ORCODA LIMITED — AGM Information 2016

Nov 23, 2016

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SmartTrans Holdings Limited (ASX:SMA)
Annual General Meeting 2016
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24 November 2016

Integration / Innovation / Inspiration / Information

SmartTrans Board

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Hon. Mark Vaile AO
Non-Executive
Chairman
Bryan Carr Andrew Forsyth Yui (Ian) Tang Ian Hawkins Greg Simpson
CEO & Non-Executive Director Non-Executive Director Executive Director Non-Executive
Managing Director Director
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Integrity / Innovation / Inspiration / Information

Two well defined operating businesses

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SmartPay: Mobile/internet-based billing systems and e-Commerce platforms in China

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Mobile and internet software solutions in Australia - exploring growth opportunities in China

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Key revenue drivers in China

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Direct Carrier Billing:

• § Focus to date has been on scaling up platform and revenue base

• § Forward strategy to secure higher margin, third party billing agreements – underway

• § New initiatives such as PressPlay agreement present compelling opportunities

• § Revenue growth through transaction fees + share of content/product sales

• § Subscription billing a key focus

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E-commerce:

• § Revenue earned from share of product sales in China using WeChat and Alipay platforms

• § Rolling out e-commerce through SMA’s proprietary marketing platform, covering multiple websites/apps in China

• § Hosting, digital brand marketing and customer acquisition services

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Lotteries:

• § Established partnership with lotteries provider

• § Pilot program in Hainan province has been a success

• § Pursuing broader rollout with General Administration of Sport plan to accelerate innovation

• § Significant focus on sports betting

• § SMA appointed advisor to government sponsored Lotteries Research Think Tank

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SmartPay Payment Partnerships

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• § SmartPay facilitates e-commerce, digital marketing and customer acquisition

• § The ultimate gateway to transacting in China – relationships not easily replicated

• § Direct carrier billing via China Mobile, China Telecom & China Unicom allows reach to +1.23 billion customers

• § Credit or debit card transaction via UnionPay, thus catering to all bank account holders in China

• § AliPay – Chinese equivalent to PayPal, allows consumers to pay using a platform which handles over 50% of China’s online transactions

• § WeChat Pay – popular way to pay via mobile. Chinese equivalent of Facebook & Twitter with +700 million

• users

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Large addressable market

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China – the world’s largest smart device market underpins SMA’s growth

Active Unique internet Users mobile users

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668M

675M

Penetration: 49%

Penetration: 49%

Number of Smartphone Users in China 2013 – 2019* (millions)

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800
700
600
500
400
300
200
100
0
2013 2014 2015 2016 2017 2018 2019
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Source: Source Deutsche Bank iResearch

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Integration / Innovation / Inspiration / Information

Direct Carrier Billing – Subscription Billing

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§ SmartTrans provides monthly recurring subscription billing in the China smartphone market

• § Distribution and billing for a range of products with payments billed and collected by telcos

• § Subscription-based recurring billing providing long-term revenue streams from up-front investment

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Anticipated Cumulative Gross Profit of Subscription Product
$120,000
$100,000
(ROI) 93%
$80,000
$60,000 Customer Value (CV)

$40,000
$3.37
$20,000
$-
$(20,000)
$(40,000)
$(60,000)
Customer Acquisition Cost
$(80,000)
(CAC) $1.75
$(100,000)
Mth 1 Mth 2 Mth 3 Mth 4 Mth 5 Mth 6 Mth 7 Mth 8 Mth 9 Mth 10 Mth 11 Mth 12 Mth 13 Mth 14 Mth 15 Mth 16 Mth 17 Mth 18 Mth 19 Mth 20 Mth 21 Mth 22 Mth 23 Mth 24 Mth 25 Mth 26 Mth 27 Mth 28 Mth 29 Mth 30 Mth 31 Mth 32 Mth 33 Mth 34 Mth 35 Mth 36
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Expected future return from one of the company’s subscription products based on the historical performance of its subscription products. It is also expected that revenue will continue beyond the period presented in the graph. Integration / Innovation / Inspiration / Information*

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Direct Carrier Billing – 3[rd] Party App Billing

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• § SmartTrans provides in-App billing to third parties in the largest smartphone market in the world

• Distribution and billing for well-know foreign brands

• The reduction in revenue and the increase in gross profit for Q1 2017 arises directly from the decision to focus upon lower volume but higher margin products.

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Gross
REVENUE
Profit
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Integration / Innovation / Inspiration / Information

SmartTrans e-Commerce Connecting Australian businesses to China

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Merchant
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• § SmartTrans is targeting 40 merchant companies with each company targeting $1m per annum in sales in China

• § SmartTrans generates revenue from:

• § Marketing services – brand promotion, customer acquisition

• § Merchant fee on transaction at purchase

• § Margin on products

• § Fee on cross-border payment settlement transaction

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Integration / Innovation / Inspiration / Information

SmartTrans e-Commerce

Connecting Australian businesses to China

• What SmartTrans offers to companies seeking to sell into China: § Online presence – hosted mobile and website platforms

• § Online marketing and customer acquisition § Addresses tax and regulatory requirements

• § Multi-faceted payment processing – all the payment methods people are accustomed to using in China with focus on mobile

• § Ability to settle payment back to Australia in AUD or other countries in preferred currency

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e-Commerce

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• § Targeting growth in the large and rapidly growing e-Commerce market in China where 76% of people have used their smartphone to make purchases within the last three months

• § China’s online shoppers are expected to increase to 587 million in 2018 generating RMB5.5 trillion in sales (up from 413 million shoppers in 2015)

• § Focusing on high-growth markets for products sourced outside China for which it bills consumers in China

• § Developing strategic relationships with strong online partners such as Shanghai-listed Dodoca for WeChat marketing

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RMBtrn Mobile Phone Gross Shopping Value
¥6.0 5.5
¥5.0 4.5
¥4.0
3.4
¥3.0
2.1
¥2.0
0.9
¥1.0
0.3
0.1
¥0.0
2012 2013 2014 2015 2016e 2017e 2018e
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Source: Source Deutsche Bank iResearch

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e-Commerce

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SmartTrans, with a focus on high-growth product sectors, is launching the sale of third-party products in the following markets:

§ Vitamins and supplements market in China - a $20 billion market growing at 20% per annum

• § Personal hygiene market - growing at 41% per annum

§ Personal skin care market - growing at 29% per annum

§ Australian wine exports to China which grew by 64% last year to A$397 million

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Sources: www.masterintelligence.com/content/intelligence/en/research/press-release/2016/digital-wallets-surge-popularity.html, www.scmp.com/business/companies/article/1994999/chinasonline-retail-sales-double-three-years-analysts-say

Euromonitor International Country Reports 2015, Nielsen 2015 online shopper study, www.wineaustralia.com/en/Market%20Development/Market%20Programs/China.aspx

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Integration / Innovation / Inspiration / Information

Lotteries Services

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• § In 2016, SmartTrans commenced working with a online and offline lottery provider in China, providing its technical systems to service the world’s largest lottery market (by sales volume)*

• § Market which has grown at a 30% CAGR since launch in 1987*

• § SmartTrans’ lotteries service initially launched in Hainan Province to provide consumers with access to lottery and associated products

• § SmartTrans appointed advisor to government sponsored Lotteries Research Think Tank

• § The General Administration of Sport released the 13th Five-year Plan for China’s sports development on 5 May 2016, restating the objective of policymakers to accelerate innovation in the sports lottery segment

• § Through strategic partnerships SmartTrans is positioning to become a leading service provider to this sector.

*Source: www.agtech.com/html/industry_lottery_overview_char.php

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Integration / Innovation / Inspiration / Information

Positioning for higher margin revenue

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• § At the nexus of Technology, Consumption, Mobile and Finance… The Gateway to China

• § High Barriers to entry – Privileged and trusted billing access to China Mobile, China Telecom and China Unicom customer databases

• § Diverse applications of its billing services by third parties

• Virtual products - Games and Apps

• Physical and Services - e-Commerce

• § Annuity-style income streams through subscription billing generating high double digit ROIs – a focus for SMA moving forward

• § Focus now is to reduce emphasis on lower margin in-App billing to pursue higher-margin products and e-Commerce revenue – will result in a change in revenue profile

• § Diversified exposure to China’s large and growing e-commerce industry. No single product risk exposure which offers a broader, thematic exposure to Chinese consumption and crossborder trade

• § Exposure to the largest lottery market in the world growing at 30% CAGR since 1987[*]

Source: www.agtech.com/html/industry_lottery_overview_char.php

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Integration / Innovation / Inspiration / Information

Compelling Investment Case

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Highly scalable:

• § A simple business – we ‘clip the ticket’ whether it be a mobile-based app, the crossborder sale of goods and services or the buying of a lottery product

• § Servicing the largest mobile phone market in the world – China

• § Operating in the largest e-commerce market in the world

• § Servicing the largest lottery market in the world

• § Valuable cross-border payment settlement facility

• Source: www.agtech.com/html/industry_lottery_overview_char.php, iResearch)

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Integration / Innovation / Inspiration / Information

Growing, diversified customer base across China and Australia

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Customers base continues to grow as more companies seek to transact in China

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Disclaimer

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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.

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Integration / Innovation / Inspiration / Information