YPB Group improves net operating loss 52% in H1 2020 as growth takes shape

YPB Group Ltd’s (ASX:YPB) financial performance improved strongly in the first half of 2020 with net operating loss reduced by $1.9 million or 52% compared to the corresponding period in 2019. The improved result was primarily driven by lower costs while business growth gains momentum, providing encouragement for the future. YPB reduced costs through aggressive cost action and temporary salary reductions, as well as directors moving to zero director fees from April to December this year, measures that have brought savings of $703,000. A key development during the half was new business momentum in China as the company unearths strong new interest in its established T2 tracer-scanner technology. During the first half, YPB’s new generation consumer engagement platform Connect 2.0 was released, and the migration of existing customers to the new platform is expected to result in lower hosting and other operating costs. Major progress was also made on MotifMicro1 smartphone readability by achieving a critical technical milestone. "Cost-effective skilled team" YPB Group CEO John Houston said: “H1 2020 demonstrates that YPB is heading toward becoming a successful, self-funding business. “Our product suite is now diversified and commercially robust, and we have developed a cost-effective yet highly skilled tech team in Bangkok. “Our cost management is very tight and the new norms of remote work and meeting will permanently reduce a range of costs.” China business growth YPB China’s business gained momentum in the first half of 2020, mainly driven by new interests in YPB’s established T2 tracer-scanner technology. The company has established a strong reputation in Tracer technologies amidst heightened awareness of the need for product security and provenance. China operations have also been restructured with the sales function now closely integrated with the Australian sales team and new sales strategies and tactics have been developed. Houston said: “YPB China’s market development progress with our established T2 tracer-scanner is very encouraging and it is possible that T2 in China alone could underwrite the company’s profitability should we be able to build further momentum in that business over time.” Major advances with Motif1Micro During the period, the company’s progress on MotifMicro1 smartphone readability is considered a key commercial milestone. With the addition of android functionality to the existing iOS capability of MotifMicro, a major technical hurdle commercial development path was passed. The Android capability is included in the second generation MotifMicro1 app which was also released at the end of July. Houston said: “As MotifMicro1 approaches commercial release, our market opportunity balloons many folds as it will be a globally unique, high-security, product authentication technology for the much larger consumer market.” Outlook The company believes that the prevailing COVID-19 situation has made it extremely difficult to estimate sales revenue. Based on present indicators, the company believes that H2 2020 revenue should stabilise at H1 2020 levels and possibly grow in the fourth quarter. YPB’s operating costs are likely to rise in the second half as salary reductions made to adjust with COVID-19 situation ended on June 30, 2020.