News

W Home Secures Major Pre-Pay Orders for US$23m (30/3/2005)

SkyNetGlobal Ltd, listed on ASX ("SKG") in Sydney and on AIM ("SKN") in London, announced today that its wholly-owned subsidiary, W Home Automation Pty Ltd, secured two binding pre-pay orders from the Australian subsidiary of a Russia-Ukraine trading company, Techno Import Pty Ltd, for US$23 million (A$29 million) worth of home automation products.

SkyNetGlobal Ltd, listed on ASX ("SKG") in Sydney and on AIM ("SKN") in London, announced today that its wholly-owned subsidiary, W Home Automation Pty Ltd, secured two binding pre-pay orders from the Australian subsidiary of a Russia-Ukraine trading company, Techno Import Pty Ltd, for US$23 million (A$29 million) worth of home automation products.

Techno Import is acting as an agent for a consortium of Russian and Ukrainian property developers and construction companies whose portfolios include upscale residential apartment buildings in Moscow and Kiev. Among the developers is Glavmosstroy, Russia's largest residential property developer, which was founded in 1954.

Under the terms of the binding agreements, W Home Automation will receive full payment for the US$23 million in orders on or before 30 June 2005. W Home must deliver all products within four months of receiving payment. The orders include a pre-pay, volume discount. However, SkyNetGlobal expects to maintain a 26-percent profit margin on the orders, in part due to cost scale advantages. SkyNetGlobal will recognise revenue when the products are delivered, so the US$23 million payment would be attributed to the company's consolidated FY2005-06 results.

Among the W Home products to be supplied under the agreement include universal remote controls, lighting controls, appliance and computer modules and wireless transmitters. All of the products will be packaged and deployed under the W Home brand and customised for Russian language and electrical power standards.

The landmark export deal follows visits in February to Moscow and Kiev, where three SkyNetGlobal employees, including CEO Jonathan Soon, solidified relationships with major property developers, key industry players and senior government officials. Among those contacts is Konstantin Danilin, 60, a senior Moscow Government official who is the city's head of relations with the Russian federal government. Danilin, who is a strong proponent of Asia Pacific -Russian trade, was on hand in Sydney to witness the contract signing ceremony.

"The size of the deal, with its revenue and profit implications, is significant for SkyNetGlobal," says Soon. "Equally important, we do not see this is as a once-off transaction in the region. The luxury home market in emerging countries like Russia and Ukraine is booming in response to demand from newly-rich locals, as well as expatriate executives from leading multinational companies. We expect to do more deals of this kind in the Middle East, China and India as well."

The demand for smart home products is expected to grow substantially in Russia and the Ukraine, where developers are eager to differentiate their luxury properties with a proven product line. According to developers, there are no established home automation brands in either country.

"What we are seeing in Russia and the Ukraine is a typical response to new wealth," says Anthony Blass, Group Managing Director for SkyNetGlobal. "People want to live more comfortably and property developers are in a hurry to provide that comfort. The W Home product line is a leading smart home lifestyle brand in Australia and that has helped us secure this contract."

SkyNetGlobal's move into Russia and the Ukraine is part of its European expansion plan following its dual listing in February on AIM, which is operated by the London Stock Exchange.

www.skynetglobal.com