Fake-fighter YPB partners with Australian Made after AliHealth deal

Special report: Traceability tech YPB Group has been reinstated to trade today after agreeing to two of the biggest deals in the company’s history.

Today YPB (ASX:YPB) announced a partnership with the Australian Made Campaign – the movement behind the signature green and gold kangaroo stamp – to offer its full PROTECT DETECT CONNECT product suite to all of the 2700-plus Australian licensees.

The agreement follows YPB’s appointment by AliHealth, a subsidiary of the Chinese behemoth Alibaba Group, as an Independent Software Vendor for China — a deal which was announced last week.

The two deals marked a watershed moment for the company which has been voluntarily suspended from trade since early January.

“There is no greater door-opener in Australia than Australian Made — and naming us as a partner in Australia allows us to do this,” YPB’s chair John Houston told Stockhead.

“The same goes for the AliHealth name in China – a market of substantially larger size and opportunity.”

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YPB’s proprietary CONNECT platform helps clients protect their brands and vital documents from counterfeiting and theft through the use of PROTECT codes (which are like super QR codes) as well as providing the tools to connect with end-users.

Scanning these codes at points in a supply chain provides forensic-level security at low cost to minimise brand damage and consumer harm and can provide information direct to the consumer at the final destination.

Once the product is in the customer’s hands, YPB’s customer engagement software kicks in, enabling brands to leverage investment in packaging to build detailed profiles of otherwise invisible and unknowable customers as well as operating a personalised, digital marketing channel directly to any smartphone.

Green and Gold

Partnering up with the golden kangaroo has the potential to be a major revenue contributor in the years to come as Aussie exports increasingly recognise the need to combat counterfeits.

The chief of Australian Made Campaign, Mr Ian Harrison, said the group’s partnership with YPB would help fight fakes.

“Combining the Australian Made logo with technological solutions can contribute to product and brand integrity,” he said.

“As product copying and brand appropriation become global market issues, it is important that Australian producers adopt appropriate technology that will help ensure supply chain integrity and combat counterfeiting — both in Australia and overseas.”

Information about YPB’s products will be available via the Australian Made website from May with potential to reach its pool of 2700-plus licensees and more than 20,000 individual products.

Mr Houston said connection with end-customers was particularly pertinent with the growing number of daigous sending products to Asia.

“At present the last contact the brand has with each customer is leaving the supermarket but that often is not the final user,” he said.

“Our PROTECT codes allow for Aussie brands to reach Chinese customers directly.”

Respected partnership

YPB hopes its strategic partnership with AliHealth will chart a clear path to profitability due to the prominence and reputation of its parent company, the $464 billion Alibaba Group.

In the first commercial partnership of its kind, YPB was appointed as an Independent Software Vendor last week to sell the tech in China first and with a view to become an overseas partner when it launches internationally.

“YPB expects the 2018 revenue impact of this contract to be Major, defined as greater than $1 million per annum, and a valuable contributor to our expectation of a $5 million pre-tax profit for 2018,” the company told the market on its announcement.

“In the next 10 years, we believe that all products will be serialised,” Mr Houston told Stockhead.

“The world of retail and ecommerce is changing rapidly and customers are demanding full transparency and traceability… we ride in the eye of the storm of traceability.”

Watershed moment

News comes against the backdrop of what the company described as an ‘unacceptable and disappointing 2017’.

Its result for the year ending December 2017 showed a loss of $11.2 million, down from $16.4 million the year before, with revenues down 33 per cent to $2 million.

In its report, the company pointed the finger at the departed CEO, especially in relation to sales in China and unsustainable overheads which Mr Houston has managed to reduce by 40 per cent with absolutely no change in operational effectiveness.

“The biggest revenue disappointment was the failure to convert a very large new business pipeline into sales and inordinate lags between contract closure and first sales,” it told shareholders.

Chairman, and now chief, Mr Houston said that was all behind them, and this month’s deals were proof the new strategy was paying off.

This special report is brought to you by YPG Group.

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