SMIT Announces 2016 Interim Results

(Hong Kong, 5 August 2016) – SMIT Holdings Limited (“SMIT” or the “Company,” together with its subsidiaries, (the “Group”)) (stock code: 2239), a global leading CAM supplier and a major mPOS supplier in China, has announced its unaudited interim results for the six months ended 30 June 2016 (the “Period”).

During the review period, the Group’s overall revenue decreased by approximately 22.3% year-on-year to US$26.9 million, mainly due to reduced orders of mPOS products resulting from industry adjustment in response to new PRC regulations in the first half of 2016. However, the increase in the gross profit margins of both mPOS and CAM products during the Period have driven the overall gross profit margin to climb from 34.4% in the same period last year to 42.2% , representing a year-on-year increase of 7.8 percentage points.

The profit during the Period amounted to US$2.0 million while it was US$3.2 million in the corresponding period last year. Excluding the impact from listing expenses, the Group recorded a profit of approximately US$3.9 million during the Period, which was relatively stable compared to the same period in 2015..

Mr. Shuai Hongyu, President of SMIT, said, “Amidst the unstable global market conditions in the first half of this year, the Group’s businesses have faced many challenges. To better cope with the situation, the Group has actively explored new customers to broaden our customer segments, and developed more new products and cooperation opportunities. In the second half of this year, economic uncertainties are expected to persist. In light of this, we will continue to strengthen our competitive advantages thereby reinforcing our industry-leading position, as we actively explore new business opportunities in a bid to differentiate ourselves in the market.”

During the Period, with respect to the CAM business, the Group actively sought out new customers. The Group, together with Irdeto, a major conditional access provider, has provided CAMs to MEDIA BROADCAST, a German broadcasting operator, which is launching the first commercial television channels on the German digital terrestrial broadcasting system. This is part of Germany’s conversion to DVB-T2, the new terrestrial broadcasting system standard. Germany is currently leading the European market in this conversion, and by producing and selling compatible CAM products at this early stage, the Group has positioned itself as an industry leader. The solution signifies that the Group’s new generation of 1680 chipsets are now available for market applications. Moreover, in collaboration with Irdeto, the Group has obtained RCSRDS, a new major broadcasting operator customer in Romania, for the provision of a cardless solution developed based on the Group’s 1670 chipset and Irdeto’s advanced security standards. The cardless solution also supports the customer’s own customized features, such as parental rating and menu/screen displays.

As for the mPOS business, the Group and Bank of Urumqi jointly developed the Xuelianbao Facilitated Service Project and successfully launched it to the market. This marks the Group’s first joint project with a traditional commercial bank in providing equipment support for the bank’s online to offline payment systems. The Group believes that the traditional commercial banks represent a considerable opportunity for future growth in its mPOS business.

Looking ahead to the second half of the year, the Group will continue to adjust its business strategy and proactively co-operate with industry partners and customers to develop new projects and business opportunities. The CAM solution supplied to MEDIA BROADCAST by the Group and Irdeto will help set the industry standard for CAM products as the DVB-T2 conversion rolls out across Europe. The Group plans to pursue similar opportunities and continue improving its research and development capabilities in order to further solidify its leading position in the global CAM market.

In addition, the Group anticipates that the mobile payment services industry will be able to recover as it adapts to the new standards in the long term. As a major supplier of mPOS devices in the PRC, the Group intends to leverage its position for further growth opportunities once the industry stabilises. In anticipation of further developments in the mobile payments industry, the Group’s new generation of mPOS products are in the process of obtaining UnionPay certifications. Additionally, the Group has obtained EMV certification, an internationally recognized technical standard for payment devices, for its most commonly sold mPOS product model, in order to lay down a solid technological foundation for expansion to an overseas market.

About SMIT Holdings Limited

SMIT Holdings Limited is a leading security devices provider for pay TV broadcasting access worldwide and for mobile point-of-sale, or mPOS, payment systems in China. The Company’s main product types are CAMs and mPOS devices. According to Frost & Sullivan, the Company was the largest CAM provider globally by both sales volume and revenue in 2014 and for the first half of 2015. In addition, the Company was a major mPOS supplier in China.