date: crowd mobile (cm8): cm8 company...

D.J. Carmichael Pty Limited ABN 26 003 058 857

Australian Financial Services Licence No: 232571 Level 14, Parmelia House,

191 St Georges Terrace, Perth, Western Australia 6000 PO Box Z5186, Perth, Western Australia 6831

: +61 (0)8 9263 5200 F: +61 (0)8 9263 5280 [email protected] www.djcarmichael.com.au

Research Company Update

DJ Carmichael Pty Limited | ABN 26 003 058 857 | AFSL 232571 Telephone: +61 8 9263 5200 | Email: [email protected] | Webpage: www.djcarmichael.com.au

Crowd Mobile (CM8): CM8 Company Update.

CM8’s recent capital raise has strengthened the balance sheet and removed

a key headwind. This leaves the business well placed for FY18.

Summary Key Points

CM8’s cashflow generation remains robust: CM8 recently released its FY17 Q3 results

and recorded a strong quarter with revenues of $10.8m and underlying $3.0m in EBITDA.

The underlying business is strongly cash flow generative with impressive growth in the

Q&A business contributing. Several costs associated with its purchase of its subscription

business and the accompanying funding package are starting to wash out of the business

which will help underpin future free cash flow generation.

The balance sheet is now much stronger: CM8 recently completed a placement of

$5.4m which has resulted in the net debt position falling to circa $3.4m. The high debt load

has been a headwind for the company as investors have been concerned that the

company was carrying too much debt. In our view the CM8 management team have done

a good job of balancing the rapid paydown of debt and the working capital demands of the

business.

CM8 expanding its business model into the new area of Digital Influencers: The

company has already achieved some early success in that it has secured its first campaign

Insertion Order for its new created Digital Influencer Agency Crowd Media. CM8 is

leveraging its successful and cashflow generative business model into new emerging

areas. Its global payments network will help facilitate these moves and allow for rapid

monetisation of new strategies. CM8 as an established business therefore has an

advantage over other emerging players trying to enter these markets.

Financial Forecasts: CM8 has largely performed to our expectations from an operational

perspective but paying down the principle and interest from operational cashflow has

stressed the business by constraining the working capital for customer acquisition. A key

constraint on the business is that CM8 has a relatively long working capital cycle and

therefore, at the end of the half year CM8 had over $10m in trade receivables. However,

this long cycle ties up a lot of free cash for a long time and impacts CM8’s ability to spend

more money on marketing. Historically CM8 have a 3.5x uplift on marketing to revenue

spend and devoting more cash resources to marketing will lead to higher revenue growth

going forward.

Valuation and Recommendation

Our DCF valuation values CM8 at $0.33 a share and we maintain our BUY

Recommendation. We have discounted our long term DCF at a WACC of 10.49% which

is largely due to the high level of expensive debt to equity. Once the debt is reduced next

in FY18 we believe the cost of capital will fall. In the past, we have defined an earnings

positive peer group that currently trade at a FY17 13.4x EV/EBITDA. CM8 is trading on

3.6x FY17 EV/EBITDA which makes it substantially undervalued relative to its peers.

Thanks to improving earnings visibility, exposure to the mobile commerce thematic and

solid growth prospects, CM8 is compelling at these levels. CM8 trades at an attractive less

than 1x FY17 revenue and low EV/EBITDA multiple.

Date: 22 May 2017

Recommendation: BUY

Price Target: $0.33

Company Information

Code CM8

Last Price A$0.13

Shares on Issue 219.7m

Market Capitalisation $28.6m

Daily Volume 0.03m

Financial Summary

2016a 2017e 2018e 2019e

Revenue ($m) 37.91 43.92 48.88 56.46

EBITDA ($m) 6.36 8.58 9.62 10.70

D&A ($m) (3.73) (5.16) (3.66) (2.52)

EBIT ($m) 2.63 3.42 5.96 8.18

Net Interest ($m) (2.06) (3.21) (2.00) (0.37)

Income Tax ($m) 0.30 (0.06) (1.39) (2.34)

Underlying NPAT ($m) 3.36 1.94 3.35 6.25

Reported NPAT ($m) 0.38 0.15 2.58 5.47

EPS Reported (¢) 0.00 0.00 0.01 0.02

EPS growth (%) -102% -74% 1373% 85%

DPS (¢) 0.0 0.0 0.0 0.0

Cash ($m) 2.90 9.53 10.11 11.01

Net debt ($m) 14.80 2.89 (3.34) (11.3)

Net debt / equity (%) 69.5% 9.7% -10% -30%

ROE (%) 1.8% 0.5% 8.0% 14.5%

ROA (%) 0.8% 0.3% 5.8% 12.7%

NTA per share (¢) 0.11 0.11 0.12 0.13

PE (x) 53.52 191.4 11.09 5.22

EV/EBITDA (x) 5.53 3.67 2.62 1.61

Share Price Performance

Source: Factset

Analyst Details

Michael Eidne

+618 9263 5213

[email protected]

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Investment Points

CM8’s cashflow generation remains robust: CM8 recently released its FY17 Q3 results

and recorded a strong quarter with revenues of $10.8m and underlying $3.0m in EBITDA.

The underlying business is strongly cash flow generative with impressive growth in the

Q&A business contributing but unfortunately this has been offset by weaker than expected

results in the subscription business. CM8 acquired a high level of debt when it acquired

the Track concepts business in 2015 (which formed the Subscription business). The

predominantly cash deal has been financed via a combination of vendor finance and bank

debt. In Q1FY17 CM8 refinanced its bank loan as a principal and interest facility from the

interest and bullet payment facility it had with a German bank. Paying down the debt via a

principal and interest facility allowed management to achieve their stated goal of reducing

the debt load as quickly as possible. While we believe, this was the correct strategy, it has

meant a large proportion of CM8’s free cash flow has been devoted to repaying debt during

FY17 and has consequently been a headwind in terms of revenue and profitability. This

impediment has now been removed and we can expect improved results as the CM8

business is unshackled from the debt load.

The balance sheet is now much stronger: CM8 recently completed a placement of

$5.4m which has resulted in the net debt position falling to circa $3.4m. The high debt load

has been a headwind for the company as investors have been concerned that the

company was carrying too much debt. In our view the CM8 management team have done

a good job of balancing the rapid paydown of debt and the working capital demands of the

business.

The global nature of the business and cash flow generation relative to the current market

cap has started to catch the attention of investors and now that the balance sheet is in a

much better position, CM8 is looking attractive at these levels. A substantial portion of the

placement was corner-stoned by an institutional investor which underpins the credibility of

the business. CM8 is unique in that it is a global mobile commerce business that gives

investors exposure to the ongoing global penetration of smart phones across the world.

Once CM8 pays the debt down in the new financial year, the only remaining debt on the

balance sheet will be the outstanding vendor loan of €4.9m. This is only due in October

2018 and based on the business performing as we expect, we believe this will be easily

paid from operational cash and cash on hand.

The business is well placed for future growth: Smartphones and their ecosystems have

proven to the be lucrative for developers who have managed to create a game or program

that appeals to consumers but this has historically has been a hit and miss process. There

are over 2 million apps on the Google Play store and Apple store but despite the vast

amount of games and apps available on the platforms more than 50% of the revenue

earned goes to 2% of the app makers.

Monetising mobile phone content can be an elusive dream for some but CM8 have a

system that can deliver content to a mobile device in over 50 countries around the world

and bills the customer. Popular trends in games and applications will change but having

the ability to distribute up to date content and charge consumers for the privilege is a key

competitive advantage. As smart phones continue to grow in popularity along with the

increasing sophistication of products and services, CM8 will be well placed to benefit.

CM8 expanding its business model into the new area of Digital Influencers: The

world of advertising has undergone a seminal shift in the last few years. Traditional

advertising on television and newspapers has suffered from the fragmentation of platforms

as cable television, satellite television and the internet has provided alternative avenues

for users to access content. This is evident in the ongoing weak financial results from listed

television and media companies that are predominantly relying on advertising spend for

their revenues.


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The shift to online advertising has been disrupted by the rise in the use of adblocking

software as users have become frustrated with an overload of intrusive banner and pop

up ads. A recent report by PageFair found that 11% of internet users are using ad block

software and this is growing 30% a year. Mobile ad block use is also exploding especially

across the developing world. This largely because users want to limit valuable bandwidth

usage and save on costs.

Figure 1: The increase in use of Ad block Software Source: PageFair

Another key issue is that users are becoming increasingly cynical about major celebrity

endorsements of products and relying more on digital micro-influencer user generated

content. This accounts for the rise of digital influencers who use platforms such as

YouTube and Instagram to review and endorse products. Internet users, especially the

younger demographic, give these influencers far more credibility than high profile stars

who are paid large sums of money to endorse products that are therefore perceived as

been conflicted by the often very lucrative economic benefits they receive. A teenager

talking about makeup or the quality of a new console game carries far more weight with

viewers than big media stars like Kim Kardashian endorsing a brand for a money.

Figure 2: CM8’s Technology Platform Source: CM8


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4 22 May 2017

Figure 3: Examples of digital influencers on YouTube Source: YouTube

When contemplating a purchase, many consumers are jumping online and reviewing the

product. A search on YouTube for reviews for the recently released Samsung S8

smartphones returns just under 2 million hits. The top hit from is from a well-known digital

influencer; Marques Brownlee. His S8 review has been viewed 2.2 million times which is

a powerful endorsement for a product. Marques has 4.5 million subscribers with over half

a billion views of his tech videos since 2009. He is not an actor or celebrity but is a “normal”

person who has developed a following because he has developed a trusted relationship

with his online audience.

CM8 has recognised that it has a vast footprint and can a facilitate the interaction between

influencers and their audience. For the reasons explained already, brands are moving

towards directly connecting with their customers by using digital influencers to offset the

decline in effectiveness in more traditional advertising. CM8 has been using digital

influencers to market its Q&A products for over years 3 years and has developed internal

capabilities to handle this new marketing channel.

CM8 is planning to target middle of the road influencers who are not represented or are in

the process of developing their presence.

The company has already achieved some early success in that it has secured its first

campaign Insertion Order for its new created Digital Influencer Agency Crowd Media.

While we think, this is an interesting development and recognise the potential of this new

business we have not attributed any value to this new business going forward.

Financial Forecasts: CM8 has largely performed to our expectations from an operational

perspective but paying down the principle and interest from operational cashflow has

stressed the business by constraining the working capital for customer acquisition. CM8

has a very long working capital cycle due to the fact the Telcos it deals around the globe,

generally pay on a 3-month basis. At the end of the half year CM8 had over $10m in trade


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receivables. The Telcos always pay their bills so CM8 can expect minimal bad debts.

However, this long cycle ties up a lot of free cash for a long time and impacts CM8’s ability

to spend more money on marketing. Historically CM8 have a 3.5x uplift on marketing to

revenue spend and devoting more cash resources to marketing will lead to higher revenue

growth going forward.

The bulk of the marketing spend is on digital marketing and the returns are good but a

lower marketing spend due to a long working capital cycle and free cash flow being

directed towards debt and interest payment has resulted in lower than expected revenue

numbers.

Figure 4: The change in revenue split between Q&A and Subscription Source: DJC

Research

The Q&A business is growing strongly and CM8 expect that over time the contribution to

revenue from the Q&A business will over time outgrow the revenue contribution from the

subscription business. The Q&A business will therefore account for a large proportion of

the longer term expected revenue growth of the overall business. CM8 have always stated

that the subscription business was a more mature business but thanks to its higher

margins which are double the Q&A business, it will make up a large proportion of

operational cashflow and profitability.

Subscription Business

Management have stated that the subscription business has stabilised therefore we have

assumed flat growth into the future. We feel that this is prudent considering it is a mature

business and may suffer some headwinds from shifts in user demands. It is however a

high margin business and will deliver significant cashflow over the next several years and

over time will pay for itself.

It should be noted that one of the strategic reasons Crowd Mobile acquired the

Subscription business was to increase its mobile payments footprint and thereby has

increased its coverage to over 160 mobile carriers. The enlarged footprint has helped the

Q&A business grow faster than forecast by leveraging the acquired payment network.

Q&A Business

Q&A message volumes continue to grow strongly and this business has continued to

outperform our expectations. The average revenue per message has fallen from ~$2.22

to ~$2.00 in last quarter as CM8 has entered different markets with different pricing

structures (ie. In Latin American and Asia where the unit economics are lower than

Western Europe). We are assuming this will drop further to $1.80 over time. Message

growth has been growing at a CAGR (compound annual growth rate) of circa 120%. We

have however assumed that in time message growth will taper off to a more normalised

long term growth rate.


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Figure 5: Q&A Message Growth Source: CM8

We have assumed an ongoing strong growth in revenue for the next 2 years as free

cashflow is redirected towards digital marketing. We expect margins to remain stable with

some long-term improvements as more economies of scale are realised.

Total business Performance

We have stripped out non-recurring and non-cash costs to calculate an underlying EBITDA

that in our minds represents a better view of operational cashflow. CM8 are not expecting

to pay any more transaction costs in the near term although there may be some penalty

interest should they pay the current loan off early. We have assumed this debt is paid off

in 1HFY18 as we believe this timing will minimise early payment penalties. The only debt

remaining will the vendor loan of €4.9m.

We have also calculated the NPATA which gives a better idea of the bottom line

performance of the business from a cashflow perspective as some non-cash items are

added back. CM8 has a big D&A charge relative to its EBITDA which is largely due the

acquisition of the Subscription business. Over time this will reduce which in turn will

improve the bottom line NPAT. We can expect the EPS and the EPS calculated from

NPATA to move closer together over time.

Figure 6: DJC Total Business Forecasts: Source: DJC Research

Total Business 2016a 1HFY17a 2HFY17e 2017e 1HFY18e 2H18f 2018e 2019e

Total Revenue 37,911,487 21,520,348 22,424,103 43,944,451 22,184,747 26,697,271 48,882,018 56,457,923

Underlying EBITDA 8,838,775 4,742,829 5,624,450 10,367,279 4,653,894 5,747,553 10,401,446 11,475,511

Underlying Margin 23.3% 22.0% 25.1% 23.6% 21.0% 21.5% 21.3% 20.3%

Growth 17.3% -1.9% 2.2% 0.3% 10.3%

Reported EBITDA 6,355,637 3,344,719 5,235,800 8,580,519 4,265,244 5,358,903 9,624,146 10,698,211

NPAT 877,612 (914,549) 1,063,712 149,163 1,004,163 1,571,590 2,575,753 5,469,812

EPS 0.002 (0.005) 0.005 0.001 0.004 0.006 0.009 0.019

NPATA 4,105,507 1,616,528 3,691,320 5,307,848 2,834,294 3,401,720 6,236,014 7,986,943

EPS NPATA 0.026 0.009 0.017 0.024 0.013 0.015 0.028 0.036


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Figure 7: Forecast Reported EBITDA and Underlying EBITDA Source: DJC Research

Valuation and Recommendation

Our DCF valuation values CM8 at $0.33 a share and we maintain our BUY

Recommendation. We have discounted our long term DCF at a WACC of 10.49% which

is largely due to the high level of expensive debt to equity. Once the debt is reduced next

in FY18 we believe the cost of capital will fall. In the past, we have defined an earnings

positive peer group that currently trade at a FY17 13.4x EV/EBITDA. CM8 is trading on

3.6x FY17 EV/EBITDA which makes it substantially undervalued relative to its peers.

The strengthening of the balance sheet and the ongoing progress in the Q& A business is

a positive. There has been some concern about the relatively high debt load but the recent

capital raise has infinitely improved the net debt position. While CM8 has the option of

issuing shares to the lender to pay down its debt, it has never exercised this option, as it

would be negative. The latest issue was primarily to bring new institutional shareholders

onto the register who have recognised that the business is undervalued.

We have a relatively high level of confidence on the FY17 numbers as 3 of the quarters

have already been reported on. On a 13-month forward basis, the business is trading on

an even more compelling 11x P/E ratio and 4.2x EV/EBITDA. It is also interesting to note

the ROE and ROA are increasing as the debt issues wash out of the system and the

earnings grow on the back of more capital available to grow revenue.

Figure 8: Key CM8 Metrics Source: DJC Research

Key Metrics 2016a 2017e 2018e 2019e

P/E 53.52x 191.46x 11.09x 5.22x

Underlying EV/EBITDA 3.98x 3.03x 2.42x 1.50x

Reported EV/EBITDA 5.53x 3.67x 4.23x 2.11x

Net Debt 14,803,486 2,891,166 (3,344,848) (11,331,791)

Net D/E 69% 10% -10% -30%

Interest Cover 1.28x 1.07x 2.98x 22.29x

ROE 1.8% 0.5% 8.0% 14.5%

ROA 0.8% 0.3% 5.8% 12.7%


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8 22 May 2017

Catalysts

Expanding into new Markets: CM8 have already made some key announcements about

expanding into South America and Asia. The financing flexibility that has been introduced

via the new debt arrangements will help CM8 devote more working capital towards

geographic and product expansion.

The launching of new Q&A products: CM8 is working on a number of new Q&A products

that will expand its product portfolio opening up new markets in the digital influencer area.

Expanding mobile commerce opportunities: CM8 are working on potentially linking a

mobile commerce solution to the answers of certain questions that recommend and

endorse specific products for an affiliate fee.

Further acquisitions: CM8 are currently working to bed down the Track acquisition and

once this is complete it is possible that it will look for other complimentary businesses to

add to its platform in the Digital Influencer space.


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Current Shares on Issue 219.7m Date

Diluted Shares on issue 275.6m Share Price

Market Capitalisation $28.6m Valuation

Year End 30-June

Equity Valuation Full Year Summary (A$m)

A$/share 2016a 2017e 2018e 2019e

Value of the Firm 0.33 Sales Revenue 37.91 43.92 48.88 56.46

Return 153% Underlying EBITDA 8.84 10.37 10.40 11.48

WACC 10.5% Reported EBITDA 6.36 8.58 9.62 10.70

Depreciation & Amortisation (3.73) (5.16) (3.66) (2.52)

Shares on Issue EBIT 2.63 3.42 5.96 8.18

Issued Shares (End of Period) 220 Net Interest Expense (2.06) (3.21) (2.00) (0.37)

Options on Issue 47 Profit Before Tax 0.57 0.21 3.96 7.81

Diluted Shares incl options 276 Income Tax Expense 0.30 (0.06) (1.39) (2.34)

Abnormal Items (0.50) 0.00 0.00 0.00

Profitability Reported NPAT 0.38 0.15 2.58 5.47

Key Metrics Underlying NPAT 3.36 1.94 3.35 6.25

2016a 2017e 2018e 2019e

Revenue Growth 192% 16% 11% 15%

EBITDA Growth (Adj) (331%) 35% 12% 11%

NPAT Growth (Adj) (110%) (61%) 1,627% 112%

EBITDA Margin (Adj) 17% 20% 20% 19%

EBIT Margin (Adj) 7% 8% 12% 14% Full Year Summary (A$m)

EPS - Reported 0.00 0.00 0.01 0.02 2016a 2017e 2018e 2019e

EPS - Fully Diluted Adjusted 0.00 0.00 0.01 0.01 EBIT 2.63 3.42 5.96 8.18

EPS Growth (102%) (74%) 1,373% 85% Tax 0.30 (0.06) (1.39) (2.34)

Effective Tax Rate -53% 30% 30% 30% Other 1.67 1.95 1.66 2.15

Operating Cash Flow 4.60 5.31 6.24 7.99

Financial Ratios Capital Expenditure 2.78 0.00 0.00 0.00

Other (26.83) 0.00 0.00 1.00

Earnings & Cash Flow Multiples (A$) Free Cash Flow (19.45) 5.31 6.24 8.99

2016a 2017e 2018e 2019e Equity Raised 11.61 8.30 0.00 0.00

EPS 0.00 0.00 0.01 0.02 Dividends Paid 0.00 0.00 0.00 0.00

EPS Growth (102%) (74%) 1,373% 85% Inc/(Dec) in Borrowings 26.78 (6.98) (5.08) (7.34)

P/E 53.52x 191.46x 11.09x 5.22x Financing Cash Flow 38.39 1.32 (5.08) (7.34)

EV/EBIT 13.36x 9.19x 4.23x 2.11x Effects of Exchange Rates 0.00 0.00 0.00 1.00

EV/EBITDA 5.53x 3.67x 2.62x 1.61x Movement in Net Cash 9.54 (1.67) 1.16 0.65

Balance Sheet

2016a 2017e 2018e 2019e

Gearing (Debt/Equity) 83.1% 41.7% 22.7% 0.0%

Gearing (Net Debt/Equity) 69.5% 9.7% -10.3% -30.0% Full Year Summary (A$m)

EBIT Interest Cover 1.3x 1.1x 3.0x 22.3x 2016a 2017e 2018e 2019e

ROE 1.8% 0.5% 8.0% 14.5% Cash 2.90 9.53 10.11 11.01

ROA 0.8% 0.3% 5.8% 12.7% Current Assets 15.05 23.15 22.78 21.87

NTA Per Share 0.11¢ 0.11¢ 0.12¢ 0.12¢ Total Assets 49.18 44.73 43.98 42.78

Debt 17.71 12.42 7.34 0.00

Other Liabilities 3.72 0.88 1.47 1.69

Total Liabilities 27.86 14.97 11.64 4.97

Total Shareholders' Equity 21.31 29.76 32.34 37.81

Dividends

2016a 2017e 2018e 2019e

Dividend Per Share 0.0¢ 0.0¢ 0.0¢ 0.0¢

Dividend Yield 0.0% 0.0% 0.0% 0.0%

Dividend Franking 0.0¢ 0.0¢ 0.0¢ 0.0¢

Dividend Payout Ratio 0.0% 0.0% 0.0% 0.0%

Analyst: Michael Eidne | +61 8 9263 5213 | [email protected]

Equity Valuation, Return Income Statement

Cash Flow Statement

Balance Sheet

Crowd Mobile (CM8.ASX)

22 May 2017

$0.13/share

$0.33/share

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2016a 2017e 2018e 2019e

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Private Client Dealing Email Telephone

Hugo McChesney Institutional Advisor [email protected] +61 8 9263 5214

Chad South Head of Retail Advisory [email protected] +61 8 9263 5225

Tim Bennett Private Client Adviser [email protected] +61 8 9263 5351

Matthew Blake Executive Director - Private Client Adviser [email protected] +61 8 9263 5248

Eve Broadley Private Client Adviser [email protected] +61 8 9263 5324

Gregory Chionh Private Client Adviser [email protected] +61 8 9263 5302

Gerry Connolly Private Client Adviser [email protected] +61 8 9263 5265

Andrew Cox Private Client Adviser (Equities & Derivatives) [email protected] +61 8 9263 5237

Toby Jefferis Private Client Adviser [email protected] +61 8 9263 5217

Chris Jones Private Client Advisor [email protected] +61 8 9263 5232

Michael Marano Private Client Adviser [email protected] +61 8 9263 5238

Derek Steinepreis Private Client Adviser [email protected] +61 8 9263 5292

James Titcombe Private Client Adviser [email protected] +61 8 9263 5254

Zac Paul Private Client Adviser [email protected] +61 8 9263 5272

Jason Murray Dealers Assistant [email protected] +61 8 9263 5260

Ben Osborne Dealers Assistant [email protected] +61 8 9263 5251

Wealth Management Email Telephone

Brad Clarke Wealth Adviser [email protected] +61 8 9263 5224

Paul Elkington Wealth Adviser [email protected] +61 8 9263 5285

Domenic Macri Wealth Adviser [email protected] +61 8 9263 5263

Mark Meacham Wealth Adviser [email protected] +61 8 9263 5247

Danial Fonseca Wealth Adviser [email protected] +61 8 9263 5296

Nick Casale Portfolio Administration Manager [email protected] +61 8 9263 5215

Research Email Telephone

Paul Adams Director - Head of Research and Natural Resources [email protected] +61 8 9263 5234

Michael Eidne Director - Research [email protected] +61 8 9263 5213

Michael Ron Research Analyst [email protected] +61 8 9263 5264

Corporate Finance Email Telephone

Davide Bosio Managing Director & Head of Corporate Finance [email protected] +61 8 9263 5210

Scott Robertson Director – Corporate Finance Executive [email protected] +61 8 9263 5218

Adam Russo Associate Director - Corporate Finance Executive [email protected] +61 8 9263 5290

Matthew Hall Associate Director – Corporate finance Executive [email protected] +61 8 9263 5291

Carly Circosta Manager - Corporate Finance Executive [email protected] +61 8 9263 5268

Julie Martino Executive Secretary [email protected] +61 8 9263 5257

Administration Email Telephone

Cadell Buss Chief Executive Officer [email protected] +61 8 9263 5204

Belinda Roychowdhury Administration Manager [email protected] +61 8 9263 5216

Gabrielle Bouffler Head of Compliance and Risk [email protected] +61 8 9263 5221

Janelle Whyte Chief Financial Officer [email protected] +61 8 9263 5241

Michelle Perrett Assistant Accountant [email protected] +61 8 9263 5220

Kerry Morrice Administration Assistant [email protected] +61 8 9263 5279

Brenda Woodenberg Reception [email protected] +61 8 9263 5200

mailto:[email protected]


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11 22 May 2017

Disclosure Disclaimer RCAN1396

This Research report, accurately expresses the personal view of the Author. DJ Carmichael Pty Limited, members of the Research Team; including authors of this report, its directors and employees advise that they may hold securities, may have an interest in and/or earn brokerage and other benefits or advantages, either directly or indirectly from client transactions in stocks mentioned in this report. The Author of this report made contact with in Crowd Mobile Limited. for assistance with verification of facts, admittance to business sites, access to

industry/company information. No inducements have been offered or accepted by the company.

This Research report, accurately expresses the personal view of the Author. All the information utilised in this report is accurate and current at the date

stated on this report.

The analyst does not own shares in Crowd Mobile Limited. DJC Advisers and/or Directors do hold shares in Crowd Mobile Limited.

DJ Carmichael Pty Ltd has participated in placements in Crowd Mobile Limited and has acted as the Lead Manager and Corporate Advisor to Crowd

Mobile Limited and was paid a fee for these services. DJC, its directors and employees hold 1,000,000 unlisted CM8 options exercisable at $0.25

expiring in April 2018; 6,000,000 unlisted CM8 options exercisable at $0.30 expiring in December 2018; and 1,515,023 unlisted CM8 options exercisable

at $0.27 expiring in August 2018.

DJ Carmichael Pty Ltd is a wholly owned subsidiary of DJ Carmichael Group Pty Ltd ACN 114 921 247. In accordance with Section 949A of the Corporations Act 2001 D J Carmichael Pty Limited advises this document contains general financial advice only. In preparing this document DJ Carmichael Pty Limited did not take into account the investment objectives, financial situation and particular needs (‘financial circumstances’) of any particular person. Accordingly, before acting on any advice contained in this document, you should assess whether the advice is appropriate in light of your own financial circumstances or contact your DJ Carmichael Pty Limited adviser. DJ Carmichael Pty Limited, its Directors employees and advisers may earn brokerage or commission from any transactions undertaken on your behalf as a result of acting upon this information. DJ Carmichael Pty Limited, its directors and employees advise that they may hold securities, may have an interest in and/or earn brokerage and other benefits or advantages, either directly or indirectly, from client transactions. DJ Carmichael Pty Limited believes that the advice herein is accurate, however no warranty of accuracy or reliability is given in relation to any advice or information contained in this publication and no responsibility for any loss or damage whatsoever arising in any way for any representation, act or omission, whether express or implied (including responsibility to any persons by reason of negligence), is accepted by DJ Carmichael Pty Limited or any officer, agent or employee of DJ Carmichael Pty Limited. This message is intended only for the use of the individual or entity to which it is addressed and may contain information that is privileged, confidential and exempt from disclosure under applicable law. If you are not the intended recipient or employee or agent responsible for delivering the message to the intended recipient, you are hereby notified that any dissemination, distribution or copying of this communication and its attachments is strictly prohibited. Recommendation Definitions

SPECULATIVE BUY – Potential 10% out-performance, but high risk

BUY – Potential 10% or more out-performance

ACCUMULATE – Potential 10% or more out-performance, buy on share price weakness

HOLD – Potential 10% underperformance to 10% over performance

SELL – Potential 10% or more underperformance

Period: During the forthcoming 12 months, at any time during that period and not necessarily just at the end of those 12 months. Stocks included in

this report have their expected performance measured relative to the ASX All Ordinaries Index. DJ Carmichael Pty Limited’s recommendation is made

on the basis of absolute performance. Recommendations are adjusted accordingly as and when the index changes.

© 2017 No part of this report may be reproduced or distributed in any manner without permission of DJ Carmichael Pty Limited.

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