartTrans"Holdings"Limited"–"October"2014""
SmartTrans)Mobile)Game)App)Revenue))
Third?party"Applica=on"Billing"
SMARTTRANS)
¥7.20)($1.31))
¥27.20)($4.95))
¥39.20)($7.13))
¥79.20)($14.40))
12"SmartTrans"Holdings"Limited"–"October"2014""
SmartTrans)Mobile)Game)App)Revenue))
SmartTrans"In?Applica=on"Billing"
SMARTTRANS)
¥3.60)($0.65))
¥18.00)($3.27))
¥58.80)($10.69))
¥172.80)($31.42))
13"SmartTrans"Holdings"Limited"–"October"2014""
China’s)Mobile)Game)App)Market))
• Mobile"game"Apps"account"for"the"majority"of"growth"in"China"?""an=cipated"to"reach"US$7.4"billion"by"2018*"
• SMA"has"agreements"with"AliPay"and"UnionPay,"who"have"a"collec=ve"share"of"80%"of"mobile"game"market*"""
• Through"partnerships"with"leading"Chinese"game"developers"–"revenue"from"game"upgrades"and"repeat"business""
"*Source:"h^p://www.pocketgamer.biz/asia/data?and?research/58833/18?key?trends?from?the?chinese?mobile?games?market/"
"
14"SmartTrans"Holdings"Limited"–"October"2014""
3.)LogisQcs)so[ware)business")
Client)LogisQcs)OperaQon)Centre))
SMA)distribuQon)plaPorm)sends)informaQon)to)drivers)
Delivery)informaQon)sent)to)handheld)devices)
Driver)informaQon)monitored)through)logisQcs)plaPorm)
• SMA"logis=cs"sooware"used"by"blue"chip"companies"to"op=mise"goods"delivery"and"reduce"logis=cs"costs""
• Electronic"Proof?of?Delivery,"bar"code"&"signature"record"keeping,"cash"reconcilia=on"systems"
• Typically"3?5"year"contracts"with"circa"50%"of"contract"value"billed"in"first"year"–"very"high"customer"reten=on"
• Strong"recurring"revenue"streams"with"good"margins"
• Pursuing"expansion"in"Australia"and"China"+"integra=on"with"billings"placorm""
15"SmartTrans"Holdings"Limited"–"October"2014""
LogisQcs)sector)market)dynamics)support)growth)prospects))
• Annual"revenues"of"China’s"logis=cs"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"
• $22"billion"earmarked"by"US"funds"Carlyle"and"Blackstone"to"invest"in"warehousing"and"logis=cs"in"China""
Value)of)e^commerce)transacQons)in))the)US)and)China,)2009^2015)
Forecast)
2010" 2012" 2014"
Source:"KPMG)analysis)of)US)and)Chinese)e;commerce)data)from)Sta=sta)Bain)&)Company))
600)
500)
400)
300)
2011" 2013" 2015"
China" USA"
2009"
200)
100)
US$)Billions))
Parts)of)the)value)chain)carried)out)in)China)
Procurement"
Transport"and"logis=cs"
Manufacturing"/"assembly"
Marke=ng"/"sales""
Design""
Research"and"development"
Aoer?sales"services"
76%"
60%"
57%"
54%"
49%"
15%"
13%"
Source:"Logis=cs)in)China:)An)All;inclusive)Market)PriceWaterhouseCoopers))
16"SmartTrans"Holdings"Limited"–"October"2014""
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"
DepreciaQon)expense)) (7,623)� (8,735)" (1,112)�
Material)&)installaQon)costs)–)Australia)) (300,072)" (190,793)" *109,279"
Material)&)installaQon)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"�
17"SmartTrans"Holdings"Limited"–"October"2014""
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""
813,913"230,801"122,742"19,902"
2,410,232"104,244"
?"28,613"
TOTAL)CURRENT)ASSETS)) 1,187,358) 2,543,089)
NON^CURRENT)ASSETS)Trade"and"other"receivables""Property,"plant"and"equipment"Explora=on,"evalua=on"and"development"costs""
13,796"21,463"
?"
29,474"21,356"
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""
"613,155"126,056"700,000"
"422,032"302,859"
?"
TOTAL)CURRENT)LIABILITIES)) 1,439,211) 724,891)
NET)ASSETS)) (216,594)) 3,955,668)
EQUITY))Issued"capital""Reserves))Accumulated)losses""
"64,927,987"
586,229"(65,730,810)"
"64,805,669"
504,530"(61,354,531)"
TOTAL)EQUITY)) (216,594)) 3,955,668)
18"SmartTrans"Holdings"Limited"–"October"2014""
In)Summary)
3.)Growth)in)logisQcs)business)in)Australia)and)China)will)strengthen)recurring)revenue)base)))
1.)ConQnuing)uptake)by)third)parQes)of)SMA’s)mobile)payments)plaPorm)is)a)key)growth)driver))
2.)MarkeQng)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)))
19"SmartTrans"Holdings"Limited"–"October"2014""
Appendix:)China)Mobile)&)Online)Billings)PlaPorm)Agreements))
• Direct?to?phone"billing"and"In"Applica=on"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"u=lise"UnionPay"in"its"placorm"
• UnionPay"charges"SMA"0.65%"of"transac=on"fee""to"access"its"placorm""
• Annually"auto"renewing"agreement"in"place"with"Alipay""
• Circa"600"million"subscribers*""
• AliPay"charges"SMA"1%"of"transac=on"fee"to"access"its"placorm"""
• 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"registra=ons"–"very"hard"to"secure"
• Direct?to?phone"billing"and"In"Applica=on"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"Applica=on"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""
20"SmartTrans"Holdings"Limited"–"October"2014""
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"connec=on"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"en=tled"to"and"agrees"not"to,"rely"on"any"part"of"this"document"(whether"as"to"a"ma^er"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,"uncertain=es,"assump=ons"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"assump=ons"regarding"present"and"future"business"strategies"and"the"environment"in"which"the"Company"will"operate"in"the"future."No"representa=on,"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"informa=on"given"in"this"document"is"given"for"illustra=ve"purposes"only"and"should"not"be"relied"upon"as"(and"is"not)"an"indica=on"of"future"performance."By"accep=ng"this"document,"the"Recipient"agrees"that"it"will"make"and"rely"solely"upon"its"own"due"diligence"inves=ga=ons"and"enquiries"and"will"not"in"any"way"rely"upon"any"of"the"informa=on"in"this"document"or"use"this"document"for"any"purpose"other"than"as"informa=on"to"assist"the"Recipient"and"its"advisers"to"undertake"its"own"due"diligence"inves=ga=ons"and"enquiries."""None"of"the"statements,"opinions,"projec=ons,"forecasts"or"other"forward?looking"informa=on"contained"in"this"document"have"been"independently"verified"and"no"commitment,"representa=on"or"warranty,"express"or"implied,"is"made"in"rela=on"to"their"accuracy,"reasonableness"or"completeness."Furthermore,"where"statements"in"this"document"are"taken"from"or"a^ributed"to"sources"created"by"third"par=es,"the"Recipient"should"have"regard"to"those"sources"and"rely"on"its"own"enquiries."""SmartTrans"has"prepared"this"document"based"on"informa=on"available"to"it"at"the"=me"of"prepara=on"and"subject"to"the"qualifica=ons"in"this"document."To"the"maximum"extent"permi^ed"by"law,"neither"the"Company"nor"any"of"its"respec=ve"related"bodies"corporate"or"other"affiliates,"directors,"officers,"employees,"representa=ves,"agents,"advisors"or"their"respec=ve"advisors’"affiliates"or"partners,"directors,"officers,"employees"or"contractors"(each"a"Limited"Party"and"together"the"Limited"Par=es)"takes"any"responsibility"for"the"contents"of"this"document"or"any"ac=on"taken"by"the"Recipient"or"any"other"person"on"the"basis"of"any"informa=on"in"the"document."The"Limited"Par=es"disclaim"any"obliga=on"or"undertaking"to"disseminate"aoer"the"date"of"this"document"any"updates"or"revisions"to"any"forward"looking"statements"to"reflect"any"change"in"expecta=ons"in"rela=on"to"those"statements"or"any"change"in"events,"condi=ons"or"circumstances"on"which"any"such"statement"is"based."To"the"maximum"extent"permi^ed"by"law"any"and"all"liability"in"respect"of"this"document"and"the"informa=on"contained"within"it"is"expressly"excluded"including"without"limita=on"any"direct,"indirect"or"consequen=al"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"informa=on"in"this"document"being"inaccurate"or"incomplete"in"any"way"for"any"reason,"whether"by"negligence"or"otherwise."No"Limited"Party"makes"any"representa=on"or"warranty,"express"or"implied,"as"to"the"currency,"accuracy,"completeness,"reliability,"fairness"or"correctness"of"the"informa=on"contained"in"this"document"or"about"SmartTrans"generally"or"any"opportunity"to"invest"in"SmartTrans"in"the"future.�
Disclaimer))
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