2017 Interim results
Disclaimer The information contained in these presentation materials has been prepared by PAX Global Technology Limited ( “Company” or “PAX”) solely for use at the presentation to prospective investors for introduction of the Company. By accepting this document, you are agreeing to maintain absolute confidentiality regarding the information disclosed in this document. This document has not been independently verified. No representation or warranty, expressed or implied, is made as to, and no reliance should be placed on the fairness, accuracy, completeness or correctness of the information contained herein. The information contained herein shall be studied and considered based on the circumstances at the time as the information has not and will not be updated to reflect progress of events after the date of the presentation. These materials contain statements that reflect the Company's current beliefs and expectations about the future as of the respective dates indicated herein. You should not place undue reliance on forward-looking statements. These forward-looking statements are based on a number of assumptions about the Company's operations and factors beyond the Company's control and are subject to significant risks and uncertainties. Accordingly, actual results may differ materially from these forward-looking statements. The Company expressly declaims any no obligation to update these forward-looking statements for events or circumstances that occur subsequent to such dates. There can be no assurance that the results and events contemplated by the forward-looking statements contained in these materials will in fact occur. The information contained in these materials may be of a price-sensitive nature and the provision of any such information shall constitute you and /or your representatives as “insiders” subject to the laws of Hong Kong or elsewhere. Accordingly, you may not deal in, and will inform your representatives of the restriction against dealing in, any shares in the Company in breach of any applicable laws. 1 PAX Global – 2017 Interim results
Agenda 1. 2017 Interim financial highlights & results 2. Full year guidance 2 PAX Global – 2017 Interim results
2017 Interim financial highlights & results 3
2017 interim highlights • Interim revenue: HKD 1,606M - YoY change: +20.5% - Overseas market, YoY change: +47.2% • Interim gross profit margin: 41.7% - YoY change: -190 basis points • Interim R&D expenses: HKD 119M - YoY change: +92.1% • Interim profit attributable to the owners of the Company: HKD 265M - YoY change: -14.7% • 2017 1H M&A activities - 4 completed/ contracted transactions • Proposed 2017 interim dividend: HKD 0.04 per ordinary share 4 PAX Global – 2017 Interim results
Financial results – Revenue by region 1H 2017: HKD 149M 36% USCA 1H 2017: HKD 570M LACIS +55.4% 1H 2016: HKD 96M 9% +146.8% 1H 2016: HKD 231M HKD KD 1,6 ,606M 7% 1H 2017: HKD 105M APAC* +20.5% +22.6% 1H 2016: HKD 85M 16% 1H 2017: HKD 263M 32% EMEA 1H 2017: HKD 519M China -19.2% 1H 2016: HKD 326M -12.7% 1H 2016: HKD 595M -8.4%** *Exclude China; **Constant currency basis 5 PAX Global – 2017 Interim results
Financial highlights – Regional updates +55.4% USC USCA (HKD 149M) US : i) PAX is in growth stage ii) Keeps on gaining more new customers -12.7% iii) Will target three market segments: • integrated multilane for large chain stores Ch Chin ina (HKD 519M) • new generation cash registers for small to i) Market remains volatile: -19.2% medium sized merchants - influence of the interchange rate policy • unattended petroleum solutions EMEA (HKD 263M) EM - keen market competition ii) Shipment volume increased by 8% Europe: i) Expanding European footprint by iii) Rapid change in technology and market’s acquiring CSC Italia S.r.l needs ii) Encouraging performance in Eastern European countries Middle East: Shipments slightly slowed down +146.8% +22.6% LA LACI CIS (HKD 570M) APAC C (HKD 105M) Brazil : i) Successful launch of traditional payment terminals Korea: Expanding into Korea market by a proposed ii) Maintain dominant leading position in mPOS market acquisition of a Korean subsidiary Argentina and Russia : meaningful growth expected in the India and Indonesia: growth continues future Notes: APAC (Asia Pacific exclude mainland China); LACIS (Latin America and Commonwealth Independent States); EMEA (Europe Middle East and Africa); USCA (the United States of America and Canada); China (the People’s Republic of China exclude Taiwan, Hong Kong, Macau). 6 PAX Global – 2017 Interim results
Financial results – Operating expenses For the period ended 30 June 2017 For the period ended 30 June 2016 +/- (HKD ‘000) (HKD ‘000) Selling expenses 195,083 125,759 +55.1% Administrative expenses 209,885 132,917 +57.9% R&D expenses 119,290 62,105 +92.1% (included in administrative expenses) • Selling expenses +55.1% - Increase in sales and after-sales service staff headcounts 1H17 average headcounts: approximate 600; 1H16 average headcounts: approximate 400 - Increase in advertising expense • Administration expenses +57.9% ( R&D expenses +92.1%) - Increase in R&D staff headcounts 1H17 average headcounts: approximate 950; 1H16 average headcounts: approximate 600 - Increase in certification expense 7 PAX Global – 2017 Interim results
Financial results – Key balance sheet items movement As at 30 June 2017 As at 31 December 2016 As at 30 June 2016 Key Items (HKD ‘000) (HKD ‘000) +/- (HKD ‘000) +/- 1,743,572 1,347,446 +29.4% 1,453,756 +19.9% Trade and bills receivables Goodwill 87,026 64,583 +34.8% 69,157 +25.8% Prepayment for land use rights 83,333 - n/a - n/a Available-for-sale financial asset 18,282 - n/a - n/a • Trade and bills receivables +29.4% - Comparing to the balance as at 30 June 2016, the increase is mainly driven by sales growth - No significant change in credit risk and repayment pattern • Goodwill +34.8% - Acquisition of 60% equity stake of CSC Italia S.r.l • Prepayment for land use rights - Entered into an agreement on purchasing land use rights of a land at Shenzhen (will be China headquarters of the Group) • Available-for-sale financial asset - Invested in 20% equity stake of Onslip AB (a Sweden company providing software and solution services) 8 PAX Global – 2017 Interim results
Full year guidance 9
FY 2017 guidance • Topline: +5-15% • Gross profit margin: 40%~42% • Operating profit: approximate the trend as interim 10 10 PAX Global – 2017 Interim results
Q & A 11
Appendix: New products & services E500 QR 55 • • Launching by 2H 2017 Launched in 1H 2017 • • Facing small and medium merchants Configured with camera & color screen • • Address customers’ need for one -stop payment platform with Target NFC & QR code payment market payment functions Secured cloud-based SaaS platform – PAXSTORE Omni-payment gateway service – PAXPAY PAXPAY Alipay • A secured cloud-based (SaaS) platform based on amazon Merchants web services • Key features WeChat Pay ➢ Application management • Easily integrated with APPs ➢ Terminal management • ➢ Provides SDK for applications directing to WeChat Pay or Alipay Value-added services for payment 12 12 12 12 PAX Global – 2017 Interim results
Investor relations – IR contacts • Ethan Cheung, Chief Financial Officer • Calvin Pei, Assistant Vice President - Corporate Strategy & Finance • Steven Chen, Assistant Vice President - Corporate Strategy & Finance Email: ir@pax.com.hk TEL: +852 2500 8510 13 13 PAX Global – 2017 Interim results
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