Post on 14-Mar-2020
August 9August 9thth, 2006, 2006
eAccess Limited eAccess Limited 【【94279427】】11stst Quarter Results for Fiscal Year Ending 3/2007Quarter Results for Fiscal Year Ending 3/2007
((4/2006 4/2006 ~~ 6/20066/2006))
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III. Financial Overview III. Financial Overview
II. Operational OverviewII. Operational Overview
I.I. FY2006/ 1Q Results HighlightFY2006/ 1Q Results Highlight
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I.I. FY2006/1Q Results HighlightFY2006/1Q Results Highlight
III. Financial Overview III. Financial Overview
II. Operational OverviewII. Operational Overview
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(As of August 2006)(As of August 2006)
Corporate OverviewCorporate Overview
Date of Establishment: November 1, 1999
Capital Shares and capital reserve: 21.5 billion yen
Number of Employees: Approximately 600*
Japan’s Largest ADSL Wholesale Operator
Internet Service ProviderAcquired in July 2004
eAccess Ltd.eAccess Ltd.
Subsidiary
46.2% ownershipAOLADSL
Establishment: January 5, 2005Capital shares and capital reserve:
143.2 billion yen
Feasibility Study
WiMAX
eMobile
*The number includes eMobile employees.
5
FY2006/1Q HighlightsFY2006/1Q Highlights
Achieved 12,000 ADSL net subscriber addition in 1Q Achieved 12,000 ADSL net subscriber addition in 1Q to a total accumulated subscribers of 1.93 millionto a total accumulated subscribers of 1.93 million
Completed 363.2 billion yen financing which will Completed 363.2 billion yen financing which will satisfy the funding requirement of our mobile plansatisfy the funding requirement of our mobile plan
Completed Phase 1 cell planning for data service launchCompleted Phase 1 cell planning for data service launchStart rolling out network in Tokyo Osaka Nagoya areasStart rolling out network in Tokyo Osaka Nagoya areas
Commence quarterly dividend payout from 2Q (900 yen per share)Commence quarterly dividend payout from 2Q (900 yen per share)Expect annual dividend payout to be 1,800 yen per shareExpect annual dividend payout to be 1,800 yen per share
ADSL/ ADSL/ ISPISP
FinancialFinancial
MobileMobile
ShareholdersShareholdersReturnReturn
Achieved consolidated operating margin of 15.1%, Achieved consolidated operating margin of 15.1%, despite of initial startdespite of initial start--up loss for eMobileup loss for eMobile
Parent base operating profit increased by 63.8% YoY, Parent base operating profit increased by 63.8% YoY, with operating margin of 22.8%with operating margin of 22.8%
Strong growth in ADSL/ISP revenue and profits in 1QStrong growth in ADSL/ISP revenue and profits in 1Q
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I.I. FY2006/1Q Results HighlightFY2006/1Q Results Highlight
III. Financial OverviewIII. Financial Overview
II. Operational OverviewII. Operational Overview
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ADSLADSL・・ISP BusinessISP Business
8
50Mbps50Mbps
Lowest price plan for Metal Plus NetLowest price plan for Metal Plus Net
Automatic upgrade from 3Mbps to 5MbpsAutomatic upgrade from 3Mbps to 5Mbps
ADSL plan without phone subscription rights requirementADSL plan without phone subscription rights requirement
Assessing the possibility of wholesale FTTH Assessing the possibility of wholesale FTTH service with UCOMservice with UCOM
Lowest price level of flat rate ADSL service in JapanLowest price level of flat rate ADSL service in Japan
PurposePurpose
5Mbps plan 5Mbps plan
FTTH
Metal Plus Net (10Mbps) Metal Plus Net (10Mbps)
Metal Plus NetMetal Plus Net((Type2Type2))
AOL960KbpsAOL960Kbps
Current menuCurrent menu
40Mbps40Mbps
24Mbps24Mbps
12Mbps12Mbps
8Mbps8Mbps
3Mbps3Mbps
1Mbps1Mbps
Reduce churnReduce churn
Improve Improve customer customer
satisfactionsatisfaction
PromotePromotemigration ofmigration ofnarrowbandnarrowbandsubscriberssubscribers
Expanding our ADSL service menus through cooperation Expanding our ADSL service menus through cooperation with partner ISPs to meet user demand from different segmentswith partner ISPs to meet user demand from different segments
Expansion of ADSL service menuExpansion of ADSL service menu
Expansion of ADSL Service MenuExpansion of ADSL Service Menu
9
Churn TrendChurn Trend
Average monthly churn in 1Q increased to 2.08% from 4Q 2005 (Jan-March 2006) due to the moving season. Monthly churn rate decreased since the peak in April.
-April: 2.49% May: 1.98% June: 1.77%-1QAverage: 2.08%
[Retention Measures]Continued retention measures with Partner ISPs-Automatic upgrade from 3M to 5M-Free charge for moving houses-Free charge for changing service menu-Initiate long-term discount-Free installation support etc.
Churn rose in 1Q due to seasonal moving period in April. Churn rose in 1Q due to seasonal moving period in April. Achieved net subscriber addition by expanding ADSL service menuAchieved net subscriber addition by expanding ADSL service menu
and implementing churn reduction measures.and implementing churn reduction measures.
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ISP business (AOL) StrategyISP business (AOL) Strategy
Introduction of new service in July 20065Mbps plan:3,024 yen/month
(IP phone bundled menu)-Existing 1Mbps users can upgrade to 5Mbps plan for free of charge
960Kbps plan:1,995 yen/month-Lowest price level of flat rate ADSL service.
Maintain lower churn, increase subscriber acquisition and promote migration to broadband, by offering a wide range of service menus to meet user demand.
Expanding lower speed menuExpanding lower speed menuExpanding lower speed menu
Increasing page view by expanding access menu and improving contIncreasing page view by expanding access menu and improving contentsents
Strengthen contents by improvingfunctions of AOL diary and increasingmovie and music related contentswithin the entertainment section.
ContentsContentsContents
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WiMAX ProjectWiMAX Project
Commenced WiMAX field trial, to prepare for the WiMAX commercialCommenced WiMAX field trial, to prepare for the WiMAX commercial licenselicense
Dec 2005 :Established WiMAX division
Apr 2006 :Applied for mobile WiMAX field trial license
July 2006 :Obtained mobile WiMAX field trial license, and commenced field trials
【Summary of field trial】
Spectrum:2.5GHz
Trial Period:1 year
Trial Area:Three cell sites within Tokyo 23 wards
Purpose:Gather data and information relating to cell design and equipment.
*eAccess is the first operator to conduct field trial withinTokyo 23 wards
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eMobile StrategyeMobile Strategy
13
(As of March 2006)*1 Speed and monthly charges are based on the average price of top 5 ISPs.*2 Monthly price is for individual houses, and includes monthly modem rental charges.
PHS and othersPHS and others2 million users2 million users
【【MobileMobile】】
Potential Mobile Potential Mobile Data MarketData Market
【【32~384kbps32~384kbps】】5,000~15,000 yen5,000~15,000 yen
Pricing and speed need to be improved in order to expand
market
Fixed & Mobile Internet AccessFixed & Mobile Internet Access
Total : Approx. 31.2 million Total : Approx. 31.2 million
【【64kbps64kbps】】~~2,000 yen2,000 yen
【【11~~50Mbps50Mbps】】2,0002,000~~5,000 yen5,000 yen
【【1.51.5~~30Mbps30Mbps】】4,0004,000~~6,000 yen6,000 yen
【【1010~~100Mbps100Mbps】】6,0006,000~~8,000 yen8,000 yen
Speed and Monthly charges*
ADSLADSL14.5 million14.5 million((4646%)%)
Dial UpDial Up7.9 million7.9 million((2525%)%)
CATVCATV 3.3 million3.3 million((1111%)%)
FTTHFTTH 5.5 million5.5 million((1818%)%)
Non Internet userNon Internet user
Source: MIC
【【Fixed LineFixed Line】】
Entering March 2007Entering March 2007
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eMobile Business Plan ScheduleeMobile Business Plan Schedule
FY3/2006 FY3/2007 FY3/2008 FY3/2009 FY3/2010 FY3/2011 FY3/2012
-Y1 Y0 Y1 Y2 Y3 Y4 Y5
Net profit positive
Subs. 5.0 million
EBITDA positive
Subs: 3.0 million
Data service
Voice serviceMar. Mar.
OperationOperation
FinancialFinancial
1.7Ghz License
Nov
Completed financing as plannedCompleted financing as plannedBuilding the network to prepare for the data service launch in 3Building the network to prepare for the data service launch in 3/2007/2007
Revenue 300 billion yenEBITDA 100 billion yen
Expand to nationwide
Expand coverage for voice service
Focus on Tokyo, Osaka, Nagoya area
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((500500億円億円~600~600億円)億円) ((646646億円)億円) ((140140億円億円~240~240億円)億円)
eMobile Financing StructureeMobile Financing Structure
Completed financing of 363.2 billion yen for eMobileCompleted financing of 363.2 billion yen for eMobile’’s funding requirements funding requirement
EquityEquity DebtDebt143.2 billion yen 220 billion yen
Bank LoanBank Loan::total 13 bankstotal 13 banks
++ = 363.2 billion yen= 363.2 billion yen
eAccesseAccess46.2%46.2%
Others 15.3%Others 15.3%
Goldman Goldman Sachs 24.9%Sachs 24.9%
TemasekTemasek7.0%7.0%
TBS 6.6%TBS 6.6%
*Woodperker Group, New World TMT, Mitsui&Co.,YodobashiCamera, BicCamera, Kojima,Yoshimoto Kogyo (Sedona Capital) etc…
Aozora Bank, Ltd. Mitsubishi UFJ Trust and Banking Corporation
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corporation
**
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eMobile Board of Directors StructureeMobile Board of Directors Structure
eAccess DirectoreAccess Director
Representative Director and COO
Haruo Taneno
Representative Director Representative Director and COOand COO
Haruo TanenoHaruo Taneno
Representative Director and CEO
Sachio Semmoto
Representative Director Representative Director and CEOand CEO
Sachio SemmotoSachio Semmoto
eAccess Representative Directorand CEO
eAccess Representative Directorand CEO
Representative Director and CFO
Eric Gan
Representative Director Representative Director and CFOand CFO
Eric GanEric Gan
eAccess Representative Directorand CFO
eAccess Representative Directorand CFO
External DirectorToyoo Gyohten
External DirectorExternal DirectorToyoo Toyoo GyohtenGyohten
External DirectorTaketo Furuhata
External DirectorExternal DirectorTaketo FuruhataTaketo Furuhata
President of Institute for International Monetary Affairs
President of Institute for International Monetary Affairs Former President of IDCFormer President of IDC
EVPShinichi Suzuki
EVPEVPShinichi SuzukiShinichi Suzuki
Former Senior VP&CTO of KVHFormer President of Nissho Techno
Former Senior VP&CTO of KVHFormer President of Nissho Techno
EVPYasushiro Murakami
EVPEVPYasushiroYasushiro MurakamiMurakami
Former Managing Director of Daimei Corporation
Former Managing Director of Daimei Corporation
External DirectorPeter Cowhey
ExternalExternal DirectorDirectorPeter CowheyPeter Cowhey
Dean of International Relations & Pacific Studies
Univ. of California, San Diego
Dean of International Relations & Pacific Studies
Univ. of California, San Diego
Director
Toshio Yasui
DirectorDirector
Toshio YasuiToshio Yasui
eAccess Representative Directorand COO
eAccess Representative Directorand COO
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Network Construction ProcessNetwork Construction Process
Cell Planning (Phase 1)
Site Acquisition
Civil Work
Equipment Installation
Tuning (Optimization)
Operation
Completed
In-Process
Next process
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Network ConstructionNetwork Construction
Selected Ericsson and Selected Ericsson and HuaweiHuawei as our two major vendors, as our two major vendors, eMobile is rolling a full nationwide 3.5G (HSDPA) network eMobile is rolling a full nationwide 3.5G (HSDPA) network
Radio Network : Start from Tokyo, Osaka, Nagoya area
Core Network : Nationwide
Radio Network : Start from Sendai, Sapporo area
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Partnership with Partnership with HuaweiHuawei
eMobile has selected eMobile has selected HuaweiHuawei as our second RAN network vendor.as our second RAN network vendor.
HuaweiHuawei TechnologiesTechnologies
Headquarters: Shenzhen, ChinaHeadquarters: Shenzhen, ChinaSales in 2005: $8.2 billion Sales in 2005: $8.2 billion Employee: 40,000Employee: 40,000
Providing mainly WCDMA related equipments to the Providing mainly WCDMA related equipments to the leading next generation telecom network vendor leading next generation telecom network vendor serving 28 of the worldserving 28 of the world’’s top 50 operators, and s top 50 operators, and Serving over one billion users worldwideServing over one billion users worldwide
Nearly a half of employee is dedicated to R&D. Major Nearly a half of employee is dedicated to R&D. Major R&D centers are located in Bangalore, India and R&D centers are located in Bangalore, India and Silicon Valley.Silicon Valley.
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I.I. FY2006/1Q Results HighlightFY2006/1Q Results Highlight
III. Financial OverviewIII. Financial Overview
II. Operational OverviewII. Operational Overview
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FY2006FY2006
15.22
1.99
1.58
0.93
4.87
1.75
2.89
FY2005FY2005
1Q1Q(2005/4(2005/4--6)6)
14.29
3.26
2.93
1.75
5.70
1.46
2.43
FY2006FY2006
ParentParent
1Q1Q(2006/4(2006/4--6)6)
- 6.1 %
+ 63.8 %
+ 85.4 %
+ 88.2 %
+ 17.0 %
- 16.6 %
- 15.9 %
YoY %YoY %
RevenueRevenue
Operating profitOperating profit
Recurring profitRecurring profit
Net IncomeNet Income
EBITDAEBITDA
CapexCapex
DepreciationDepreciation
(billion yen)
FY2006/1Q Financial ResultsFY2006/1Q Financial Results
14.29
3.26
2.93
1.75
5.70
1.46
2.43
ADSLADSL・・ISPISP MobileMobile ConsolidatedConsolidated
-
- 1.10
- 1.61
- 1.62
- 1.09
0.47
0.01
14.29
2.16
1.32
0.97
4.60
1.93
2.44
++ ==
1Q1Q(2006/4(2006/4--6)6)
NonNon--ConsolidatedConsolidated
Parent achieved 39.8Parent achieved 39.8%% EBITDA margin and 22.8EBITDA margin and 22.8%% operating profit margin. Mobile business startoperating profit margin. Mobile business start--up up losses were absorbed by ADSL/ISP business profit. Consolidated olosses were absorbed by ADSL/ISP business profit. Consolidated operating margin was 15.1%.perating margin was 15.1%.
YoYYoYComparisonComparison
*Minority interest adjustment of 0.83 billion yen in the net income line.
*
22
14.29
3.26
2.93
1.75
5.70
1.46
2.43
1Q1Q ForecastForecast ProgressProgress
56.00
10.90
9.70
5.40
20.50
13.00
9.60
25.5 %
29.9 %
30.2 %
32.4 %
27.8 %
11.2 %
25.3 %
NonNon--ConsolidatedConsolidated
14.29
2.16
1.32
0.97
4.60
1.93
2.44
1Q1Q ProgressProgress
56.00
- 3.20
- 6.30
- 1.30
6.90
93.70
10.10
25.5%
NA
NA
NA
66.7 %
2.1 %
24.2 %
ConsolidatedConsolidated
ForecastForecast
RevenueRevenue
Operating profitOperating profit
Recurring profitRecurring profit
Net IncomeNet Income
EBITDAEBITDA
CapexCapex
DepreciationDepreciation
(billion yen)
ADSL/ISP business progressed inADSL/ISP business progressed in--line with forecastline with forecastMobile business startMobile business start--up costs and Capex are mostly incurred FY2006/2Hup costs and Capex are mostly incurred FY2006/2H
Financial ProgressFinancial Progress
23
1,867 1,870 1,895 1,918 1,930
300 289 280 270 260
2,167 2,159 2,175 2,187 2,190
0
400
800
1,200
1,600
2,000
2,400
2005/1Q 2005/2Q 2005/3Q 2005/4Q 2006/1Q
ISP 契約数ADSL 契約数
Achieved net subscriber addition through increasing demandAchieved net subscriber addition through increasing demandfor lowfor low--speed ADSL service and the bundling with Metal Plus servicespeed ADSL service and the bundling with Metal Plus service
ADSL/ISP Subscriber GrowthADSL/ISP Subscriber Growth
ISP Subscribers
ADSL Subscribers
Narrowband Subscribers
Non-eAccess broadband subscribers※Excluding eAccess’ ADSL
subscribers
(thou. Subscribers)
Subscriber
Subscriber
24
15,219 15,132 15,149 14,853 14,291
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2005/1Q 2005/2Q 2005/3Q 2005/4Q 2006/1Q
(million yen)
Revenue decline was inRevenue decline was in--line with the expected ARPU dilution line with the expected ARPU dilution from rising Metal Plus and 1Mbps ADSL subscribersfrom rising Metal Plus and 1Mbps ADSL subscribers
Revenue GrowthRevenue Growth
25
5,206 5,416 5,6926,604
5,155
34.2%
39.8%
44.5%
35.8%34.1%
0
2,000
4,000
6,000
8,000
2005/1Q 2005/2Q 2005/3Q 2005/4Q 2006/1Q
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
EBITDA(ADSL ・ISP)
EBITDA margin (%)(ADSL・ISP)
Achieved high level of EBITDA margin of 39.8% up by 5.6% point YAchieved high level of EBITDA margin of 39.8% up by 5.6% point YoYoYfor ADSL/ISP business through continuous cost cutting effortfor ADSL/ISP business through continuous cost cutting effort
(million yen) (million yen)
EBITDA TrendEBITDA Trend
EBITDA and EBITDA margin trend EBITDA and EBITDA margin trend (Consolidated Basis(Consolidated Basis))
EBITDA and EBITDA margin trendEBITDA and EBITDA margin trend(ADSL(ADSL・・ISP OnlyISP Only))
4,874 4,691 4,8195,754
4,601
32.0% 31.0% 31.8%
38.7%
32.2%
0
2,000
4,000
6,000
8,000
2005/1Q 2005/2Q 2005/3Q 2005/4Q 2006/1Q0.0%
10.0%
20.0%
30.0%
40.0%
50.0%EBITDA
EBITDA margin (%)
*2005/4Q figure includes NTT charges retroactive adjustment of approx. 1,000 million yen.
*
*
26
2,3312,829
3,262
2,439
4,071
15.3% 16.1%
18.7%
27.4%
22.8%
0
1,000
2,000
3,000
4,000
5,000
2005/1Q 2005/2Q 2005/3Q 2005/4Q 2006/1Q0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
Operating profit(ADSL・ISP)
Operating margin (%)(ADSL・ISP)
1,990 1,963 2,218
3,204
2,162
13.1% 13.0%14.6%
21.6%
15.1%
0
1,000
2,000
3,000
4,000
5,000
2005/1Q 2005/2Q 2005/3Q 2005/4Q 2006/1Q0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
Operating profit
Operating margin (%)
(million yen) (million yen)
Operating margin for ADSL/ISP business increased 7.5% point YoY Operating margin for ADSL/ISP business increased 7.5% point YoY due to a decline in depreciation and operating expensesdue to a decline in depreciation and operating expenses
Operating Profit TrendOperating Profit Trend
Operating profit and Operating margin trendOperating profit and Operating margin trend((Consolidated BasisConsolidated Basis))
Operating profit and Operating margin trendOperating profit and Operating margin trend((ADSLADSL・・ISP OnlyISP Only))
*2005/4Q figure includes NTT charges retroactive adjustment of approx. 1,000 million yen.
**
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(million yen)(million yen)
Capex in 1Q is mainly for ADSL/ISP businessCapex in 1Q is mainly for ADSL/ISP businessMobile business Capex are incurred mainly in 2H Mobile business Capex are incurred mainly in 2H
Capex and Operating FCF TrendCapex and Operating FCF Trend
Consolidated Capex TrendConsolidated Capex Trend Consolidated Operating Free Cash Consolidated Operating Free Cash FlowFlow※※ TrendTrend
※ Operating Free Cash Flow = EBITDA – Capex
3,128
3,558
2,881
3,369
2,673
0
1,000
2,000
3,000
4,000
2005/1Q 2005/2Q 2005/3Q 2005/4Q 2006/1Q
1,928
2,384
1,938
1,132
1,746
0
1,000
2,000
3,000
4,000
2005/1Q 2005/2Q 2005/3Q 2005/4Q 2006/1Q
28
Maintain a very strong balance sheet for ADSL service expansion Maintain a very strong balance sheet for ADSL service expansion and mobile business and mobile business Consolidated gross cash position reached 187.1 billion yenConsolidated gross cash position reached 187.1 billion yen
with a net cash position reached 93.9 billion yenwith a net cash position reached 93.9 billion yen
--
42.3 %
84.9 % 187.07
93.13
- 93.94
84.94
33.69
220.24
--
100.0 %
15.3 %
38.6 %
- 278.8%
53.33
25.8 %
--
100.0 % 136.39
113.1 %
68.3 %
----
29.2 %
39.1 %
93.13
39.81
35.20
Share of Total 期末残高BalanceBalance
<Parent>As of June 30, 2006
Share of TotalBalance期末残高BalanceBalance
<Consolidated>As of June 30, 2006
Share of TotalBalance(billion yen)
Cash and Cash Deposit
Debt
Total Asset
Net Debt/Equity ratio(%)
Net Debt
Minority Interest (eMobile)
Total Shareholders’ Equity
Balance SheetsBalance Sheets
29
29.2%
46.6%
14.6%
0
500
1,000
1,500
2,000
2,500
3,000
3/2005 3/2006 3/2007E0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
50.0%
Plan to payout quarterly dividend from 2Q. MidPlan to payout quarterly dividend from 2Q. Mid--term dividend is planned to be 900 yen.term dividend is planned to be 900 yen.
+300円 +500円
1,800 yen
1,300 yen1,000 yen (Plus 200 yen commemorative dividend)
Dividend per shareDividend per share((PlannedPlanned))
0 yen1Q
900 yen2Q
450 yen3Q
450 yen4Q
Creating High Shareholders ReturnCreating High Shareholders Return
(Dividend per share, yen)(Dividend payout
- parent basis)
Dividend Dividend YieldYield 1.32% 1.43%
Based on the March end stock price of each fiscal year.
2.52%**11 **11 **22
Based on the stock price on August 8, 2006 of 71,400 yen
Highest level of Highest level of dividend yield in dividend yield in industryindustry
**11**22
30
This presentation has been prepared by eAccess Ltd. (“the Company”). This presentation contains forward- looking statements, which are subject to risks, uncertainties, and assumptions. This presentation is being presented solely for your information and is subject to change without notice. No representation or warranty, expressed or implied, is made and no reliance should be placed on the accuracy, actuality, fairness, or completeness of the information presented. The Company accept no liability whatsoever for any losses arising from any information contained in the presentation.
This presentation does not constitute an offer or invitation to purchase or subscribe for any shares of the Company, and no part of this presentation shall form the basis of or be relied upon in connection with any contract or commitment.
DisclaimerDisclaimer