Great to see you both too Masmit and Reo, It's also great to have two holder's views posted up for consideration.
The meeting had 13 shareholders until that same man got up and collected the cups.
The mood of the board was much more confident than in previous years. This year board member Ian Tang was introduced, who as we know is the owner of 123 Education Development and brings to SMA the Rovio Angry Birds Playground Curriculum and Learning Space deal. I won't add anymore to what Masmit has posted.
This was also Dr Geoff Raby's first year chairing the AGM, obviously with many years experience as a politician, his comments were well crafted. Notwithstanding he was quite reassuring and seemed very genuine about the extent SMA had established a firm base in China so early in the smartphone revolution that it would be difficult if not impossible for startups to penetrate what is now a "massive entry barrier" that SMA has broken through. In fact for the first time, he conceded that in previous years, SMA while developing their approach and learning how to develop their place in the the market, there had been mistakes made. This honesty was new to SMA AGMs and personally I felt slightly more trusting and less sceptical than in the past.
The past billing issues have obviously been a considerable problem but seem to be sorted out now. The 90 day wait with China Mobile and other providers was explained by the first 30 days being normal end user terms, the next 30 days being available for end user App purchase dispute and the last 30 days being the provider's normal credit terms. This means that the incomes SMA began making in August and May will now start rolling in.
The Double Eagle deal is still awaiting the China Merchant's Bank Launch. CMB and other banks lost considerable market share to Alipay (a Paypal equivalent), and are attempting to get it back on the back of of SMA.
The Company Overview & Update IMO seemed slapdash in preparation and very thin on real detail, in fact Raby sidestepped it's presentation as it was soon made redundant by Bryan's verbal report.
Long before the inevitable question regarding a CR, Raby announced the closure of the Perth Office and the centralisation of management in Melbourne. He also announced the appointment of a CFO to assist in improvements to efficiency. He wouldn't be held to any estimate for when SMA would become cash positive unlike the off-the-record estimation of 12 months given by his predecessor John Forsyth at the last AGM.
The question of SMA's security over it's Intellectual Property discussed saying that the software is held safely on secure servers and safe from reverse engineering or hacking. On the flipside, some of the problems "pushing" V1 onto customers is that there are a huge number of fake sites and counterfeit products. SMA is working toward addressing this identity problem through their marketing campaigns.
AGM questions
Q. Is the company using word of mouth marketing as part of its campaign to attract clients?
Bryan: The marketing strategy that is proving the most successful is based on "Push Marketing" , ie: developing a database collecting every detail from mobile provider, region, user location, user habits, handset type, App purchase history etc. Rather than SMA generating a "Brand", using this valuable and ever growing database, the marketing spend can be focused to the exact target buyer without waste.
Q. Why is DPhone not ever mentioned as a significant income or as a successful achievement? What is the royalty percentage SMA earn from the deal.
Bryan: The billing mechanism hadn't quite been sorted out until as late as August but is operational now.
Now, I have written in my own words my best understanding of what he explained is the status with DPhone, I asked for a additional clarification adding that the SMA platform was preloaded to initially 1 million phones over a year ago and now there are 4 million rolled out. I compared notes with Reo and Masmit and we were all perplexed by the response. Without doubt it was a negative and confusing response for the shareholders present.
Q. Is the company 'hitting' it's own targets re penetration/revenue re mylife products?
Geoff Raby: Without any reservation Yes, the board is very satisfied.
Q. Is the company still on-track for the China Merchants Bank / Double Eagle launch in Q1 2014...and can they update on the potential?
Raby: Yes SMA is all set just waiting on the CMB launch, No - not at this stage due to pre-launch confidentiality.
Q. Is the company looking at a consolidation and if so would it be part of a future CR? Consolidation wasn't asked when this question was posed by another holder but a CR is being delayed as far as possible by savings measures such as closing the Perth office. As inevitable as it might be at some stage, The board did seem genuine in trying hard to delay a CR. It also depended on the appropriation of funds for marketing should a specific additional spend be beneficial.
Q. Does the Company see the Mining and Logistics as separate operating enterprises that could be either sold, or floated as individual
Raby: Yes when someone offers the right deal.
Q. Has the 123 Education/Angry Birds opportunity been sealed with a written detailed signed agreement and launch date...if not,when? Raby: Yes and no
Q. What happened to the Dphone deal of 4m/yr phones in May 2012? Is this still alive
See above:
Q. Do you see a strong synergy on being able to push the V1 lottery app via the mylifeonline.cn and mylife365.cn websites? Can you quantify what we can realistically expect from such synergies in terms of cashflow?
See above
Q. It was noted that SMA may be cashflow positive within 12 months of last AGM. When do you now expect to be cashflow positive based on current progress?
See above
Generally, as Masmitt says, the shareholders left much happier than in previous years and would I guess be topping up at this SP in preparation for next year. It would seem though the DPhone was just one of those small stepping stones for SMA to take while moving forward into the future.
Most important points were, SMA's involvement with Double Eagle Deal is ready to go and awaiting the launch which is still expected in Q1 2014. I wouldn't expect Brazil Olympics submission to be a game changer if SMA are awarded the logistics deal as it is more of a sideline activity. (The Beijing Olympics deal didn't do much for SMA either). The Perth office closure shows that the mining interests are ready for disposal at the first opportunity and SMA is focussing it's efforts completely on Smartphone software.
Raby encouraged us to expect that the hard slog is mostly over and the near future is going to be very exciting. In his former role as Australia's Ambassador to China, he watched so many times only the most persistent Aussie battlers succeed in China after many years of hard work. To now be running SMA show's his confidence.
As the company focusses more on China, Bryan seems to be carrying a tremendous amount of the load.
For me, I am happy to keep adding more to the stock, the upside is still huge.
SMA Price at posting:
3.0¢ Sentiment: Hold Disclosure: Held
(20min delay)