resource star limited investment in sugar dragon limited · 2017. 6. 6. · maverick (subsidiary of...

Resource Star Limited Investment in Sugar Dragon Limited

Investor Presentation

April 2015

Disclaimer

All currency amounts are in AUD$ unless stated otherwise.

Disclaimer

This presentation has been prepared by Resource Star Limited (“Company”). It does not purport to contain all the information that a prospective investor may require in connection with any potential investment in the Company. You should not treat the contents of this presentation, or any information provided in connection with it, as financial advice, financial product advice or advice relating to legal, taxation or investment matters.

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This presentation is provided expressly on the basis that you will carry out your own independent inquiries into the matters contained in the presentation and make your own independent decisions about the affairs, financial position or prospects of the Company. The Company reserves the right to update, amend or supplement the information at any time in its absolute discretion (without incurring any obligation to do so).

Neither the Company, nor its related bodies corporate, officers, their advisers, agents and employees accept any responsibility or liability to you or to any other person or entity arising out of this presentation including pursuant to the general law (whether for negligence, under statute or otherwise), or under the Australian Securities and Investments Commission Act 2001, Corporations Act 2001, Competition and Consumer Act 2010 or any corresponding provision of any Australian state or territory legislation (or the law of any similar legislation in any other jurisdiction), or similar provision under any applicable law. Any such responsibility or liability is, to the maximum extent permitted by law, expressly disclaimed and excluded.

Nothing in this material should be construed as either an offer to sell or a solicitation of an offer to buy or sell securities. It does not include all available information and should not be used in isolation as a basis to invest in the Company.

Future matters

This presentation contains reference to certain intentions, expectations, future plans, strategy and prospects of the Company.

Those intentions, expectations, future plans, strategy and prospects may or may not be achieved. They are based on certain assumptions, which may not be met or on which views may differ and may be affected by known and unknown risks. The performance and operations of the Company may be influenced by a number of factors, many of which are outside the control of the Company. No representation or warranty, express or implied, is made by the Company, or any of its directors, officers, employees, advisers or agents that any intentions, expectations or plans will be achieved either totally or partially or that any particular rate of return will be achieved.

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US disclosure

This document does not constitute any part of any offer to sell, or the solicitation of an offer to buy, any securities in the United States or to, or for the account or benefit of any “US person” as defined in Regulation S under the US Securities Act of 1993 (“Securities Act”). The Company’s shares have not been, and will not be, registered under the Securities Act or the securities laws of any state or other jurisdiction of the United States, and may not be offered or sold in the United States or to any US person without being so registered or pursuant to an exemption from registration including an exemption for qualified institutional buyers.

Private & Confidential 22 April, 2015 2

Agenda

1. Transaction Overview

2. Proposed Structure

3. Investment Summary

4. Investment Rationale

5. Management and Board

6. Market Opportunity

7. Okmno Asia Limited

8. Corporate Strategy

9. Products

10. Marketing Strategy

11. Business Model

12. Activity Timeline

13. Summary

3 22 April, 2015 Private & Confidential

Transaction Overview

Resource Star Ltd, an ASX listed entity (ASX:RSL) intends to acquire a 60% interest in Sugar Dragon Limited through the following structure

• Initial phase - Resource Star to take a 15% interest in Sugar Dragon Limited through the proposed structure below:

– A $300,000 refundable deposit within 2 days of execution. The deposit is refundable in the event the Conditions Precedent are not satisfied, otherwise it will convert into 4,615,384 Sugar Dragon shares at $0.065

– A $200,000 unsecured and interest free loan within 21 days of execution, repayable in the event the Conditions Precedent are not satisfied, otherwise it will convert into 4,615,384 Sugar Dragon shares at $0.065

• Subject to shareholder approval and a re-compliance capital raising Resource Star intends to subscribe for a further 55,769,233 Sugar Dragon shares at $0.065 for $3,625,000 increasing its ownership to 60%, of Sugar Dragon Limited

4

ASX RSL (pre acquisition as at 20/4/15)

Share price – 52 week range $0.017 - $0.003

Shares on issue 536,333,333

Market cap. $6,436,000

Cash at bank $503,000 @ 31/03/15

22 April, 2015 Private & Confidential

Transaction Structure

60%

Okmno Asia Limited

Okmno Asia Management Sugar Dragon Limited

(public unlisted company)

Resource Star Limited

72.5%

27.5%

22 April, 2015 Private & Confidential 5

Investment Summary

• RSL’s investment in Sugar Dragon Limited provides direct access and investment (72.5%) into Okmno Asia

• Okmno Asia (the ‘Company’) holds an exclusive 4 year license with King.com to manufacture and distribute ‘Candy Crush’ (both Candy Crush Saga and Candy Crush Soda) branded confectionery products into the following markets - China, Hong Kong, Taiwan and Macau

• The Candy Crush brand has become a global phenomenon, with over 30 billion game plays per month globally and in China alone, has generated over 48 million downloads since launch in August 2014

• Okmno Asia has an established and diverse network in China and Europe with long-standing partnerships with leading manufacturers, importers and distributors: Trolli (Mederer Group Germany), HuiTao Corporation (China), Miti Corporation (Taiwan) and LF Asia (Hong Kong)

• The Company is managed by an expert team with extensive marketing and distribution experience in the fast moving consumer goods (FMCG) market

• Okmno Asia has successfully trialed and launched 333,000 mini packs of Candy Crush gummies (30g) products in China and 80,000 clear gummies (100g) in Taiwan, and is looking to expand this further across new territories such as South Korea


Investment Rationale

• Strategic investment into confectionery market across China, Taiwan, Macau and Hong Kong, estimated at US$13.9bn in 2013, having doubled from US$7.2bn in 2006

• First mover advantage to market and sell the Candy Crush branded confectionery products in China, Hong Kong, Taiwan and Macau, under exclusive license with King

• Strong and established partnerships with leading marketing and distribution companies – King, Tencent, Trolli, LF Asia

• Scalable business model, with significant revenue potential through expansion into new growth markets such as Philippines, Korea and other parts of Asia

• Focused strategy, which leverages the ever-growing success and demand for the Candy Crush Saga game – which has generated over 48 million downloads in China, since launch in August 2014

• Potential for substantial profit margin growth, with low capital required for

for further product growth and further licensing opportunities

other well known brands and further product lines


Management and Board

Jade Zhang, Managing Director – Okmno Asia Ltd Over 10 years of experience in the FMCG industry, have worked in project management, finance and marketing, retail, advertising and e-commerce. Most recent project was the successful launch global online fashion brand ASOS into China. Exceptional experience in social media marketing in China.

Mathew Walker Mr. Walker has extensive experience in both public and private company management and in the provision of corporate advice. He is also Chairman the boutique corporate advisory firm Cicero Advisory Services Pty Ltd and corporate administration firm Cicero Corporate Services Pty Ltd.

Sigrid Tan, Sales and Marketing Director – Okmno Asia Ltd With 15 years of experience in the Greater China food retail market. Have successfully launched various licensed products for Trolli China, namely Marvel (Disney) and Hello Kitty. Previously worked as the head of field marketing for Pepsi and Maverick (Subsidiary of Smithfield).


Andrew Bell Mr Bell is a former Mining Analyst, Fund Manager, and Investment Banker and is Chairman of Regency Mines plc and of Red Rock Resources plc, both companies are listed on the AIM market of the London Stock Exchange.

Richard Parker

Mr Parker is a businessman based in Western Australia, with over twenty years in managing and developing various projects in Australia. His earlier experience in the transport and mining industries included management positions responsible for plant and maintenance, health and safety, and mine safety.

Market Opportunity – Leveraging an International Brands

9

• Candy Crush Saga successfully launched in the Chinese market in August 2014 through WeChat and QQ, owned by Tencent

• Voted Best Social Game at the International Gaming Awards 2013

• Currently over 48 million registered users in China

• Tencent is the largest social network in the world

• 2 billion people use Tencent QQ messaging

• Tencent set to launch mobile payment platform in 2015

• 500 million monthly users of WeChat site (owned by Tencent) (WeChat, Chinese version of Facebook)

60 million fans on Facebook globally

Over 120 million daily active users and over 30 billion game plays per month globally

13.6 million registered users in Hong Kong

13.6 million

1 in every 7 people in Hong Kong play Candy Crush

27.3 million registered

users in Taiwan

Candy Crush Soda to be

launched soon


Licensing of Brands – A Proven Model

10

Popular Cartoon

Licensing of brand

Established Brand in its own right

• Cartoon created in Japan in 1974 by Sanrio • Hello Kitty is now a global marketing

phenomenon • Worth US$7 billion a year in 2014, thirty years

later • Over 50,000 Hello Kitty products are now sold

through various license holders in over 70 countries


Licensing of Brands – Comparable Peer Model

11

Successful confectionery brand Yowie

5 Years Later

Yowie Group is now licensing and producing Yowie branded confectionery


• Yowie brand previously licensed by Cadbury

• Highly successful product in the 90s and 2000s

• At the end of 2000 Cadbury ceased production of the Yowie product line

• In 2014 Yowie Group took over the license of the Yowie brand to begin production of the popular product range

• Product has been trialed and launched in a small retail chain in the U.S and will be launching in approximately 1,500 Walmart stores and 1,300 Safeway stores in the U.S in Q1 2015

• Company listed on the ASX in 2012 at $0.20 and today has a market cap of A$110m and a share price of $0.80

About Okmno Asia Limited

• Manufacturing and distribution confectionery company founded in 2007

• Extensive experience in brand licensing and launching well known western brands into the Chinese market including: Brandon (a Puma company), MIO, Renault, Lamborghini, Sara Lee and Red Bull and ASOS

• Major sourcing partner of sweets for the Chinese market, through manufacturing partnerships in Europe and China

• Strategic partnerships in place with major food distributors in China, Taiwan, Philippines, Japan and Korea

12

Okmno Asia has the exclusive opportunity to market and distribute Candy Crush Saga confectionery and Soda in China, Hong Kong, Macau and Taiwan, under a 4 year exclusive license agreement with a right of first refusal to extend with King.com (owner and publisher of Candy Crush Saga game)


Focused Strategy

To create a long term Candy Crush confectionery business in China, Hong Kong and Taiwan, leveraging the success of the Candy Crush Saga brand and marketing activities

13

• Promotional strategies are hinged on the brand awareness of Candy Crush Saga game, which launched in China in August 2014

• Agreement with King and King’s JV with Tencent will provide full marketing support and access to multimillion dollar marketing resources for the brand

• Flexible structure will allow the Company to adopt to any of King.com’s and Tencent’s marketing and promotional strategies quickly and effectively

Promotional Leverage and a Flexible Structure

Initially targeting:

• South East China region, tier 1-5 cities in China (108 of 661 cities)

• Total population of tier 1 cities equates to ~110million

• Taiwan has a total population of 23.3 million

• Aim to capture 2% of the estimated US$1.5 bn Pick and Mix confectionery market.

Targets


confectionery Market – Greater China


Greater China has one of the world’s largest confectionery

markets

• With sales estimated at US$13.9bn in 2013 Greater China is the biggest confectionery consumer market in Asia

• The market is experiencing exceptional growth having doubled from US$7.2bn in 2006

• Within this market, the most favourable consumer product is the Pick and Mix consumer market, estimated to be circa US$1.5bn in 2013

Okmno Asia - Partnerships for Candy Crush Saga confectionery

Licensing Agreement • King.com - Exclusive licensing deal with Candy Crush Saga (King.com) to produce and market Candy Crush

branded confectionery. King has a network of 352 million monthly unique users and offers more than 180 games in over 200 countries. King will work with Okmno Asia to market and promote candy in China and Taiwan

Manufacturing • Trolli (Germany - Mederer Group est.1975) – World’s 2nd Largest gummies manufacturer, employing over

2,500 people

• 20,000 strong distribution network and products sold in over 80 countries

• Factories in Germany, China, Czech Republic and Spain. Direct relationship with Okmno Asia in both Germany and China to manufacture candy crush gummies confectionery

Distribution

15

HuiTao Corporation Employs over 500 people and trades in over 130 cities. Distribution network consists over over 3,000 outlets

China

Miti Corporation Leading distributor in Taiwan with relationships with some of the largest outlets in the country

Taiwan

LF Asia Presence in over 300 cities in Asia and 30,000 retail outlets in its network across China and ASEAN

Hong Kong


Near-term Products

• 30g x 24 strip hanging pack distributed to Chinese distributors

• First production volume 10 tonnes, approximately 333k packs

• First shelf display pack (30g X 16 Packs) to be manufactured in April 2015

16

• 90g Fish Gummies Tin • 5 tonnes to be

manufactured in April 2015

• Premium product to go into convenience stores and supermarkets

• 100g Neon/Clear colour gummies 8 tonnes shipped to Taiwan

• 10 tonnes remaining to go to China, HK and Korea


Mid-term Products

• Candy Crush Saga Pick & Mix Pack 40g • Smaller version of the 100g pack • Will be made in Trolli’s China facility and

sold in China

• 90g Fish Gummies Tin – Candy Crush Soda

• Premium product • To be made in June in

Hong Kong.

• 60g Saga Tin Slider • To be released in June 2015


Longer-term Products

• Candy Crush Saga 100g Family Pack • Packaging in discussions

• Candy Crush Saga 200g Family Pack • Packaging in discussions


230 x 135

135 x 190

Summary of Product Portfolio


30g x 24 strip hanging pack - 10 tonnes,

approximately 333,000 packs sold

Neon/Clear colour gummies - 8 tonnes

shipped to Taiwan and 10 tonnes remaining for China, Hong Kong and

Korea.

May 2015 6g fish candies in 90g tins and Pick and Mix channel, 100g clear

see through candies in Taiwan and Hong Kong

June 2015 4-5g soda bear in 100g

foil packs and metal tins

July 2015 4-5g soda bottles in 100g foil packs and

metal tins

August 2015 Chocolate bomb 15g

singular candy

By the end of 2015 Okmno Asia anticipates having 6 products in 8 different packaging styles in production and being sold across it’s four target markets

Current Future

Sales Channels

Priority channels for Candy Crush candies in China, Hong Kong, Taiwan and Macau

• Snack Stores

• Specialty candy stores

• Supermarkets and Megamarts – SuGuo, HaoDe

• Convenience Stores: 7Eleven, Circle K

• CVCs -Family Mart

• Special Events and Corporate Sales

• Higher end stores: Mannings or Watsons - specialty candy

• Large retail stores: Aeon sections

HuiTao Corporation (China)

• Snack Stores

• CVCs, Supermarkets and megamarts –Carrefour, Hi-Life, Wellcome, Cosmed

• Medium size stores – Taiwan Fresh Mart, Taisuco, I Mei

• Online Stores – Yahoo! Ruten Market, PC Home, Momo, HoHappy, Udn shopping

• Special Events and Corporate Sales

• Amusement Parks – Leofoo, Lihpao, Janfusan, Eda

• Medium sized chain-mart

Miti Corporation (Taiwan)

• Snack stores

• Higher end stores: Mannings or Watsons - specialty candy sections

• CVCs and Supermarkets – i.e.: Welcome

• Convenience stores – Vango

• ChemMarts

• Online Stores

LF Asia (Hong Kong)


Marketing Strategy

• Promotional and branding through direct channels established through King.com’s Candy Crush Saga gaming market, and via established distribution channels Tencent and WeChat (in China)

• Joint and associated branding support, by leveraging King.com’s:

– Local abilities and aligning marketing plans with Tencent and King.com

– Digital content for online social media marketing

– Celebrity endorsement and promotional props

– Media: free press within Kings’s marketing communications

• Cross selling with other licensees – selling other products with confectionery products

• Target higher end stores with larger 90g fish gummies in specialty box – to gain premium pricing


Highly Scalable Business Model

22

-

500

1,000

1,500

2,000

2,500

3,000

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

2015 2016 2017 2018

Forecast Volume (units) and Revenue Growth ($)

Volumes (000) Revenue ($000) Gross Margin

18 tonnes sold to date Net Sale Value per product will be US$3.75 per Kg with a GM% of c35-40%

Royalties of US$500,000 have been pre-paid to King.com King.com to then begin to receive 5% of sales when USD$10 million in sales is reached


Activity


Product line confirmed and manufacturer in place Distributor assigned. POS confirmed and product samples ready First production run of hanging 30g packs and 100g clear colour gummies packs Candy Crush Soda launched in China

Activity to date

Enter New Markets

In discussion with Korea, Vietnam and Cambodia

Grow distributor network

Showcase products at exhibitions and attend

industry events

Grow Product Offering

Further License agreements with King - Farm Heroes,

Witch Bubble Saga

Growth Strategy

Summary

• Strategic investment into confectionery market across China, Taiwan, Macau and Hong Kong, estimated at USD$13.9bn in 2013, having doubled from USD$7.2Bn in 2006

• First mover advantage to market and sell Candy Crush branded confectionery products in China, Hong Kong, Taiwan and Macau, under exclusive license with King

• Strong and established partnerships with leading marketing and distribution companies – King, Tencent, Trolli, LF Asia

• Focused strategy, which leverages the ever-growing success and demand for the Candy Crush Saga game – which has generated over 48 million downloads in China since launch in August 2014

• Scalable business model, with significant revenue potential through expansion into new growth markets such as Philippines, Korea and other parts of Asia.

• Low capital required for potential for further product growth through direct partnerships and licensing of other well known brands and further product lines

• Expert management team with extensive marketing and distribution experience in the fast moving consumer goods (FMCG) market


resource star limited investment in sugar dragon limited · 2017. 6. 6. · maverick (subsidiary of...

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