CODEIFAI LIMITED — Interim / Quarterly Report 2016

Jul 28, 2016

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ASX: YPB

ASX/MEDIA ANNOUNCEMENT 29[th] July 2016

YPB provides review of Q2 2016 activities

YPB Group Limited (ASX:YPB) is pleased to provide a summary of activities for the quarter ended 30 June 2016.

The quarter saw further progress in the commercialisation of YPB's unique suite of technologies with key achievements including:

• Signing of a binding MOU with Orora Ltd, a global packaging solution provider to the food and beverage industries, to provide YPB’s full suite of technologies to Orora's customers. The MOU will advance to a supply agreement which is currently in final documentation stage.

• Through the Affymx joint venture focussing on Mexican Vital Government Documents, YPB has now secured four contracts for the supply of vital records in Mexico. The most recent order, for 395,000 vital record documents, was placed by one of Mexico's most populous states and represents a key milestone for YPB as it aggressively pursues the vital record business for Mexico’s 120 million citizens.

• A new customer in Southeast Asia secured for the VariSec ePassport technology, with an existing customer placing a 14 million unit re-order. YPB Varisec is now supplied to 18 million of the 125 million e-passorts issued annually.

• Launch of YPB in India after a Joint Venture with cricket legend Sachin Tendulkar’s team was signed as part of a ten year agreement.

• First delivery of security labels with anti-counterfeit technology together with consumer engagement functionality to Comtech Solutions Ltd, a New Zealand based security solution provider to the banking, finance, supply chain and distribution industries. This first delivery is part of a supply contract that marks the first signed in New Zealand for the supply of YPB’s integrated solution of anti-counterfeit and product tracking targeting the Chinese market.

• Entering into a three year supply agreement to provide Universal Pharmaceuticals Ltd with anticounterfeit and consumer engagement technologies.

FINANCIAL SUMMARY

YPB achieved cash receipts of $0.734m for the second quarter. Year to date cash receipts were $1.5m, representing a significant increase of $1.3m on the prior comparable period in 2015.

On a quarter on quarter basis Q2 2016 cash receipts were largely in line with Q1 2016 as expected. From the stable cash receipt position in the first half of 2016, solid growth in cash receipts and revenues is expected from new relationships established in the first half, commencing to toll revenues in Q3 and Q4 2016.

The company continues to manage its operating costs closely with operating cash outflow for the quarter closing at $2.3m, compared to $2.2m for Q1 2016.

Q2 2016 saw YPB complete an oversubscribed capital raising which resulted in a cash inflow of $4.54m.

During the period the company also provided earnings guidance for the first time. The guidance can be summarised:

1. Profit break even by the end of the March Quarter 2017

2. A$5m pre-tax profit projected for the year to December 2017

YPB Executive Chairman John Houston said: “The June quarter 2016 was undoubtedly the most significant in the commercial development of YPB with numerous customer wins and new channels to market established. We have set the foundation to achieve our 2017 goals and the team is committed to the execution of our business plan and delivering subsequent shareholder value.”

For further information please contact;

Mr. John Houston Executive Chairman YPB Group Limited T: +61 458 701 088 E: john.houston@ypbsystems.com W: www.ypbsystems.com

Mr. Robert Whitton Company Secretary YPB Group Limited T: +61 457 666 309 E: rob.whitton@ypbsystems.com

Media and Investor Enquiries

Matthew Wright NWR Communications +61 451 896 420 matt@nwrcommunications.com.au

About YPB

YPB Group (ASX: YPB) is a pioneer in advanced brand protection solutions. Listed on the Australian Securities Exchange, we are expanding our global footprint with an established presence in China, USA, Australia and South East Asia.

YPB’s patented anti-counterfeit technology combined with its security packaging solutions, consulting and forensic services enables businesses to protect their high value brands from the risks of counterfeit and product diversion.

YPB’s full range of services will give businesses the ability to cost effectively protect their brands, easily detect counterfeits and give them the opportunity to connect with their consumers about the authenticity of their brand.

PROTECT

Security print packaging and labeling

YPB offers a wide range of intelligent security packaging and labeling solutions that can be included into almost any material and is a cost effective brand protection solution for companies wanting to protect the integrity and value of their brands in high-risk markets.

IP solutions & forensic services

YPB’s IP solution specialists will work with quality brands and Governments, to develop personalised brand protection strategies and solutions that will deliver real protection and safety for brands, products and consumers.

DETECT

Scanner and tracer protection solutions

YPB’s patent protected state-of-the art tracer technology is invisible, cannot be copied or destroyed. Brand owners that include YPB’s tracers in their packaging can use YPB’s scanners to verify their product’s authenticity. If a counterfeit is detected YPB’s forensic services will consult with a brand owner to develop strategic solutions to protect the brand counterfeiting and product diversion.

CONNECT

Smartphone applications to detect and connect

YPB’s sophisticated, user friendly and powerful smartphone applications allow brand owners and consumers to identify and report suspected counterfeit or divergent products and allows brands to connect and engage with consumers via QR codes, near field communication, track and trace, product scanning and consumer engagement. Giving brand owners valuable and actionable “big data” about their consumers and products through a powerful data analytics capability.

Beijing

Los Angeles

Sydney

Melbourne

Bangkok

Appendix 4C Quarterly report for entities admitted on the basis of commitments

Rule 4.7B

Appendix 4C

Quarterly report for entities admitted on the basis of commitments

Introduced 31/3/2000. Amended 30/9/2001, 24/10/2005.

Name of entity
YPB Group Limited
ABN 68 108 649 421	Quarter ended (“current quarter”)
68 108 649 421	June 2016

Consolidated statement of cash flows

Cash flows related to operating activities 1.1 Receipts from customers 1.2 Payments for (a) staff costs (b) advertising and marketing (c) research and development (d) leased assets (e) other working capital 1.3 Dividends received 1.4 Interest and other items of a similar nature received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Other (provide details if material) Net operating cash flows	Current quarter $A’000	Year to date $A’000
	734 (1,411) (25) (170) (109) (1,221) 8 (53) (23)	1,510 (3,003) (101) (396) (109) (2,198) 17 (105) (57)
	(2,270)	(4,442)

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Appendix 4C Quarterly report for entities admitted on the basis of commitments

	Current quarter $A’000	Year to date $A’000
1.8 Net operating cash flows (carried forward)	(2,270)	(4,442)
Cash flows related to investing activities 1.9 Payment for acquisition of: (a) businesses (item 5) (b) equity investments (c) intellectual property (d) physical non-current assets (e) other non-current assets 1.10 Proceeds from disposal of: (a) businesses (item 5) (b) equity investments (c) intellectual property (d) physical non-current assets (e) other non-current assets 1.11 Loans to other entities 1.12 Loans repaid by other entities 1.13 Other (provide details if material) Net investing cash flows 1.14 Total operating and investing cash flows	(135) - - (57) - - - - - - - -	(135) - - (62) - - - - - - - -
	(192)	(197)
	(2,462)	(4,639)
Cash flows related to financing activities 1.15 Proceeds from issues of shares, options, etc. 1.16 Proceeds from sale of forfeited shares 1.17 Proceeds from borrowings 1.18 Repayment of borrowings 1.19 Dividends paid 1.20 Other - Capital raising costs $ - Net financing cash flows	4,681 - - - - (350)	5,597 - - - - (672)
	4,331	4,925
Net increase (decrease) in cash held 1.21 Cash at beginning of quarter/year to date 1.22 Exchange rate adjustments to item 1.2 1.23 Cash at end ofquarter	1,869 1,275 20	286 2,901 (24)
	3,164	3,164

• See chapter 19 for defined terms.

Appendix 4C Page 2

24/10/2005

Appendix 4C Quarterly report for entities admitted on the basis of commitments

Payments to directors of the entity and associates of the directors

Payments to related entities of the entity and associates of the related entities

1.24 Aggregate amount of payments to the parties included in item 1.2 1.25 Aggregate amount of loans to the parties included in item 1.11	Current quarter $A'000
	271
	nil-

• 1.26 Explanation necessary for an understanding of the transactions N/A

Non-cash financing and investing activities

• 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows

N/A

• 2.2 Details of outlays made by other entities to establish or increase their share in businesses in which the reporting entity has an interest

N/A

Financing facilities available

Add notes as necessary for an understanding of the position. (See AASB 1026 paragraph 12.2).

3.1 Loan facilities 3.2 Credit standby arrangements	Amount available $A’000	Amount used $A’000
	-	-
	-	-

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Appendix 4C Quarterly report for entities admitted on the basis of commitments

Reconciliation of cash

Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.	Current quarter $A’000	Previous quarter $A’000
4.1 Cash on hand and at bank 4.2 Deposits at call 4.3 Bank overdraft 4.4 Other (provide details)	3,164	1,275
	-	-
	-	-
Total: cash at end of quarter(item 1.23)	3,164	1,275

Acquisitions and disposals of business entities

5.1 Name of entity 5.2 Place of incorporation or registration 5.3 Consideration for acquisition 5.4 Total net assets 5.5 Nature of business	Acquisitions (Item 1.9(a))	Disposals (Item 1.10(a))
	YPB Group Co., Ltd (FKA) Intellectual Product Protection Co., Ltd	-
	Thailand	-
	Balance of purchase consideration of $135K	-
	Approx $800K	-
	Anti-counterfeiting consultancy and design	-

Compliance statement

• 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act (except to the extent that information is not required because of note 2) or other standards acceptable to ASX.

• 2 This statement does give a true and fair view of the matters disclosed.

Sign here: Robert Whitton Date: 29 July 2016 (Director/Company Secretary)

• See chapter 19 for defined terms.

Appendix 4C Page 4

24/10/2005

Appendix 4C Quarterly report for entities admitted on the basis of commitments

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Appendix 4C Quarterly report for entities admitted on the basis of commitments

Notes

1. The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

2. The definitions in, and provisions of, AASB 1026: Statement of Cash Flows apply to this report except for the paragraphs of the Standard set out below.

3. 6.2 - reconciliation of cash flows arising from operating activities to operating profit or loss

4. 9.2 - itemised disclosure relating to acquisitions

5. • 9.4 - itemised disclosure relating to disposals • 12.1(a) - policy for classification of cash items • 12.3 - disclosure of restrictions on use of cash • 13.1 - comparative information

6. Accounting Standards . ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

• See chapter 19 for defined terms.

Appendix 4C Page 6

24/10/2005