SMIT 2017 Interim Profit Skyrockets 77.9%

SMIT 2017 Interim Profit Skyrockets 77.9%

Highlights

 For the six months ended 30 June 2017, the revenue increased by 19.6% to USD32.2 million,

mainly due to the growth in the CAM business and sales in the new O2O smart terminals and

blockchain server businesses. Profit amounted to USD3.5 million, an increase of 77.9%, partly

attributable to the increase in revenue and gross profit due to the contributions from CAMs

business and new businesses

 For the CAM business, as the European markets gradually picked up and the mass-scale sales

in emerging markets have also entered a favourable development stage, sales of CAMs

reached approximately USD22.8 million, representing a 22% increase year-on-year. As the

sales in the European market with comparatively higher gross margin picked up, the gross profit

margin of its CAMs products during the period was 1% higher than the corresponding period in

2016

 New Businesses has started to make contribution and accounted for 10.7% of the Group’s

revenue

 O2O smart terminals: the group took a non-controlling stake in a Shenzhen one-stop

cross-border e-commerce company to enter the O2O smart terminal business and become

the exclusive O2O smart terminal supplier of the e-commerce company, enabling the quick

commencement of the new O2O smart terminal business

 Blockchain chipset and server: the group co-developed an integrated blockchain chipset

and server business with a Shenzhen technology company. Both parties have also begun

to cooperate on a business level by providing the blockchain server to the Shenzhen

technology company and to integrate the upstream and downstream resources of

blockchain technology and achieve synergies for the development of the Blockchain

Business and mobile payment business

(Hong Kong, 1 August 2017) – 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

2017 (the “Period”).

For the six months ended 30 June 2017, the Group recorded revenue of USD32.2 million, increased by 19.6% when compared with the corresponding period in 2016, mainly due to the growth in the CAM business, sales in the new O2O smart terminals and blockchain chipset and server businesses(“Blockchain Business”). Profit surged to USD3.5 million, representing an increase of 77.9%. During the Review Period, the Group continued to maintain a healthy and solid liquidity position. As at 30 June 2017, total cash and cash equivalents of the Group amounted to USD51.9 million. The Group has no debt so far.

Mr. Huang Xueliang, Chairman and Chief Executive Officer of SMIT, said, “As the European markets gradually picked up and the mass-scale sales in emerging markets have also entered a favourable development stage, the business performance of CAMs has met our expectation. At the same time, to diversify its business, the Group expanded new business scope to enter the O2O smart terminal business and Blockchain Business and contributed revenue to the Group. The Group continues to make these businesses to be one of the Group’s growth drivers.”

In the first half of 2017, the Group’s sales from CAMs reached approximately USD22.8 million,representing a 22% increase as compared to the corresponding period in 2016, and contributed to 70.6% of the Group’s total revenue. As the sales in the European market with comparatively higher gross margin picked up, the gross profit margin of its CAMs products during the period was 1% higher than the corresponding period in 2016. During the Review Period, the Group had good performance in Europe, mainly attributable to the significant growth from the mass shipment of USB TV-Sticks to Media Broadcast, a large customer newly secured in Germany last year. Partly due to

the gradually increase in shipment to Indian operator Airtel, the emerging markets also grew considerably with revenue by 355.4% as compared to the corresponding period in 2016 and contributed to 2.9% of the Group’s total revenue.

As for the mPOS business, the development of the entire market remained in the stage of adjustment. In the first half of 2017, the Group’s revenue from mPOS amounted to approximately USD6 million, representing a decrease of 27.5% from the same period last year, and accounted for

18.7% of the Group’s total revenue. Facing the different demands of customers and rapid changes in the market, the Group continued to actively develop a range of smart payment hardware and has actively sought for authorisation and certification for a variety of new products. A large member of key smart payment products including the smart POS SM40, personal payment terminal SM10 and mPOS SM30 have all received “UnionPay Card Acceptance Terminal Safety Certification” which can enhance the competitiveness of the Company’s products in the smart payment terminal market.

In addition, the Group actively expanded its business scope to O2O smart terminal and Blockchain Business. During the Review Period, the Group took a non-controlling stake in a Shenzhen one-stop cross-border e-commerce company and has become the exclusive O2O smart terminal supplier of the e-commerce company, enabling the quick commencement of the new O2O smart terminal business. During the Review Period, this product segment generated USD0.9 million revenue,accounting for 2.9% of the Group’s total revenue. For the Blockchain Business, the Group and a

Shenzhen technology company have entered into a strategic cooperation relationship to co-develop an integrated Blockchain Business. Both parties have also begun to cooperate on a business level by providing the blockchain server to the Shenzhen technology company, base on the Group’s strong ability to integrate upstream and downstream resources vertically and its production management experience. This initiative serves as a starting point for the Group to integrate the upstream and

downstream resources of blockchain technology and achieve synergies for the development of the Blockchain Business and mobile payment business. During the Review Period, this segment recorded a revenue of USD2.5 million, accounting for around 7.8% of the Group’s total revenue.

Looking ahead, the Group is optimistic and remains positive about the business prospects for the second half of the year 2017. The Group will continue to endeavour to secure a larger market share and actively expand its business scope. The Group will also further optimise internal controls and improve cost-efficiency. Leveraging its leading position in the global CAM market, the Group will further develop the European market and markets in other regions with stronger momentum and continue to promote the USB CAM project with reference to the characteristics of the PRC market.

Moreover, the Group will continue to upgrade its security systems and develop new product models to support more diverse payment methods and other value-added features. The Group will also identify opportunities to cooperate with third party payment operators, commercial banks and other types of potential mPOS customers. The Group will continue to proactively cooperate with industry partners to develop more new projects and business opportunities. In order to further promote business development, the Group will actively seek suitable merger and acquisition opportunities so as to enhance its development capabilities for security devices and expand its business to new products and service areas in order to bring greater returns to its shareholders.