ORCODA LIMITED — Interim / Quarterly Report 2017

Feb 27, 2017

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Appendix 4D

Rule 4.2A

1. Half yearly report

Name of entity

SmartTrans Holdings Ltd

ABN: 86 009 065 650

Report for the half-year ended	31 December 2016
Previous corresponding period
is the financial year ended	30 June 2016
and half year ended	31 December 2015

2. Results for announcement to the market

Revenues_(item 2.1)* down 58%to Loss after tax attributable to members (_item 2.2) up 158%to Net Loss for the period attributable to members up 158%to (item 2.3)	Revenues_(item 2.1)* down 58%to Loss after tax attributable to members (_item 2.2) up 158%to Net Loss for the period attributable to members up 158%to (item 2.3)	A$’000s 2,716 (1,666) (1,666)
Dividends(item 2.4) No dividends will be paid
Record date for determining entitlements to the dividend_(item 2.5)_	N/a
Brief explanation of any of the figures reported above necessary to enable the figures to be understood (item 2.6): As previously noted in the Annual Report and Quarterly Reports, the company has been transitioning the business from high-volume, low margin products to higher margin e- Commerce products and has been focused on building up its e-Commerce services and establishing relationships with key partners and brands seeking to sell online in China. The company moved its focus towards marketing products with higher gross margins and those products which are expected to provide higher lifetime customer value to the company. Whilst this has and will reduce gross revenue, it is expected to increase the overall return to the company.

Beijing Melbourne Sydney Room 101, Building 22, Level 1 G.05 Courtyard, 4 Gong Ti Bei Lu 10 Queens Road 55 Miller St Chaoyang District, MELBOURNE PYRMONT BEIJING, 100027 VIC 3004 NSW 2009 Ph: +86 (010) 6500 0910 Ph: (03) 9866 7333 Ph: (02) 9660 4564

3. Net tangible assets per security (item 3)

Net tangible asset backing per ordinary security

**(item 3) **
Current period	Previous corresponding period
0.18¢	0.15¢

4. Details of entities over which control has been gained or lost during the period: (item 4)

Control gained over entities

N/A

Name of entities (item 4.1)

Date(s) of gain of control (item 4.2)

N/A

Loss of control of entities

Name of entities (item 4.1)

N/A

Date(s) of loss of control (item 4.2)

N/A.

(item 4.3).

Contribution to consolidated profit (loss) from ordinary activities after tax by the controlled entities to the date(s) in the current period when control was lost

Profit (loss) from ordinary activities after tax of the controlled entities for the whole of the previous corresponding period (item 4.3)

N/A. N/A.

5. Dividends (item 5)

N/a Date of payment Total amount of dividend

Final dividend – N/a

Interim dividend – N/a

Amount per security

Beijing Melbourne Sydney Room 101, Building 22, Level 1 G.05 Courtyard, 4 Gong Ti Bei Lu 10 Queens Road 55 Miller St Chaoyang District, MELBOURNE PYRMONT BEIJING, 100027 VIC 3004 NSW 2009 Ph: +86 (010) 6500 0910 Ph: (03) 9866 7333 Ph: (02) 9660 4564

	Amount per security	Franked amount per security at % tax	Amount per security of foreign sourced dividend
Interim dividend: Current period Previous period	N/a	-	-
	N/a N/a

Interim dividend on all securities

Ordinary securities_(each class separately) Preference securities(each class separately) Other equity instruments(each class separately)_	Current period $A'000	Previous corresponding Period - $A'000
	-	-
	-	-
	-	-

Total

6. Details of dividend or distribution reinvestment plans in operation are described below (item 6) :

N/A

The last date(s) for receipt of election notices for participation in the dividend or distribution reinvestment plan

N/A

7. Details of associates and joint venture entities (item 7)

7. Details of associates and joint venture entities (item 7)
Name of associate orjoint venture entity	% Securities held
None	N/A

Name of associate or joint venture entity

Aggregate share of profits (losses) of associates and joint venture entities (where material)

Group’s share of associates’ and joint venture entities’: Profit (loss) before tax Income tax Net profit (loss) after tax Adjustments Share of net profit (loss) of associates and joint venture entities	6mths to 31 Dec 2016 $	6mths to 31 Dec 2015 $
		-
		-

Beijing Melbourne Sydney Room 101, Building 22, Level 1 G.05 Courtyard, 4 Gong Ti Bei Lu 10 Queens Road 55 Miller St Chaoyang District, MELBOURNE PYRMONT BEIJING, 100027 VIC 3004 NSW 2009 Ph: +86 (010) 6500 0910 Ph: (03) 9866 7333 Ph: (02) 9660 4564

8. The information provided in the Appendix 4D is based on the interim financial report (attached), which has been prepared in accordance with Australian accounting standards (item 8) .

9. The interim financial report is not subject to audit dispute or qualification. (item 9)

Periodic Disclosure Requirements Compliance Statement

• 1 An interim report for the half-year ended 31 December 2016 is provided with the Appendix 4D information.

• 2 The interim report has been prepared in accordance with AASB 134 Interim Financial Reporting.

• 3 Except where noted in the report, the interim report and information provided in Appendix 4D uses the same accounting policies as those applied at 30 June 2016, except mandatory changes under the Australian equivalents to International Financial Reporting Standards (A-IFRS).

• 4 The Appendix 4D information gives a true and fair view of the matters disclosed in the interim financial report.

• 5 The Appendix 4D information is based on the interim financial report, which has been subject to review.

The audit report or review by the auditor is provided with the interim financial report.

Sign here: Date: 28 February 2017 Print name: Bryan Carr

Beijing Melbourne Sydney Room 101, Building 22, Level 1 G.05 Courtyard, 4 Gong Ti Bei Lu 10 Queens Road 55 Miller St Chaoyang District, MELBOURNE PYRMONT BEIJING, 100027 VIC 3004 NSW 2009 Ph: +86 (010) 6500 0910 Ph: (03) 9866 7333 Ph: (02) 9660 4564

SMARTTRANS HOLDINGS LIMITED And Controlled Entities A.B.N. 86 009 065 650

INTERIM FINANCIAL REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2016

C O N T E N T S

Directors’ Report Auditor’s Independence Declaration Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Financial Statements Directors’ Declaration Independent Auditor’s Review Report

SMARTTRANS HOLDINGS LIMITED And Controlled Entities

DIRECTORS’ REPORT

Your Directors present their report together with the interim report of the consolidated entity for the half year ended 31 December 2016.

The names of Directors in office at the date of this report are:

• Hon. Mark Vaile AO – Non-Executive Chairman

• Andrew D Forsyth Llb – Non-Executive Director

• Bryan E Carr BSc – Executive Director , CEO

• Yui Ian Tang – Non-Executive Director

• Gregory Simpson – Non-Executive Director

The above named Directors held office during and since the end of the half-year.

Review of Operations

HALF YEAR SUMMARY

Highlights

• Cash collections in HY 2017 totalled $4.41 million (up from $2.06 million in HY 2016)

• Total Consolidated Revenue for HY 2017 of $2.72 million

• Cash holdings at 31 December 2016 was $1.30 million

• $4.5 million funding secured with $3.4m invested in sharing arrangement with Lanstead Capital LP upon issue of Tranche B shares in second half of the financial year.

• Funds raised will be applied to scale up e-commerce market place in China and market SmartPay in Australia

• Company expanded its e-Commerce services and capabilities as the “Gateway to China” for businesses seeking to sell their products online in China

• Development of WeChat e-commerce market place with Shanghai Stock Exchange-listed Shanghai Dodoca Information Technology Co. Ltd

• Company is targeting to have 120 premium Australian brands on its e-Commerce platform in China within 12 months

• Continued expansion and diversification of revenue sources

ASX-listed smartphone payments provider and logistics software company SmartTrans Holdings Limited (ASX: SMA) provides the following update for the Half Year ended 31 December 2016.

Operational

SmartTrans operates mobile and internet-based billing and e-Commerce platforms in China and mobile and internet software solutions servicing the logistics and services sectors in Australia.

In China, the company has successfully established itself in the rapidly emerging “fintech” and e-Commerce sectors, effectively distributing and collecting payment for a diverse range of products.

In the first half of the year SmartTrans focused on the expansion of its mobile and internet billing services into the e-Commerce sector, establishing its SmartTrans Roolife brand and platform with:

• Alibaba stores (SmartTrans Roolife)

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SMARTTRANS HOLDINGS LIMITED And Controlled Entities

• WeChat store (Roolife Lifestyle Store)

• Dodoca Roolife platform

SmartTrans’ ability to promote and distribute products online, bill customers directly and settle payments to merchants in Australia strongly positions the company as the “Gateway to China” for businesses seeking to sell their products online in China.

The company continues to expand its operations with China-listed Dodoca, Australian-listed BPS Technologies and its China-based billing partners China Mobile, China Telecom, Alibaba and QianDaiPay Payments Company.

The company is a trusted provider to Australian businesses seeking to sell their products in China and importantly to receive payment in Australia, matching the demand from Australian businesses eager to sell into China with the growing demand from Chinese consumers seeking high quality, safe and prestigious Australian products.

During the quarter the company continued its billing activities for third-party mobile content and subscriptionbased billing in China, albeit at lower levels with lower marketing expenditure.

In Australia, the company continued negotiation for the expanded roll out of its products with new and existing users of its mobile and internet-based logistics software.

Financial

The company’s cash holdings at 31 December 2016 were $1.30 million.

On 28 December 2016, the company announced that it had secured funding of $4.5 million from a new institutional investor, UK-based Lanstead Capital LP and two existing shareholders, Loyal Strategic Investment and Dymocks Securities, to fund the expansion of its e-commerce platforms and facilitate the rollout of its SmartPay payments platform into Australia.

Under the Sharing Agreement with Lanstead Capital described in the company’s announcement dated 28 December 2016:

• The company has retained $412,500 of the $2.75 million of the first tranche of subscription funds and invested the balance under the terms of the Sharing Agreement;

• Subject to approval at the General Meeting to be held on 28 February 2017, the company will retain $187,500 of the $1.25 million of the second tranche of subscription funds and invest the balance under the terms of the Sharing Agreement.

The company has made changes to its product mix designed to improve the return from its business activities over the course of FY17.

As previously noted in the Annual Report and Quarterly Reports the company has been transitioning the business from high volume, low margin products to low volume but higher margin e-Commerce products and has been focused on building up its e-Commerce services and establishing relationships with key partners and brands seeking to sell online in China.

The company moved its focus towards marketing products with higher gross margins and those products which are expected to provide higher lifetime customer value to the company. Whilst this has and will reduce gross revenue, it is expected to increase the overall return to the company.

Total Consolidated Revenue for the Half Year was $2.72 million.

In the Half Year ended 31 December 2016, the company received cash inflows of $4.41 million from sales of products, including payments of trade receivables, from an earlier reporting period, up from $2.06 million in the corresponding half year ended December 2015.

Following the end of the half year, the company received its R&D tax return payment of $301k further strengthening the company’s cash position.

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SMARTTRANS HOLDINGS LIMITED And Controlled Entities

Outlook

SmartTrans expects to continue to build the portfolio of products being sold and distributed in China and to continue to cultivate and benefit from its customer database, expanding the revenue contribution from its e- Commerce activities.

The company plans to commence actively marketing its billing capabilities and e-Commerce platforms to merchants and brands in Australia to build the range of brands and products SmartTrans sells in China.

As the virtual “Gateway to China” SmartTrans will service the growing demand from Australian businesses seeking to enter the China market. The company expects its business model to be equally appealing to businesses anywhere in the world providing for further expansion opportunities in the future.

SmartTrans and its China-based e-Commerce partner Dodoca have set a target of marketing and selling 100 premium Australian brands on the Dodoca Roolife platform within 12 months.

In FY17, SmartTrans and Australian-based partner, BPS Technologies, are targeting at least 20 high-quality merchants which each produce at least $1million in annual sales on the SmartTrans e-Commerce platform.

SmartTrans anticipates that it will generate a double-digit percentage fee on sales through the platform, with the magnitude of the fee linked to the level of service being provided to specific merchants. The company also anticipates receipt of fees on processing payments and cross-border settlements.

SmartTrans is also planning to expand its SmartPay platform into the Australian market to process payments made by inbound Chinese tourists wanting to use their existing payment infrastructure – WeChat, UnionPay and AliPay – to procure goods and services when travelling in Australia, consequently establishing and forging a connection between Australian businesses and Chinese consumers. Funds raised under the placements referred to above will also be used to market and provide the SmartPay infrastructure to Australia-based retailers and tourism operators in Australia.

Sales of third-party Apps and subscription-based mobile billing is expected to continue but with the growing addition of e-Commerce billing and sales.

In Australia, SmartTrans is working with key partners and clients to expand its installation footprint and revenue for its proprietary logistics software designed to optimise and manage the delivery of products and services.

With agreed funding in place and a growing range of products and services being sold in China the Board and management of SmartTrans Holdings Limited remain confident of driving growth and delivering value for their shareholders.

Auditor’s Independence Declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is included in this interim financial report.

Signed in accordance with a resolution of the Board of Directors.

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______ Bryan E Carr Managing Director

Signed this 28[th] February 2017

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AUDITOR’S INDEPENDENCE DECLARATION

As lead auditor for the review of the financial report of SmartTrans Holdings Limited and its controlled entities for the half year ended 31 December 2016, I declare that, to the best of my knowledge and belief, there have been no contraventions of:

• (i) the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

• (ii) any applicable code of professional conduct in relation to the review.

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RSM AUSTRALIA PARTNERS

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P A RANSOM

Partner

28 February 2017 Melbourne, Victoria

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SMARTTRANS HOLDINGS LIMITED And Controlled Entities

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the Half-Year Ended 31 December 2016

Note Revenue - Operations 5 Online mobile promotion & third party cost Employee salaries and benefits expense Material and installation costs Depreciation expense Consultancy cost Share registration regulatory and compliance costs Share based payment Corporate Advisory Rental & occupancy costs Travelling and accommodation costs Legal & associated costs Amortisation of intangible assets Foreign exchange gain/(loss) Other expenses Loss before income tax Income tax benefit Loss for the period Other comprehensive income for the period: Foreign currency translation Total comprehensive loss for the period Basic loss per share (cents per share) Diluted loss per share (cents per share)	31 Dec 2016 31 Dec 2015 $ $ 2,715,745 6,542,536 (1,709,474) (4,955,824) (1,330,676) (715,956) (285,034) (149,602) (13,817) (5,504) (383,558) (618,004) (136,533) (127,486) - (150,000) (55,291) - (120,815) (126,757) (110,536) (89,787) (68,231) (41,201) (12,068) - (3,970) - (151,316) (207,024)
	(1,665,574) (644,608) - -
	(1,665,574) (644,608) 40,058 41,541
	(1,705,632) (603,067)
	(0.07) (0.03) (0.07) (0.03)

The accompanying notes form part of these financial statements

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SMARTTRANS HOLDINGS LIMITED And Controlled Entities

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2016

Note CURRENT ASSETS Cash and cash equivalents Trade and other receivables 6 Other assets Financial assets 7 TOTAL CURRENT ASSETS NON CURRENT ASSETS Financial assets 7 Intangible asset Property, plant and equipment TOTAL NON CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Provisions TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 7 Reserves Accumulated losses TOTAL EQUITY	31 Dec 2016 30 Jun 2016 $ $ 1,302,005 2,130,093 3,339,033 4,899,182 123,556 56,547 1,405,189 -
	6,169,783 7,085,822
	702,594 - 202,611 221,462 33,011 27,037
	938,217 248,499
	7,108,000 7,334,321
	2,428,706 3,639,504 163,490 159,579
	2,592,196 3,799,083
	4,515,804 3,535,238
	75,721,393 73,035,195 587,915 695,149 (71,793,504) (70,195,106)
	4,515,804 3,535,238

The accompanying notes form part of these financial statements

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SMARTTRANS HOLDINGS LIMITED And Controlled Entities

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For The Half-Year Ended 31 December 2016

Note Balance at 1 July 2015 Shares issued during the period Cost of shares issued Share based payments Foreign currency translation Loss for the period Balance at 30 June 2016 Balance at 1 July 2016 Shares issued during the period 7 Cost of shares issued Share based payments Foreign currency translation Loss for the period Balance at 31 December 2016	Issued Capital Accumulated losses $ Total Equity $ Ordinary $ Reserves $
	72,684,668 653,405 (67,383,975) 5,954,098 258,691 - - 258,691 (4,964) - - (4,964) 96,800 150,000 - 246,800 - (108,256) - (108,256) - - (2,811,131) (2,811,131)
	73,035,195 695,149 (70,195,106) 3,535,238
	73,035,195 695,149 (70,195,106) 3,535,238 2,686,198 - - 2,686,198 - - - - - (67,176) 67,176 - - (40,058) - (40,058) - - (1,665,574) (1,665,574)
	75,721,393 587,915 (71,793,504) 4,515,804

The accompanying notes form part of these financial statements .

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SMARTTRANS HOLDINGS LIMITED And Controlled Entities

CONSOLIDATED STATEMENT OF CASH FLOWS

For the Half-Year Ended 31 December 2016

Cash flows from operating activities Receipts from customers Payments to suppliers and employees Research and development tax concession Interest received Net cash used in operating activities Cash flows from investing activities Payments for property, plant and equipment Payments for Intangible Assets Payment for termination of Joint Venture Net cash used in investing activities Cash flows from finance activities Receipts from issue of shares Payments for share issue costs Proceeds from loan from shareholders Net cash flow (used in) from financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Effects of Foreign Exchange Cash and cash equivalents at end of period	31 Dec 2016 31 Dec 2015 $ $ 4,410,941 2,063,595 (5,852,695) (4,776,979) (3,394) - (1,709) 38,296
	(1,446,857) (2,675,088)
	(8,225) (3,894) - (153,322) - (77,060)
	(8,225) (234,286)
	576,886 181,880 (60,000) (199,044) 85,562 -
	602,448 (17,164)
	(852,634) (2,926,538) 2,130,091 6,058,168
	24,548 36,882
	1,302,005 3,168,512

The accompanying notes form part of these financial statements

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1. SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation

Reporting Basis and Conventions

The financial report covers the consolidated entity of SmartTrans Holdings Limited and its controlled entities. SmartTrans Holdings Limited is a listed company and incorporated and domiciled in Australia.

The half-year financial report is a general purpose financial report prepared in accordance with the requirements of Corporations Act 2001and Accounting Standard AASB 134: Interim Financial Reporting.

The half-year report does not include full disclosures of the type normally included in an annual financial report. It is recommended that this financial report be read in conjunction with the annual financial report for the year ended 30 June 2016 and any public announcements made by SmartTrans Holdings Limited and its controlled entities during the half-year in accordance with continuous disclosure requirements arising under Corporations Act 2001.

The accounting policies applied by SmartTrans Holdings Limited in this financial report are the same as those applied by SmartTrans Holdings Limited in the consolidated financial report as at and for the year ended 30 June 2016.

Going concern

The financial statements have been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and discharge of liabilities in the normal course of business.

As disclosed in the financial statements, the consolidated entity incurred a loss of $1,665,574 and had net cash outflows from operating activities of $1,446,857 for the period ended 31 December 2016. As at that date the consolidated entity had net current assets of $4,515,804.

The Directors believe that it is reasonably foreseeable that the consolidated entity will continue as a going concern and that it is appropriate to adopt the going concern basis in the preparation of the financial report after consideration of the following factors:

• Positive net current assets position provides adequate working capital to meet the company’s obligations over the next 12 months;

• Marketing and administration costs are constantly being monitored so that they are kept at minimal levels and certain marketing costs are of the discretion of management;

• The Company undertook a capital raising during the six month period which has provided funding as at the 31 December 2016 and will provide funding for a period of up to 18 months from the 31 December 2016 - refer to note 7 for details;

• The Company has been able to raise capital as and when required and the Directors believe it could do so in the future if it becomes appropriate to do so.

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SMARTTRANS HOLDINGS LIMITED And Controlled Entities

2. EVENTS SUBSEQUENT TO REPORTING DATE

The Directors are not aware of any matter or circumstance not otherwise dealt with in the Directors' Report or the Financial Statements that has significantly or may significantly affect the state of affairs or operations of the consolidated entity in the future financial periods.

3. CONTINGENT LIABILITIES

There are no contingent liabilities as at 31 December 2016.

4. SEGMENT INFORMATION

The consolidated entity has identified its operating segments based on internal reports that are provided to the Board of Directors on a regular basis. Management has identified that the consolidated entity operates in one operating segment across two geographical locations: Australia and China.

Geographical Segment Summary:

For the half year ended 31 December 2015

			Australia		China	Total
				$	$	$
Sales to External Customers			945,295		5,558,601	6,503,896
Intersegment Sales				-	-	-
Total Segment Revenue			945,295		5,558,601	6,503,896
Segment Profit / (Loss)			135,061		11,226	146,287
Segment Assets as at
30 June 2016			590,025		5,279,434	5,869,459
Segment Liabilities as at
30 June 2016			(314,568)		(3,125,152)	(3,439,720)
For the half year ended 3 December 2016
			Australia		China	Total
				$	$	$
Sales to External Customers			679,679		2,033,287	2,712,966
Intersegment Sales				-	-	-
Total Segment Revenue			679,679		2,033,287	2,712,966
Segment Profit / (Loss)			(329,432)		(478,440)	(807,872)
Segment Assets as at
31 December 2016			567,465		3,703,040	4,270,506
Segment Liabilities as at
31 December 2016			(278,767)		(1,808,056)	(2,086,823)
Reconciliation of reportable segment			31	December	2016	31 December 2015
revenue to consolidated revenue
					$	$
Total segment revenue					2,712,966	6,503,896
Interest Income					2,779	38,640
Total Revenue					2,715,745	6,542,536
Reconciliation of reportable segment			31	December	2016	31 December 2015
profit(loss) to consolidated		loss
					$	$
Total Profit/(loss)	for	reportable			(807,872)	146,286
segments
Share based payment					-	(150,000)
Corporate costs					(857,702)	(679,534)
Loss before income tax					(1,665,574)	(644,608)

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SMARTTRANS HOLDINGS LIMITED And Controlled Entities

4. SEGMENT INFORMATION (Continued)

Reconciliation of reportable segment assets to consolidated assets Reportable segment assets Unallocated assets Total Assets Reconciliation of reportable segment liabilities to consolidated liabilities Reportable segment liabilities Unallocated liabilities Total Assets	31 December 2016 30 June 2016 $ $ 4,270,506 5,869,459 2,837,493 1,464,862
	7,108,000 7,334,321
	31 December 2016 30 June 2016 2,086,823 3,439,720 505,360 359,363
	2,592,196 3,799,083

5. REVENUE OPERATIONS

The revenue figure includes a R&D tax offset of $302,524 (December 2015 $368,182) as follows:

Sales revenue R&D tax offset	31 December 2016 31 December 2015 $ $ 2,412,221 302,524 6,174,354 368,182
	2,715,745 6,542,536

6. TRADE AND OTHER RECEIVABLES

Trade and other receivables include an amount of $ 2,786,647 owing by Chinese state owned telecommunications providers.

The company is confident of collecting these receivables and consider these as a minimal credit risk given the parties from whom the amounts are receivable. Accordingly, no provision for impairment of receivables have been raised against these balances.

The company will continue to liaise with the Chinese telecommunication providers in respect of the payment of these balances which are expected to be recovered in the second half of the financial year.

The other financial asset of $1,405,189 and $702,594 are the balance of the Share placement to Lanstead outlined in note 7

7. ISSUED CAPITAL

SmartTrans Holdings has secured funding of $4.5 million from a new institutional investor and two existing shareholders to fund the expansion of its recently announced e-commerce platforms and facilitate the rollout of its SmartPay payments platform into Australia.

Placement under Lanstead agreement

The Company has entered into agreements with UK based investor Lanstead Capital LP ( Lanstead ) for an equity investment, pursuant to which the Company will issue Lanstead 400,000,000 ordinary shares at an issue price of $0.01 per share ($4,000,000 investment) as follows:

• A placement for a total of 275,000,000 shares under the Company’s 15% placement capacity ( Tranche A ); and

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SMARTTRANS HOLDINGS LIMITED And Controlled Entities

7. ISSUED CAPITAL (CONTINUED)

• A placement for a total of 125,000,000 shares (subject to, amongst other things, shareholder approval at the EGM) ( Tranche B ).

• 20,000,000 additional shares were issued to Lanstead as a success fee in respect of the transaction.

In addition, the parties have entered into sharing agreements with associated documentation in relation to each of the above tranches ( Sharing Agreements ).

As at 31 December 2016, 295,000,000 shares were issued to Lanstead.

Placement to existing shareholders

Major shareholders, Loyal Strategic Investment and Dymocks Securities will, upon receipt by the company of the first tranche of funds form Lanstead, subscribe for 25,000,000 new shares each, at an issue price of $0.01 per share, providing a total of $500,000 in placement proceeds. The shares will be issued in two tranches:

• A placement of a total of 32,887,506 shares to raise approximately $328,875 under the Company’s 15% placement capacity (of which $164,440 was received as at 31 December 2016); and

• A placement of approximately 17,112,494 shares to raise approximately $171,124, subject to shareholder approval at an Extraordinary General Meeting ( EGM ) of the Company’s shareholders, to be held on 28[th] February 2017.

Sharing Agreements

Under the Sharing Agreements, SmartTrans will retain:

• (a) $412,500 of the $2,750,000 Tranche A subscription funds; and

• (b) $187,500 of the $1,250,000 Tranche B subscription funds (subject to shareholder approval being received from the Tranche B placement).

The remainder of the funds will be invested in the sharing arrangements with funds being made available to SmartTrans over an 18 month period (commencing 60 days after closing of the respective tranche). The amount of those settlements will vary depending on the volume weighted average price (VWAP) for the Company’s shares

Funds invested under the sharing agreement were measured at fair value resulting in $2,107,783 in financial assets recognised at 31 December 2016 as follows

assets recognised at 31 December 2016 as follows
Current – Financial Asset	$1,405,189
Non-Current – Financial Asset	$702,594
Total Financial Assets	$2,107,783
The Financial assets are subsequently measured at amortised cost.
Changes in shares issued during the period as follows
Cash received – Lanstead Shares	$412 500
Fair value – balance of Lanstead	$2,107,783
Issuance of Tranche A shares	$2,520,283
Issuance of major shareholder’s shares	$164,440
Options exercised	$1,475
Total	$2,686,198

8. FAIR VALUE MEASUREMENT

The carrying amount of the other financial assets and financial liabilities, which are not measured at fair value in the statement of financial position, approximate their fair values. The group did not measure any financial assets or financial liabilities at fair value on a non-recurring basis as at 31 December 2016 (30 June 2016: Nil).

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SMARTTRANS HOLDINGS LIMITED And Controlled Entities

DIRECTORS’ DECLARATION

The directors of the company declare that, in the opinion of the directors:

• a) the attached financial statements and notes comply with the Corporations Act 2001 , Australian Accounting Standard AASB 134 Interim Financial Reporting, the Corporations Regulations 2001 and other mandatory professional reporting requirements;

• b) the attached financial statements and notes give a true and fair view of the consolidated entity's financial position as at 31 December 2016 and of its performance for the financial half-year ended on that date; and

• c) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of the directors made pursuant to section 303(5)(a) of the Corporations Act 2001.

On behalf of the Directors

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BRYAN E CARR Managing Director

Melbourne, Victoria

Dated: 28[th] February 2017

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INDEPENDENT AUDITOR’S REVIEW REPORT

TO THE MEMBERS OF

SMARTTRANS HOLDINGS LIMITED

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of SmartTrans Holdings Limited and its controlled entities which comprises the consolidated statement of financial position as at 31 December 2016, the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the half-year end or from time to time during the half-year.

Directors’ Responsibility for the Half-Year Financial Report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the company’s financial position as at 31 December 2016 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of the company, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

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Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 . We confirm that the independence declaration required by the Corporations act 2001 , which has been given to the directors of SmartTrans Holdings Limited, would be in the same terms if given to the directors as at the time of this auditor’s report.

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of SmartTrans Holdings Limited is not in accordance with the Corporations Act 2001 including:

• (a) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2016 and of its performance for the half-year ended on that date; and

• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001 .

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RSM AUSTRALIA PARTNERS

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P A RANSOM

Partner

28 February 2017 Melbourne, Victoria

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