9 March 2017
BNN Technology is pleased to announce its motorist services platform for Xinhua News Mobile App
· Significant extension of payment services on the Xinhua News Mobile App
· Important step in BNN's ambition to become a leading player in Chinese payments
· Broad offering of consumer servicers to motorists presents significant opportunities for data collection and margin enhancement
· Motorist platform to be launched in H2 2017
· NASDAQ application progressing and well advanced
BNN Technology plc (AIM: BNN), a London-listed Chinese technology, content and services company, today announces a cooperation agreement between NewNet, the Group's technology partner in China, and local partners to develop a motorist services platform for launch through the Xinhua News Mobile App.
The platform will provide a broad offering of consumer services to motorists in China, initially focusing on pre-paid petrol card top-ups, followed by motor insurance, car park payments, car maintenance and traffic fines. NewNet's partner in the motorist platform venture has signed its first strategic deal with one of the largest companies in the sector in China and expects to sign deals of a similar nature in the weeks ahead. As part of the cooperation agreement, NewNet will provide technology, management expertise, and data management on an out-sourced basis, and will provide working capital, in return for a share of profits from the motorist platform venture. The cooperation agreement also allows for NewNet to work with local partners on a broad scope of payment services in addition to the motorist platform that are proposed to launch through the national Xinhua News Mobile App, provincial Xinhua news apps and T-mall store (Taobao).
NewNet, under its existing agreements with 12 provincial Xinhua News agencies and Xinhuatong, will launch the motorist platform through the Xinhua News Mobile App. Xinhuatong is a software development company and has the exclusive rights for payment processing and other key services on the Xinhua News Mobile App. In April 2016, NewNet announced a key partnership and profit sharing arrangement with Xinhua News and Xinhuatong to develop mobile payments applications for the Xinhua News Mobile App.
In 2016, there were 184 million cars owned in China and 296 million drivers. Rising incomes in China are expected to increase car ownership from 75 vehicles per 1,000 people to 600 per 1,000 by 2030 (Source: OPEC Research). The market for motoring related services in China is therefore very substantial and set to grow.
The market for pre-paid petrol cards is already large, worth RMB 2.4 trillion (£285.4 billion) in 2016 and forecast to grow to RMB 3.7 trillion (£433.9 billion) by 2021. Similarly, car insurance in China is forecast to grow from RMB 619.9 billion (£72.1 billion) in 2016 to RMB 1 trillion (£116.3 billion) by 2020. Almost one-third of car insurance in China was purchased online in 2016 (Source: China Insurance Regulatory Commission).
NewNet and its partners will enable consumers to purchase/top-up petrol cards and insurance through the Xinhua News Mobile App. As China does not have a strong credit card culture, unlike the US and other large markets, it has effectively jumped directly from cash to mobile. Chinese mobile payments were almost 50 times greater than those in the US during 2016 (Source: Kapronasia Research). US mobile payments in 2019 are forecast to be 2.6 times their 2015 value; Chinese payments are expected to grow by 7.4 times in the same period (Source: Forrester; iResearch).
Accordingly, Chinese internet companies involved in payments are an important gateway to China's fintech infrastructure. Digital payment platforms are also an important source of transaction and financial data that is increasingly being leveraged by payment companies for new fintech platforms, targeted advertising, product development and social credit scoring. In these respects, the motor services offering through the Xinhua News Mobile App is a major step in the Group's strategy to become a leading player in on line and mobile payments in China. The motor services offering should also serve to drive more users to the Xinhua News Mobile App, which has already seen its user base increase from 120 million in February 2016 to 160 million in early December.
NewNet and its partners will develop and test the necessary infrastructure over the coming months and expect to launch motor services in the second half of 2017. Whilst the precise commercial terms agreed with its partners in the motor services cooperation agreement remain confidential, the Board of BNN expects the margins to be notably higher than those earned on revenues to date through the Xinhua News Mobile App platform.
In October 2016, we submitted our formal application for a secondary listing on NASDAQ, and that process is progressing well. We continue to work with NASDAQ, our legal and financial advisers and the US Securities and Exchange Commission on the application and we will provide updates as we meet key milestones, notably on when we appoint an investment bank as our underwriter and when our application is filed publicly. We expect to give more detailed guidance on timing after the forthcoming 2016 annual results have been published in the coming weeks.
Darren Mercer, Chief Executive of BNN Technology, said:
"I am delighted that our technology platform has been chosen to work with blue chip partners to develop, within the Xinhua News Mobile App, this unique 'one-stop-shop' for motorists. This initiative represents significant progress in BNN's strategy of becoming a leading internet portal for payments and other essential services in China. The margin enhancement expected on sales generated through this platform should ensure that it makes a material contribution to the Group's earnings in the current year. Additionally, this platform is expected to generate valuable consumer data which we plan to use to develop additional revenues from our existing and planned new sales channels, as we focus on the roll out of wider B2C activities in 2017 and beyond."
For further information, please contact:
BNN Technology plc
Darren Mercer, Chief Executive
Scott Kennedy, Chief Financial Officer
+44 (0) 1565 872990
Strand Hanson Limited (Nominated Adviser)
Andrew Emmott / Ritchie Balmer
+44 (0) 20 7409 3494
Mirabaud Securities LLP (Broker)
+44 (0) 20 7878 3362
Brian Buckley / Diana Vaughton
+44 (0)20 7404 5959
About the Group
BNN Technology plc is a Chinese technology, content and services company that builds long-term partnerships to deliver China's citizens with value-added services, content and evolving opportunities.
Listed on AIM since 2014, the Group principally engages in providing technology to facilitate fulfilment of payments online and on mobile apps through partnerships or affiliate agreements with corporate and government entities, and in developing digital content, both online and mobile. Through its partnership with Xinhuatong, BNN facilitates mobile payments on the Xinhua News Mobile App through its technology platform throughout China. The Chinese consumer shift to 'life on mobile' is only just beginning and BNN's platform technology enables urban and rural communities across China to access exclusive content and pay for services online.
The Group has offices in 12 provinces and almost 300 employees in China.