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CODEIFAI LIMITED — Regulatory Filings 2021
Apr 26, 2021
64630_rns_2021-04-26_26a49302-91fc-4a7d-9cb3-d591539cfea6.pdf
Regulatory Filings
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ASX ANNOUNCEMENT
ASX:YPB | 27 April 2021
Solid Q1 cashflow improvement while monetising breakthrough tech
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34% rise in cash receipts in Q1 2021 over 2020 quarterly average
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36% reduction in net cash burn in Q1 2021 v Q4 2020
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First revenues for revolutionary authentication tech MotifMicro[TM] recorded and broad commercial release within sight
Product authentication and consumer engagement solutions provider YPB Group Limited (ASX: YPB) presents highlights of activities for the quarter ended 31 March 2021 (Q1 2021).
Q1 2021 saw across-the-board improvements in YPB’s cash use. Receipts from customers were up and cash costs were down.
At the same time as tightly managing cash, YPB’s world’s-first forensic smartphone readable product authentication technology, MotifMicro, secured its first customer – in the huge USA sneaker reseller market.
MotifMicro also saw major technical advances and a controlled pilot release to select customers and prospects is now imminent. This will be a major step towards broad commercial release in H2 2021 and interest is strong from a range of brands and channel partners. Feedback will lead to enhancements and features prior to full commercial release.
Sound financial improvement in Q1 2021
The combination of higher cash receipts and lower cash costs saw clear improvement in cash use in Q1 2021.
Cash receipts in Q1 2021 were up 25% on Q4 2020, and up nearly 3x from the COVID-19-effected nadir of Q3 2020. Averaging 2020’s quarterly cash receipts to help discern the operating trend, Q1 2021 receipts were up 34% on the 2020 quarterly average – a significant and clear trend improvement. The Q1 lift reflected some move toward normality but, more importantly, a broadening of the customer base, particularly in China. This trend improvement in receipts is expected to be sustained over the course of the year, although COVID-19 is still periodically inhibiting order flows and business development due to travel restrictions.
Cash costs in Q1 2021 were 25% lower than Q4 2020 but were flat on the quarterly average for 2020. This sound result was achieved while the cash R&D spend in Q1 2021 was 2.2x the 2020 quarterly average as MotifMicro’s development accelerated. The notable contributors to the lower Q1 cash costs were:
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Staff costs down 15%, and
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Admin and corporate costs down 41%.
Q2 costs are likely to rise somewhat as activity intensifies around MotifMicro but to then plateau for the rest of the year.
YPB Group Limited Suite 1, 295 Rokeby Road Subiaco, Western Australia 6008, AUSTRALIA
ypbsystems.com
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The higher revenues and lower costs resulted in net cash used in operations of $0.726m being 36% lower than the $1.140m of Q4 2021 and 13% below the quarterly average net cash use for 2020.
Key technical milestones in Q1 2021
i) MotifMicro in final development leg ahead of broad commercial release
MotifMicro enhancements during Q1 significantly advanced its brand and consumer appeal and now place it in the final development leg prior to widespread commercial release. The enhanced functionality achieved in Q1 2021 included:
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Brand logo recognition – driven by advanced object recognition technology. This allows brand logos to be used as the scan point for forensic product authentication, effectively turning the brand logo into a “trust seal” for the product. Brand owners see this as a clear enhancement of brand value.
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QR and GS1 (standard one-dimensional) barcode recognition – this maximises the breadth of the YPB offer at a range of technical complexities and price points and allows existing packaging marks to be used as the launch point for a user brand experience following smartphone scan.
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Enhanced security including obfuscation – allows the MM1 app to reside on the user’s smartphone greatly speeding the authentication process.
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Intuitive user guidance – intuitive screen prompts guiding the user through a successful authentication scan.
MotifMicro’s development leg will add more features following the release to select channel partners and brands on the iOS “TestFlight” platform. Commercial pilot trials as a precursor to full commercial agreement are expected to follow.
ii) Core tracer technology extended to time-sensitive disinfectant
Q1 2021 saw the development to commercial trial readiness of an ingenious extension of YPB’s legacy tracer technology.
YPB has invented, and lodged a patent application for, a novel “evaporating tracer” that can identify the presence of disinfectant on a surface for 5 hours after application. The disappearance of the tracer allows a user to confirm that a surface has been disinfected within a fixed time period and easily indicates the need to re-apply disinfectant after the elapse of that time.
YPB has early commercial interest in this product. PRNewswire reported on February 9[th] , 2021, the global antiseptics and disinfectants market is expected to grow by 20.8% CAGR from 2021 to 2028 to reach USD$105.4 billion.
iii) Connect re-architecting cuts costs and enhanced analytics lifts value to brands
The Q1 2021 completion of the re-architecting of the Connect platform resulted in greater efficiency of resource use reducing operational hosting costs by 40% but more importantly creating a vastly more scalable product.
Advanced analytics were also added to Connect in the quarter increasing the granularity of information from a consumer’s mobile scan anywhere in the world available to brand managers. These developments have been well received by customers.
YPB Group Limited Suite 1, 295 Rokeby Road Subiaco, Western Australia 6008, AUSTRALIA
ypbsystems.com
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New business momentum improved in Q1 2021
i) First commercial revenues for Motif Micro
The receipt of first revenues under an agreement based on MotifMicro development plan was a momentous milestone for YPB.
MotifMicro effectively signed its first commercial customer, channel partner WAPL, with a deal valued at A$1million over 5 years based on minimum order quantities specified in the contract. First cash revenues were received from WAPL in Q1 for delivery of product from YPB under a two-stage deal:
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YPB initially delivered to WAPL’s SLiiP brand tracer-protected, serialised QR codes utilising tracer and MotifMicro technology. The end customer is a retailer in the giant US sneaker reseller market (announced to ASX 4 March 2021); and
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Upon completion of SLiiP’s own consumer app, MotifMicro will be white-labelled into the SliiP app and achieve its first widespread commercial release into the highly relevant and active US sneaker reseller market.
ii) Further penetration of the Natural Wellness and Beauty segment
During Q1, prominent Australian natural wellness and beauty products manufacturer Phytologic signed a 3-year MSA for an integrated product authentication, track and trace, and consumer engagement solution.
iii) Extension of SKU coverage in Natural Wellness and Beauty
In Q1, key Australian clients, Nature One Dairy and Nature’s Care, extended YPB’s coverage of their products by 7 SKUs to 47 SKUs in total. This evidences client satisfaction with YPB’s solutions.
Corporate
As of 31 March 2021, the Company held $2.326m in cash and cash equivalents, up from $1.559m as at 31 December 2020.
During the quarter the Company raised $1.5m gross before fees, equally from the issue of new equity to external investors and the conversion of options by an entity associated with Chairman John Houston.
During the quarter the Company made payments of $52,000 to related parties and their associates. This comprises of payments related to the CEO/Chairman’s existing remuneration agreement of the Company.
YPB Group CEO John Houston said: “The financial improvement recorded in the quarter was pleasing but we remain determined to make the company self-funding as soon as possible.
While our commercial progress during Q1 was undoubtedly still impeded by COVID-19 lockdowns in all our geographies, we recorded clear improvement in sales and our pipeline is increasingly prospective.
Most significant, however, was the progress made that now sees MotifMicro entering its final development leg on schedule – this is tremendously important due to the size of the opportunity. It has led to engagement with new prospects who are potentially highly valuable, prestigious customers of YPB. I commend our team for their achievements and am excited that our breakthrough technology is making breakthrough commercial success for YPB increasingly tangible.”
This announcement has been authorised by the Board of YPB Group Limited.
YPB Group Limited Suite 1, 295 Rokeby Road Subiaco, Western Australia 6008, AUSTRALIA
ypbsystems.com
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Ends.
For further information please contact:
Investor enquiries [email protected]
About YPB Group
YPB Group Limited (ASX:YPB) is an Australia-based product authentication and consumer engagement solutions provider. YPB's proprietary smartphone enabled technology suite allows consumers to confirm product authenticity and, for brands, that triggers consumers’ engagement.
The combination of YPB’s smartphone authentication solutions and its SaaS Connect platform, creates ‘smart’ product packaging, opening cost-effective, digital and direct marketing channels between brands and their consumers. Connect gathers actionable data on consumer preferences. It can then host tailored marketing campaigns directly back to the scanning smartphone.
YPB is currently focused on the rapidly growing Australian, South East Asian, and Chinese markets. Its focus is dairy, cannabis, alcohol and cosmetics where the viral growth of fake products, particularly in Asia, affects brand value and endangers consumers. To learn more please visit: ypbsystems.com
YPB Group Limited Suite 1, 295 Rokeby Road Subiaco, Western Australia 6008, AUSTRALIA
ypbsystems.com