OREANDA-NEWS. DagangHalal plc ("DagangHalal", the "Company" and the "Group"), the world's first global e-marketplace to address the need for Halal verification, today announces its intention to place certain of its ordinary shares with new investors (the "Placing") and to apply for the admission of its entire issued share capital to trading on AIM (the "Admission"), a market operated by London Stock Exchange plc.  Dealings in the Company's shares on AIM are expected to commence in March 2016. 

Arden Partners plc ("Arden Partners") is acting as Nominated Advisor and Joint Broker to the Company.  Optiva Securities Ltd ("Optiva") is acting as Joint Broker and Ingenious Haus (UK) Ltd ("Ingenious Haus") is acting as Financial Adviser. 

The Group operates DagangHalal.com, the world's first global e-marketplace to provide Halal verification. With its unique Halal Verified Engine ("HVE") database, DagangHalal.com allows the rapidly growing community of Halal suppliers and consumers to deal with confidence, assuring them that the products and services being purchased are Halal. 

Halal is a religion-driven concept, which is implemented in adherence to the core principles and values, laid down by the Islamic principles of Shari'ah law so that a product is suitable for consumption by a Muslim. Halal is applicable across a range of industries, including food and beverages, consumer goods and personal care, healthcare and pharmaceuticals, science and new technologies and hospitality and leisure amongst others.

Globally, the Halal industry is highly fragmented being composed of small and medium enterprises. The global Halal market is one of the fastest growing markets in the world with the Muslim population expected to grow from 1.6 billion in 2010 to 1.8 billion in 2020. 

Over the past three financial years the Group's revenue has increased from MYR1.18 million for the financial year ended 31 December 2012 to MYR3.405 million for the financial year ended 31 December 2014, representing an increase over the period of 187%. 

Mohamed Hazli Mohamed Hussain ('Hazli'), Chief Executive Officer of DagangHalal commented: 

"The global Halal market is huge, and digital technology will bring that market into the 21st century. More than $1 trillion is spent on Halal food and beverages each year and that figure is expected to grow to $1.6 trillion by 2018.  Market participants want to be sure that the products they are buying are genuine Halal and our HVE portal and e-marketplace is able, for the first time, to give complete confidence in product authenticity.

"With widespread internet use and smartphone adoption across the world's Muslim population, we now have the infrastructure to be able to check product authenticity anytime and anywhere. DagangHalal now has the opportunity to consolidate its position in the industry - delivering a single platform and a focal centre for global Halal trade and the proposed Placing and Admission to AIM will enable us to accelerate our growth towards this ambition."

Key strengths and opportunities

·      Strong brand recognition in the global Halal sector with an internet presence

The Group is well positioned within the global Halal trade market. As of February 2016, the Group has built up partnerships with 37 Certification Bodies ("CBs") and has participated in Halal trade fairs. Since 2011, DagangHalal.com has supported verified e-commerce for more than 3,500 sellers of Halal products and services. 

·      A diverse business benefitting from exposure to multiple elements of the global Halal ecosystem

The Group operates three business strands, being an online e-marketplace, a Halal Certified database, and a Halal media and events business, all of which are well positioned to benefit from the continued growth of the global Halal industry. 

·      Strong relationship with JAKIM and other leading Halal certification bodies worldwide

Since 2009, the Group has been working with JAKIM, the Malaysian Certification Body that the Directors believe is one of the most trusted and most recognised stamps of approval in the Halal industry. The Group also has strong relationships with other leading Halal CBs worldwide. 

·      First-mover advantage with proprietary and unique HVE database

DagangHalal.com is the world's first global e-marketplace to provide Halal certification.  In conjunction with JAKIM, the Group has developed the Halal Verified Engine, an online database of Halal certificates which have been generated and uploaded by JAKIM recognised CBs.  As at February 2016, the Group has signed agreements with 37 out of the 73 JAKIM-recognised CBs and has uploaded over 60,000 valid Halal certificates onto the HVE. The Directors believe that HVE is the only global online Halal verification repository that is able to underpin the verification of Halal products. 

·      Favourable market dynamics and drivers

The Group operates in a growing market, supported by the growth of the Muslim population and rising household incomes in the markets in which the Group operates.  The global Halal market is one of the fastest growing markets in the world with the Muslim population expected to grow from 1.6 billion in 2010 to 1.8 billion in 2020.   Global spending on Halal food and beverages was estimated to be valued at $1.1 trillion in 2012 and is expected to grow to $1.6 trillion in 2018 and account for 17.4%. of global expenditure.  

·      Improving financial track record

Between the financial year ended 31 December 2012 and the financial year ended 31 December 2014, the Group's revenue increased by 187% to MYR3.405 million. 

Under the Group's HVE model, the Group issues credits on a per certificate basis, which are then used and recognised as revenue when a certificate is downloaded on HVE.  Accordingly, as demand for HVE increases, the Group will benefit from increasing levels of revenue visibility. 

·      Strength of management team

The Group has a highly qualified and experienced management team with in-depth industry knowledge and a track record in growing technology companies across a number of geographic markets.  

·      Multiple growth opportunities

The Group's long-term vision is to become the world's digital Halal marketplace, delivering a single platform and a focal centre for the global Halal industry.  Further growth can be achieved through sales and marketing, as well as geographical expansion. In addition, the Directors see great opportunity to further help buyers to look for a genuine Halal suppliers, with optimised technology, and a greater scope of services for Halal merchants. 

Further growth opportunities can be found from favourable market dynamics. Key geographies are experiencing an increase in demand for Halal products at a time of rapid technological development that makes it easier and quicker for buyers, sellers and CBs to interact in a marketplace. Widespread internet use and smartphone adoption creates an opportunity for product verification at any time and anywhere. At the same time, JAKIM is consolidating the standards required by CBs. As a result, with its proprietary technology and relationship with JAKIM, the Directors believe that DagangHalal is in a strong position to benefit from a complementary set of market trends. 

Halal market

The Halal market is divided into food and non-food sectors. As of today, the largest of these markets (excluding Islamic finance) is the Halal food and beverages sector which includes meat, poultry, fish, dairy produce, edible vegetables, fruit and nuts, as well as processed foods and many non-alcoholic beverages.

Food & Beverage

The awareness and observance of Halal is undeniably the greatest within this sector, and the Directors' believe that adherence to Halal compliance by food and beverage producers is of the utmost importance. Indeed, the food and beverages sector constitutes over 60% of the global market potential for Halal products, of which primary meats, processed goods, baked goods and confectionary constitute approximately 35%.

The Halal Market Opportunity

The exchange of goods between businesses and consumers has traditionally been conducted via trading platforms such as catalogues, trade shows or through third-party intermediaries such as distributors and traders. Such forms of engagement can often carry elements of inefficiency making trading time consuming and difficult for buyers and merchants. The fragmented and regional nature of these marketplaces often compounds the effect of these inefficiencies, making the transactions difficult and expensive. The advent of the Internet has seen the creation of a multitude of online marketplaces or e-marketplaces which overcome many of these inefficiencies. Within the context of the Halal industry there have also been several e-marketplaces which have emerged, of which DagangHalal.com is one. As such the Group operates within the global Halal e-commerce trade market which is driven by several factors, including, but not limited to, the rising spending power of Muslim consumers (which according to Smith Zander is projected to increase from USD2.9 trillion in 2010 to USD 3.8 trillion by 2015 and to USD 5.3 trillion by 2020), increasing internet penetration and internet connected mobile phone penetration, increasing trends in online shopping and the rapid development of distributed logistics infrastructure and express delivery networks. For example, global expenditure on Halal trade is expected to grow from USD 1.7 trillion in 2012 to USD 2.67 trillion in 2018 at a Compound Annual Growth Rate ("CAGR") of 7.8%. Furthermore, the increasing availability of cheap and reliable technology for secure transactions has led to a significant growth in online sales, and global e-commerce sales grew from USD561 billion in 2010 to USD963.0 billion in 2013. E-commerce activities in Asia and the rest of the world were primarily driven by rapidly increasing computer and internet penetration. According to Smith Zander, global e-commerce sales are further expected to grow to USD1.4 trillion in 2015 and USD4.9 trillion in 2020.

DagangHalal.com

DagangHalal.com enables both B2B product and service listings as well as B2C sales for independent merchants looking to sell verified Halal products. The Group does not purchase or hold any products as inventory but helps sellers optimise the selling of their Halal products or services to potential buyers. The Group monetises its e-marketplace by selling year long merchant packages which enable independent merchants to list their Halal products or services on the e-marketplace website. There are three fee earning twelve month subscription packages, trade, silver and gold; which vary in terms of the number of products which can be listed, the number of trade categories which the merchant can showcase a product in and the search priority on the DagangHalal.com e-marketplace relative to other merchants.

Halal Certificate Repository:

The HVE is the world's first Halal repository designed to ensure accurate Halal verification and expedite the Halal-certification process for applicants. Currently hosted on Microsoft's cloud services, namely Windows Azure and SQL Server, HVE allows the public to "verify with just one click" the veracity and validity of Halal certificates from international Halal verification bodies recognised by JAKIM, for both local and imported products. It also simplifies the time and cost consuming processes to verify the Halal status of ingredients or components in a supply chain that come from other countries with the support and up-to-date information shared by the CBs which are recognised by JAKIM. HVE allows CBs to verify the authenticity of the certificates submitted from applicants for Halal certificates (Halal Applicants). Moreover, the CBs can utilise the system to help market the certificate holders to international buyers.

In order for a business to market its product as Halal to the standards of JAKIM or to the standards of one of the JAKIM recognised CBs, it must first obtain approval from one of these parties. The process of Halal certification is divided into two stages, a documentation phase and an audit phase. In the documentation phase, an applicant will prepare its application by collating the various Halal certificates from differing suppliers via phone, fax and email to prove the Halal status of each of the ingredients that they use in the their product. The applicant may also need to identify the alternative suppliers if their initial suppliers are not Halal certified by JAKIM or a JAKIM recognised CBs. The Directors believe that such processes can make the application process time-consuming.

Once an application has been prepared and approved by the issuing CB this is followed up with an audit. During this audit the issuing CB will check the validity of the statements made relating to the processes on the application form and review the hygiene practices of the staff amongst other factors. Once an applicant has successfully completed both stages, they will typically be issued with a Halal certificate.

The HVE system originated as a concept in April 2012, when JAKIM and the Group entered into the Smart Partnership Agreement to cooperate on the establishment of the HVE. Following further discussions with JAKIM, a cooperation agreement was signed on 11 July 2014. As part of this agreement DagangHalal.com was to create a database which would benefit the public, members from the food and beverage industry seeking Halal certification from JAKIM, and JAKIM-recognised CBs. Once issued, a certificate is typically valid for between one and two years.

The Directors believe that the HVE provides a solution to entities within the Halal industry needing to obtain verified and current Halal certificates, including halal applicants, Certification Bodies, supplier and manufacturers, consumers, and trade and custom officials.