For personal use only. Acquisition of Track Concepts 10 June 2015

Transcription

1 Acquisition of Track Concepts 10 June

2 Table of Contents 1. Acquisition of Track Concepts 2. Overview of Track Concepts 3. Financials 4. Appendix 2

3 Acquisition of Track Concepts 3

4 Executive Summary Acquisition of Track Concepts Transaction Overview Crowd Mobile is entering a Heads of Agreement with Netherlands company, Track Concepts(Track Holdings BV) to acquire 100% of its shares for AUD $26.7m ( 18.7m) plus Net Tangible Assets (NTA) expected to be circa AUD$5m ( 3.5m) plus earn-out to a maximum of AUD$6.7m ( 4.7m). Track Concepts owns specialist technologies in m-payments and a customer acquisition platform, with a global content distribution network operating in 38 countries within Europe, Central/Latin America, Asia-Pacific and Africa Acquisition is expected to be completed by August 2015 Strategic Rationale Transaction Funding Unique Opportunity High value network: Mobile payments network connecting with over 140 mobile operators globally and providing easy, seamless electronic m-payment transactions Strong international presence: Operates in 38 countries. Through the infrastructure of mobile operators, Track is exposed to approximately 1.43billion people worldwide. Proprietary high-tech platform: Proprietary technological platform and business model offer an excellent basis for recurring transactions and optimization of average margin per user. Diversified business model: In addition to m-payments, Track has an industry leading technology platform to acquire, retain and manage customers efficiently, and its Global Content Distribution provides mobile content, entertainment and Apps to millions of consumers worldwide. Favourable market fundamentals: Global smartphone penetration to 5.6 billion units by Ample growth opportunities: Currently in the process of entering six additional countries, with other opportunities to increase volume / traffic and sales and further optimize its services to consumers, by improving marketing capabilities and, for example, offering in-app purchases Strong financial performance: AUD$24.5m ( 17.2m) Revenue and EBITDA of AUD$13m ( 9m) in CY2014 Transaction will be funded by a combination of Equity, Debt and Convertible Note Investment Banks will be announced in due course. Acquisition of Track provides access to new territories and products in high value verticals New suite of apps and mobile technologies to complement the current offering Extends Crowd Mobile s revenue to approximately $40m AUD Revenue in FY16 Subject to Due Diligence to the satisfaction of Crowd Mobile Funding of Acquisition ASX, Regulatory, Shareholder Approvals 4

5 Overview of Track Concepts Strong corporate fundamentals Track Concepts Mobile payment network (m-payments) Content distribution network Customer Acquisition technology Mobile payments network connecting with over 140 mobile operators globally and providing easy, seamless electronic m-payment transactions for customers Provides mobile content, entertainment and apps to millions of consumers worldwide Industry leading technology platform allowing the company to acquire, retain and manage customers efficiently Track has realized significant revenue growth since its establishment reaching AUD$24.5m ( 17.2m) in CY2014 For CY2015, management anticipates revenue to grow to AUD$27m ( 19.0m) Track has realized significant EBITDA growth, increasing from AUD$13m ( 9m) in CY2014 and anticipated to reach AUD$13.8m ( 9.7m) in CY2015 5

6 Strategic Rationale Growth, Performance & Synergies Exposure to extended m-payments network Strong international presences Comprehensive product portfolio Diversified customer acquisition mix Strong Financial Performance with Upside Extends reach globally to over 180 telco allowing Track to leverage CM8 s m-payment network and vice versa. Allows Crowd Mobile to accelerate its crowd sourced micro job network push into new markets M-payments is one of the largest areas of disruption in finance/payments that CM8 is able to capitalise on Expands CM8 s international presence into South America, Africa, Europe and Asia-Pacific. CM8 will have revenue generating centres in over 55 countries Creates new sales opportunities for CM8 s current product suite Cross marketing of each others products and databases and leverages our micro job network into new markets across more of their products Supports CM8 s app, content, and distribution strategy with new proven products Track has an industry leading technology platform to acquire, retain and manage customers efficiently, and its Global Content Distribution provides mobile content, entertainment and Apps to millions of consumers worldwide, providing ample avenues to acquire new customers globally Track infrastructure provides ability to access new verticals further diversifying the customer base Extends Crowd Mobile s revenue to approximately $40m AUD Revenue in FY16 Performance improvements due to maturity in some markets may lead to increased EBITDA margin New revenue streams in new territories provide opportunities for increased revenue for CY2015 and beyond Proven track record of revenue growth Growth opportunities Leveraging the people, the customers, m-payments platform, customer acquisition technology 6

7 Synergy Significant Synergy of Acquisition Combined entity leverages m- payments globally Products including micro job network Increased customer databases Increased global reach Increased revenues and EBITDA CrowdMobile Track Combined Entity* 25 Countries 38 >50 ( 100%) 60 Mobile Operators 140 >160 ( 170%) 25 Languages 24 >40 ( 60%) 10 Core Products ( 300%) $11.2M Revenues** $24.5M $36M ( 219%) *Combined Entity values may not add up given there is some overlap between both companies. ** CM8 revenues taken from December14 Operating Results and annualised and Track FY14 management Accounts 7

8 Exposure to Mobile growth Significant growth forecast* Global Smartphone Subscriptions, (billion) 5.6 Global DCB/PSMS Volumes**, (billion) * Source: Outlined in the ASX QXQ Prospectus dated 20 th November 2014 Industry Report by Frost & Sullivan ** DCB refers to Direct Carrier Billing and PSMS refers to Premium SMS 8

9 Global m-payment network Direct Carrier Billing provides great potential from a consumer s point of view, has low friction, is more convenient and is quicker to use, compared to paying with credit cards especially when making small payments; resulting in higher conversion Direct Carrier Billing Direct Carrier Billing allows consumers to buy digital content by adding the cost of a purchase directly to their mobile bill. M-Payments Process 1. Track promotes its products across various websites and via marketing agencies. 2. Consumers click on the banner, fill in their mobile number and confirm their purchase to receive content and entertainment. Track pays a fee to the marketing agency for every new subscriber acquired. Track s infrastructure is optimized for Direct Carrier Billing. Direct Carrier Billing is fully integrated into Track s platform. 3. Telecom operators receives payments and earn a percentage of the fee. The gateway also earns a percentage of the fee. Track receives between 15% and 65% (varying by country and by operator). 4. Track generates revenue through weekly subscriptions payments either through Direct Carrier Billing/PSMS Relationships with 140 mobile operators across 38 countries 9

10 Value Chain Gateways Gateways Provide the infrastructure to the Telecom Operators Mobile operators Consumers Reach of approximately 1.4billion consumers Digital Direct Response Marketing using Customer Acquisition Platform Technology Consumers are advertised to via various online media on a CPA basis Track Content SYNERGY: Crowd Content 10

11 Track Customer Acquisition Platform Standardized mobile content and entertainment is tailored for usage on a broad range of mobile devices and compatible to run on all mobile platforms (ios, Android, Windows Phones and feature phones), ensuring optimized user-experience for consumers. All content and entertainment is marketed through customized campaigns, to suit local tastes and cultures of each geographic region and target group. Track monetizes its large consumer base primarily through fees generated via PSMS & Direct Carrier Billing. The Company closely cooperates with gateways, telecom operators, marketing agencies and content development partners. Track Holdings focuses on its core competency; optimizing average margin per user, through its in-house developed platform. 11

12 Track Content / Diversified Product Mix Downloads Downloads consists of content that consumers can download for a fee Content includes games, ringtones, music and videos Downloads available on web, mobile and apps Apps Apps contains applications for consumers smartphones. Capability in both ios and Android for maximum distribution Entertainment Entertainment primarily consists of games and ringtones that consumers can play or listen to. Games represent a high value segment 12

13 Country Reach* & Revenue Contribution % Europe 21 70% Central and Latin America 10 22% Asia - Pacific 5 7% Africa 2 1% * Country Reach signifies the number of countries Track is in across each Continent 13

14 Track Growth Opportunities 3. Strengthening marketing (and other stakeholder) relationships Strengthening relationships with marketing agencies through increased focus on monitoring, and engaging in direct buying of Internet traffic and lead generation, will enable Track to optimize its conversion rates (increase sales against a possibly lower price per sale). Becoming part of Crowd Mobile would enable increased negotiation, distribution and billing power with marketing agencies, gateways and telecom operators. 2. Further diversification of services Track is currently active in 38 countries worldwide and continuously looks for new market opportunities to increase their market presence; Potential to further diversify the range of consumer propositions through increased targeting and customization of the content to local tastes, further enriching its content. 1. Better monetization of its database Potential for monetizing its large consumer base (subscribers and leads), for example, by developing lead generation, and benefiting from major crossand upselling opportunities to consumers. Larger and more developed organizations have the capacity to better utilize Tracks database and significantly increase volume / traffic, thereby substantially increase generated profits. Strong platform with proprietary technology Track Concepts strong in-house developed Technology platform ensures fast, reliable, flexible and efficient implementation of its services without downtime. Scalability of its infrastructure has enabled the Company to expand its global reach with unparalleled ease and speed. Highly standardized and automated platform and easily accessible data allows a small team of employees to successfully and effectively manage the Company s large subscription base, and its disciplined content, campaign- and country-portfolio management. 14

15 Summary Track holds a strong position in a market with favorable underlying fundamentals An increasing part of the population has access to mobile phones (~90% penetration) of which 87% use their smartphone for leisure and are increasingly capable to buy digital content with ease. whilst being exposed to an environment with country-specific rules and regulations Market dynamics are closely monitored, and changes implemented in tight collaboration with partnering gateways enabling the Company to quickly respond to a changing business environment. 15

16 Financial Overview 16

17 Track Financial Performance & Growth Revenue AUD$ 21,374 23,694 24,571 27,143 16,174 5,243 AUD $000s FY10 FY11 FY12 FY13 FY14 D FY15 F Revenue 5,243 16,174 21,374 23,694 24,571 27, ** EBITDA EUR - 000s 2,109 Entry Latin 7,080 Entry North 9,046 11,713 Entry Africa & 12,969 Entry Asia 13,886 Revenue 3,670 Americ Americ Pacific 11,322 14,962 16,586 a a 17,200 19,000 EBITDA 1,476 4,956 6,332 8,199 9,078 9,720 FY = Track s fiscal year ending 31 December Constant exchange rate of AUD/EUR = 0.70 Key: D = Management Accounts F = Forecast 17

18 Track Profit & Loss Historical & Forecast $AUDs FY10 FY11 FY12 FY13 FY14 D FY15 F Revenue 5,243 16,174 21,374 23,694 24,571 27,143 yoy growth 39% 209% 32% 11% 4% 10% Direct costs (3,411) (7,960) (11,049) (10,724) (10,214) (11,571) Gross profit 1,832 8,214 10,325 12,970 14,357 15,571 Gross margin 35% 51% 48% 55% 58% 57% Personnel expenses (64) (569) (890) (824) (880) (1,000) Management fee General expenses 10 (67) (159) (237) (314) (371) Other expenses 331 (498) (216) (196) (194) (314) EBITDA 2,109 7,080 9,060 11,713 12,969 13,886 EUR - 000s FY10 FY11 FY12 FY13 FY14 D FY15 F Revenue 3,670 11,322 14,962 16,586 17,200 19,000 yoy growth 39% 209% 32% 11% 4% 10% Direct costs (2,388) (5,572) (7,734) (7,507) (7,150) (8,100) Gross profit 1,282 5,750 7,228 9,079 10,050 10,900 Gross margin 35% 51% 48% 55% 58% 57% Personnel expenses (45) (398) (624) (576) (616) (700) Management fee General expenses 7 (47) (111) (166) (220) (260) Other expenses 232 (349) (151) (137) (136) (220) EBITDA 1,476 4,956 6,342 8,199 9,078 9,720 FY = Track s fiscal year ending 31 December Constant exchange rate of AUD/EUR = 0.70 Key: D = Management Accounts F = Forecast Source: Auditor of the Company and management information 18

19 Acquisition terms and funding Transaction Metrics Max ( M) AUD $M Min ( M) AUD $M Base consideration Cash Stock Earn-out 1* Earn-out 2* Expected NTA Total consideration Key acquisition terms Purchase price Expected maximum purchase price of AUD$38.4m ( 26.9m) inclusive of NTA estimated at AUD$5m ( 3.5m) Consideration based on AUD$23.1m ( 16.2m) cash, AUD$3.6m ( 2.5m) equity in CM8 + AUD$6.7m ( 4.7m) capped earn-out (assuming Track achieves its CY15 forecast EBITDA) Debt / Equity / Convertible Note To Be Advised Timing The Acquisition is expected to complete by August 2015 Acquisition EBITDA multiple excluding NTA 1.95x 1.95x Acquisition EBITDA multiple including NTA <2.5x <2.5x *1 Earned if EBITDA CY15 exceeds AUD$14.2m ( 10m) *2 Maximum earned if EBITDA 15 is above AUD$17m ( 12m and Minimum at or below AUD$13.7 ( 9.6m) Note: All values rounded to nearest

20 Conclusion Game changing acquisition for Crowd Mobile Strong Strategic fit across m-payments, products and customer acquisition technology Positions Crowd Mobile as a leading m-payments organisation globally In line with Crowd Mobile s stated position of growing via acquisition Delivers strong revenue and EBITDA growth 20

21 Participate in the Future of Mobile Contact: Domenic Carosa 21

22 Disclaimer The material herein is a presentation of non-specific background information about the current activities of Crowd Mobile Limited (Crowd Mobile or the Company). It is information given in summary form and does not purport to be complete. All persons should seek appropriate professional investment advice in reviewing or considering this presentation and all other information with respect to Crowd Mobile, its business, financial performance and operations. Neither the provision of this presentation nor the information contained therein, or any associated communication to any person should be taken as constituting financial advice regarding the purchase or dealing of shares in Crowd Mobile. This presentation does not purport to provide all information that might reasonably be required to complete a detailed assessment of Crowd Mobile. Individuals should conduct their own investigation of investment and financial parameters relevant to their personal requirements for investment purposes. The presentation may contain forward looking statements regarding the intentions of the Company, and these will be affected by many other factors beyond the control of the Company. Forward-looking statements include, but are not limited to, statements concerning Crowd Mobile s planned strategies and programs and other statements that are not historical facts. Although Crowd Mobile believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements The presentation must be considered in the light of these uncertainties and investments in Crowd Mobile should be considered as speculative in nature. The presentation is not a prospectus or similar disclosure document and does not constitute an invitation to apply for shares in Crowd Mobile or ASX:CM8. 22

23 Appendix 23

24 Acquisition Risks Completion risk Reliance on information provided Analysis of acquisition opportunity Integration risk Historical liability Change of control risk Acquisition accounting Completion of the acquisition is conditional on CrowdMobile completing Due Diligence, Signing a Share Purchase Agreement and Funding the Acquisition. Crowd Mobile is working on a number of risk mitigation strategies for the identified risks. CrowdMobile is undertaking a due diligence process in respect of Track, which relied in part on the review of financial and other information provided by the vendors of Track. Similarly, CrowdMobile has prepared (and made assumptions in the preparation of) the financial information relating to Track on a standalone basis and also to the CrowdMobile Group post-acquisition included in this Presentation in reliance on limited financial information and other information provided by the vendors of Track. CrowdMobile is unable to verify the accuracy or completeness of all of that information. If any of the data or information provided to and relied upon by CrowdMobile in its due diligence process and its preparation of this Presentation proves to be incomplete, incorrect, inaccurate or misleading, there is a risk that the actual financial position and performance of Track and the Combined Group may be materially different to the financial position and performance expected by CrowdMobile and reflected in this Presentation. Investors should also note that there is no assurance that the due diligence to be conducted will be conclusive and that all material issues and risks in respect of the acquisition will been identified. Therefore, there is a risk that unforeseen issues and risks may arise, which may also have a material impact on CrowdMobile. CrowdMobile has undertaken financial, business and other analyses of Track in order to determine its attractiveness to CrowdMobile and whether to pursue the acquisition. It is possible that such analyses, and the best estimate assumptions made by CrowdMobile, draws conclusions and forecasts that are inaccurate or which are not realised in due course. To the extent that the actual results achieved by Track are different than those indicated by CrowdMobile s analysis, there is a risk that the profitability and future earnings of the operations of the Combined Group may be materially different from the profitability and earnings expected as reflected in this Presentation. The acquisition involves the integration of the Track business, which has previously operated independently to CrowdMobile. As a result, there is a risk that the integration of Track may be more complex than currently anticipated, encounter unexpected challenges or issues and takes longer than expected, diverts management attention or not deliver the expected benefits and this may affect CrowdMobile s operating and financial performance. If the acquisition of Track completes, CrowdMobile may become directly or indirectly liable for any liabilities that Track has incurred in the past, which were not identified during its due diligence or which are greater than expected, and for which the market standard protection (in the form of insurance, representations and warranties and indemnities) negotiated by CrowdMobile prior to its agreement to acquire Track turns out to be inadequate in the circumstances. As the acquisition of Track will result in a change in control of Track, there could be adverse consequences for CrowdMobile. For example, contracts to which Track is a party may be subject to review or termination in the event of a change of control of Track. CrowdMobile will undertake a formal fair value assessment of all of the assets, liabilities and contingent liabilities of Track post-acquisition, which may give rise to a materially different fair value allocation. 24

25 Risks Specific to Track Concepts Risk Receivables High amounts of receivables from gateways. Results in currency risks. IT outages Could lead to decreased billing to customers. Risk of outages at gateways, operators, own platform. Rapid market developments Legal requirements & regulation Dependency on operators Dependency on marketing channels Risk Mitigation Company works with reputable blue chip partners. Track operates a well maintained and state of the art platform. Fast developing mobile phone market. Flexible platform allows adjustments/updates with no downtime. For example, a new development such as Direct Carrier Billing is now fully integrated into Track s platform. Including consumer protection, overregulation. Could lead to discontinuation of certain business models. Required for billing; operators can adjust legal/technical requirements, exploit power. Changes cannot always be charged through to consumers. Dependent on marketing agencies. Online advertising is increasingly regulated Competition Increasing competition. Relatively low entry barriers. Well diversified, active and disciplined country portfolio management ensuring quick response. Infrastructure enabled Track to expand its global reach with ease and speed. Becoming part of a larger, further developed party would enable enlarged distribution power with gateways and telecom operators. In addition, Track provides multiple services and has established partnerships with multiple gateways in its key countries. Established relationships with a diversified range of marketing agencies and extend the direct buying of Internet traffic. Strong proprietary platform that is best of breed in the market. Access to over 50 countries. 25