YPB secures $600,000 “take or pay” contract in China

Product authentication and consumer engagement solutions provider YPB Group Limited (ASX:YPB) is pleased to advise that it has secured a 3-year take or pay ~A$600,000 contract (“Contract”) with China’s Zhongneng CIC International Import and Export Trade Co., Ltd (‘Zhongneng CIC’) where Zhongneng CIC will deploy the company’s T2 Tracer scanner product into anti-tamper and anti-counterfeit packaging (“Tracer”) for its customers in the tobacco, liquor and pharmaceutical industries.

This is an outstanding contract win for YPB and the highest minimum annual value contract secured in China to date.

Headquartered in Beijing, Zhongneng CIC is a large and diversified company with operations in importing/exporting and trading, energy, tourism, finance, chemicals, media and technology. It will deploy the T2 Tracer-Scanner technology to its end customers who are seeking the most advanced anti-counterfeit and anti-tamper packaging solutions.

Pursuant to the Contract, Zhongneng CIC will pay YPB China ~A$20,000 10 days after contract execution, and under the “take or pay” provisions of the Contract, it will pay YPB at least ~A$200,000 each year.

YPB’s operations in China are performing well and benefiting from a ‘business as usual’ trading environment there. Business development is active with growing demand for product authentication technologies. The strategy of developing relationships with government bodies and industry groups is working well and gives YPB access to larger sales teams within reseller organisations. The leverage and enhanced market access is central to YPB’s strategy to lower the cost base and headcount in China while maximizing revenue potential.

YPB Group CEO John Houston said: “This contract with Zhongneng CIC is a great example of the revenue and customer base we are now building in China – long term contracts that deliver recurring and predictable revenue streams with large and respected entities that have scope for further growth. The ~A$600,000 of revenue we will book in the first few years is based on YPB’s T2 Tracer-Scanner technology being deployed in three sectors only, and Zhongneng CIC has already identified more sectors and other areas of their business where the technology can be used. This is indeed a very high value customer win.

“We believe that this contract has potential to grow in value and could lead to other Chinese customers contracting with YPB. We now have considerable momentum in our new business pipeline in China.

We have also made considerable progress with the pending commercial launch of MotifMicro1 and we expect to provide a further update as soon as possible.” 

This announcement has been authorised by the Board of YPB Group Limited.