Transcription of Finance News Network Interview with TTG Non-Executive Director, Mr Ross BensonLelde Smits: Hello, I’m Lelde Smits for the Finance News Network and joining me today from TTG is Non-Executive Director, Ross Benson. Ross, welcome to FNN.
Ross Benson: Lelde, I’m delighted to be here.
Lelde Smits: TTG provides software and technology solutions for China’s consumer market and plans to list on the ASX in November: Why list in Australia?
Ross Benson: Certainly, and obviously apart from the fact that the Chinese like Australia, there is three main reasons. The first one is that they want to establish an enterprise value because it assists in mitigating their counterparty risk in China. The second one is that they see the Australian market as a highly regulated, compliant and efficient market and so it assists them in their profiling in the Chinese market. The third reason is this business is first to market with its business model and they would like to establish that in the financial markets as well.
Lelde Smits: And Ross could you explain why TTG focuses on China’s consumer market?
Ross Benson: Well everyone’s interested in the China consumer market but I think our answer would be that you have a phenomenon there called Consunova. This is very simply the combination of three key elements. Number one is you’ve got a very quickly increasing consumer base. Number two you have a rapidly expanding spend per capita, and number three you have an evolving definition of what the consumer is. So, the point at which these three elements meet represent a very exciting business opportunity.
Lelde Smits: So will Australia be a market for TTG over time and what do you believe will appeal to Australian investors about TTG?
Ross Benson: Within TTG’s rollout plans they are planning on obviously rolling out their product through China first but they will then target the major tourist destinations and naturally China see Australia as a major tourist destination. I think the major appeal for Australian investors is that TTG gives them an opportunity to participate in this very exciting growing consumer market of China.
Lelde Smits: Electronic commerce is the process of buying or selling over electronic systems: Could you detail the products or services TTG offers?
Ross Benson: TTG have their core product offering is an open API platform called ULPOS and basically what this is, is an architecture which allows all market participants; consumers, consumer groups, merchants and financial intermediaries to operate on one cohesive platform. That platform delivers mutual benefits to all parties.
Lelde Smits: How does this offering benefit consumers?
Ross Benson: The three main benefits are that the platform, when consumers participate by registering through their credible debit card, they get access to all the merchant discounts that are on the platform, so that’s the first one. The second one is that it eliminates a lot of the counter party risk that you see occurring with platforms that offer discounts to consumers. In China there are five thousand Groupon style business models and they’ve got a serious problem with counterparties not settling the transaction. The third one is that it allows a consolidation of all the product information and expenditure for the consumer, such as warranties, into a digital cloud-connected service.
Lelde Smits: So Ross, what do you believe is unique about this offering?
Ross Benson: Well I think it’s unique because it’s the first platform in the world of this type that actually has all the market participants cooperating cohesively, that makes it very unique. But in a business sense it’s quite unique because it turns the traditional model of customer acquisition upside down. By that we simply mean, traditionally merchants normally spend money first, then consumers spend; that’s a fixed cost customer acquisition model. What the ULPOS platform does is convert that fixed cost paradigm to one hundred per cent variable cost customer acquisition.
Lelde Smits: How does TTG generate revenue?
Ross Benson: Two primary sources of revenue. The first one is a share of the revenue that comes on to the ULPOS platform. That revenue coming onto the platform is card transaction fees, and a share of the merchant rebate that they attribute to the platform when they join. The second level of fees is what we call system integration fees, so that’s TTG working with business and operating partners to interface with the open API Platform.
Lelde Smits: What is the company’s origin and where are your management based?
Ross Benson: The origin is directly attributable to the Chairman, Mr Xiong. Mr Xiong is a well known and successful e-commerce entrepreneur in China and the principles, including Mr Xiong, started with the value proposition to deliver a solution to the Chinese market that provided macro-economic benefits, social benefits and tangible benefits to all the parties in the market. The management of TTG operationally is based in the PRC of China and at a board level we have Hong Kong, Sydney and PRC representation.
Lelde Smits: And Ross what makes TTG different to similar offerings elsewhere in the world?
Ross Benson: The main difference is that ULPOS is the first of its kind in terms of this platform which brings all parties cohesively. At the moment it’s very, very difficult to replicate this platform outside China because you don’t have an environment where you’re operating with a clearing house that has a monopoly.
Lelde Smits: Looking closer at your listing: How many shares are on offer and what percentage does this represent of the company?
Ross Benson: There’s four million CDI’s on offer, and it represents 0.6 per cent of the issued shares.
Lelde Smits: What is your issue price and what market cap [market capitalisation] does that put on TTG?
Ross Benson: The issue price is 60 cents per CDI, it puts an implied market cap of $380 million. It’s probably worth mentioning that the listing here in Australia is very much a compliance listing, we expect a free float for the first twelve months to be in the order of 1.5 per cent and the second twelve months approximately 2.8 per cent. What that means is strategically the company are looking to maintain a very tight equity register whilst this business evolves over the first two years.
Lelde Smits: Finally Ross, beyond listing on the ASX what are TTG’s main objectives for accelerating growth into next year?
Ross Benson: The main target is to roll out the ULPOS platform to the major cities in China. So, Beijing, Chengdu, Xiamen, Hainan, and Shanghai. Once that’s achieved they’ll then target the major tourist destinations.
Lelde Smits: Ross Benson, thank you for the introduction to TTG.
Ross Benson: Thank you, my pleasure.
Ends
