BNN Resources Regulatory News (BNN)

28 June 2017

AGM Statement

BNN Technology (AIM:BNN), a London-listed Chinese technology, content and services company, today provides the following statement made by Harry Keiley, Chairman, at the Annual General Meeting:

"2017 is on track to be a year of significant progress, as the initiatives we have announced over the past year are launched and begin to generate revenues. At this stage in the financial year, I am pleased to report that we are broadly in line with expectations and on track to meet market expectations for the full year.

"In the first half, revenues have been generated through mobile top-up sales, which have increased further over the first quarter, legacy lottery sales and initial sales from the test launch of petrol card top-ups on the motorist services platform. Gross revenues for the first half will be of the order of £900 million, although margins are modest and net revenues will be of a similar order to 2016. Accordingly, the half will show an operating loss broadly in line with expectations.

"In mobile top-ups our strategy is to grow both the gross revenues and, more importantly, margins. In the past nine months, we have transacted approximately £1.1 billion of mobile top-up sales on our platform. We have more than proved the capability and resilience of our systems and, as a result, are now in a position to agree higher value and higher margin contracts in this market, including both mobile top-ups and data. Specifically, we have signed a significant new contract with one of the largest telcos in China, which is expected to generate material revenues and increased margins from July 2017 onwards, materially exceeding those achieved to date.

"With the major launch of petrol card top-ups expected in July, followed by the student platform before the end of Q3, we anticipate material revenues at much higher margins in the second half of the year. Preparations for these launches in terms of access to customers and users are advanced and we look forward to reporting on these revenue streams in the coming months. Our competitive advantage in the marketplace has improved considerably and we expect to sign a number of key B2B partnerships in the coming weeks.

"The very successful launch of our soccer microsites in May has comfortably exceeded all internal targets, generating more than 250,000 unique registered users to date, with more than 800,000 unique visitors to our sites. We expect the benefits of this valuable database to contribute both to advertising revenues and to our B2C drive across the Group's various platforms in the second half and beyond.

"We are particularly excited at the prospect of the student services platform, which is scheduled for launch before the end of Q3. The platform will initially focus on the provision of recruitment services for part-time jobs for China's 35 million students, which is an increasingly important demographic as China continues to grow. Following detailed discussions, we are expecting several major international fast food and retail companies, and utility companies to be amongst the first employers to use the platform.

"Development of the additional aspects of the student services platform are continuing, as announced earlier this month, including graduate recruitment services and sales of mobile phones and other devices (and associated financing), as well leveraging our mobile and mobile data top-up and motorist services to this important user group. We expect to make further updates as we progress towards launch in October 2017.

"The Group's focus upon the creation of big data continues to gain momentum and the Board believes that this increasingly valuable commodity will develop significant shareholder value by extending our income generating capabilities considerably. From our partnerships to support the key data and utility provision of local government, to our ultimate entrance into the credit checking market, we are confident that this strategy will deliver us a very substantial Chinese database.

"The Board has previously stated that it wished to obtain a secondary listing on the NASDAQ exchange during Q3 2017. Whilst it remains our intention to list in the United States as soon as possible, and the SEC application process is well advanced, advice from leading US banks leads us to believe that the shareholder value created by the initiatives listed above, once executed, will attract significant additional interest on NASDAQ. This will inevitably delay the US listing process, but the universal view of the Company and its advisers is that focusing on new revenue generation is firmly in the best interests of all shareholders.

"In summary, we are pleased with the significant steps forward that the Group has made during the first half and look forward with considerable confidence that the execution and delivery of all of those initiatives will deliver substantial shareholder value."

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