Swift TV Ltd (STV) Earnings Call Transcript

Have all persons intending to be to ask that question. It appears the voting process finished and I therefore declare the poll closed. Results of the poll will be released on the ASX platform following this meeting. I now open the floor to general questions for the Board and management. Are there any questions? There are none. That now concludes the question-and-answer session. As there is no other business that can probably be brought before this meeting, I now declare the meeting closed at 10:21. Thank you for your attendance. Ladies and gentlemen, I now hand over to Brian to -- sorry, before I do that, I must do the most important job today. As you are aware, and as announced, Rob Sofoulis has advised he will be standing down from Swift board following the closure of the meeting today. Rob founded Swift Networks in 2009, and Rob was appointed to the board as Managing Director in May 2016 on the company's ASX listing. Rob has been instrumental in the growth of the business to be a market leader in the mining and resources sector where we are pioneered the provision of IPTV to remote on sites across Western Australia. I personally like to thank Rob for what has been a 13-year journey with Swift and welcome Rob's continued involvement with the business, not only as a major shareholder, but also as a former colleague. His contribution guidance will always be appreciated. On behalf of myself, the Board management, we wish to thank you, Rob. I now hand over to Brian Mangano, the Swift's Managing Director to provide the investor presentation.

Thank you, Charles. As just following up Charles' comments, our business was established in 2008 by Rob Sofoulis and listed in 2016. Basically, business at that point of listing was really focused on the mining industry and was a pioneer in bringing IPTV into the mining industry. Since then, the technology has evolved and has increased in terms of its scope and also its quality. Swift is really a technology company, offering a premium entertainment and gaming solution on our own proprietary platform. Our goal is to be the product of choice in the markets in which we operate, which is presently aged care and mining with also government sector work as well. I believe a key point of difference of Swift has been that we design, implement and provide ongoing support and development for our solution, and that is tailored specifically to the customer requirements as well. Looking at what really -- sort of summarizing our product offering, we've defined -- we call it 3Es. So really, it's entertainment, which is comprised of a movie catalog, which we developed over multiple years of on-demand movies so they could be started or stopped at any time, which is particularly important for the mining sector. On movies, we have the benefit of a cinematic release window that's straight after cinemas, which allows us to release movies well before the streaming services. We also provide -- and this is an area where we're increasingly focusing our offering is the engagement piece is important both in mining and aged care whether it's for on-site information, mental health, wellbeing environmental information, the dashboards as to what the facility is using in terms of their energy consumption. There's a whole lot of functionality that the platform offers our customer that we can provide through the engagement piece. That can be things like in aged care for, say, the bedridden person who wasn't able to join in the community activities, could be a live stream from the community area of an aged-care facility. That can make a really big difference to someone. And that's just one of the attributes that our platform offers. And also when we look at say the indigenous content, which we're offering more and we're developing more internally, basically providing -- telling the stories of First Nations people on the land of which some of these mine sites operate. And not to get enablement. Now enablement really is the whole comms, support network infrastructure piece. So Swift has the ability to not only install the system end-to-end, but also improve the WiFi solutions systems within camps in remote areas and within aged care facilities as well. That's all done internally through our capability and all supported by our in-house R&D team. Looking at our Swift solution, and this is one area which -- principally around the mining site where bandwidth is a real big problem. And this is something that Swift has solved. Swift has all the movies and its content cached within the IP head-end of the actual facility. So this means that bandwidth isn't drawn over the Internet for every single movie that's watched. So if you're going to mention 3,000 people getting off shift at the one-time wanting to stream content has a real bandwidth draw and actually creates all sorts of issues. And most remote areas do not have the ability to actually accommodate 500 people doing that. In unison, 2,000 or 3,000. So really, one of the other key attributes that our system of this is the ability to manage that bandwidth draw. So we can prioritize the bandwidth so that it's available for WiFi for people to facetime their friends or contact their family, which might be prioritized over, say, casting or streaming of content. So at the end of the day, we have the movie content that actually really diverts the use of bandwidth to what's already cached on site. So that it creates a better experience for the user and also has the other attributes of leaving bandwidth available for other users. And looking at our content library, really what's happened over the last few years, when you go back to 5 years, there was a move towards bring your own device, where people were asked by mine site to basically the bandwidth, bring your own streaming service and off you go. And really the trend has moved away from that. Bandwidth issues continued no matter how much -- how big a site is or how much bandwidth you have. As the production site mining requires more and more bandwidth, there's less available for the village and the people in those camps. So it's also a case of -- the employee is not feeling valued where something is provided for them to get like bringing food to the mine site. So by having the entertainment really there, it's basically the entertainment on us. It's brought there for people, and that's a real positive, especially as people are trying to attract people to their particular mine site. This is all put together through what we consider quite a slick user interface where the 3Es come together with the entertainment, the engagement and the enablement piece all to a very quick interface, which one doesn't have to check source. The free-to-air TV channels are there. It's very easy interface there. Anyone walking into the room, no matter if you've been there before, you'll quickly relate to it. Find a relevant site information, it could be things like health and safety. We can do tailored updates, tailored information to particular people on the site and integrate it to the village management system. For instance, it can be a health and safety warning that -- it's been 3 weeks since you've been on this particular site. This is what's happened in the last 3 weeks and a specific notice to that person. So someone else that had been on the site a week ago. The report would be responsibly tailored to them. Looking at our current features. This just gives you some snapshot of where we are now with our 2 main products, the Broadcast and Swift Access. Basically these multiple features of both products entail, which we're continually adding on to as demand come. Some of these are specific to aged-care, but some will also have application in both areas, whether it's the apps that we develop that allow people to even put screenshots of shots they take and they stream it on to the person's TV screen as a screensaver. Moving on to our financial results for FY '22. It was quite a good year for Swift in terms of real revitalization of the business in terms of new products and services and a real growth outlook. So whilst we've only made a 5% increase in revenue, a lot of that revenue was transitioned from short-term revenue into sometimes 3 and 5 year deals, which basically driven by the introduction of our new products. Within that revenue, we have $13.5 million of recurring subscription revenue. That's very high falling revenue with very good counterparties from Mineral Resources, Roy Hill and all the other big miners. This achieved really a group EBITDA of $1.4 million. Of that, $2.4 million is enterprise related. So that difference of $1 million effectively is the cost to be a listed public company. So that's the cost of the audit. The Board, the share registry and other related listing costs. During the year, we also acquired the casting technology, which really was an existing technology that was in the hospitality sector that we have spent fair resources and time to be able to scale up and utilize in a mining environment, which is quite different. Now we did that and also sold during the year, 6,000 rooms on 3- to 5-year terms of the new Swift Access product, all doing so whilst maintaining a $3.7 million cash balance during the year. And we also secured a new financing facility, which I'll speak on a bit later. Just looking at the results, the mix between project revenue and recurring revenues, the project revenue is generally the installation cost. They can also be upgrade costs in terms of upgrading WiFi systems on various camps. So we basically do get work for companies that we don't necessarily do the Swift Access system for, but this gives us an opportunity to move them to Swift Access as the opportunity presents itself. So really, there's a big focus at the moment on trying to grow revenue and not grow expenses. So we put out a recent announcement where we cut overheads quite considerably. And with some of the board changes as well, we're basically looking at $1 million of operating expense savings, which we hope to realize over the course of this year. Looking at our achievements, really sort of little bit of a chronology to sort of show where we went from -- really, FY '22 was really the development and introduction of the Swift Access product and also the Swift Broadcast products. So these are high-margin products. Swift revenue and margin has been at a certain level, but these products with all the capabilities allow us to move up the print to premium product both in mining and aged care. So we acquired the technology on August '21. Mineral Resources was the first substantial company to agree to pilot the actual product. We had the first sale of Swift Access to INPEX in January of '22. That's still yet to be installed -- INPEX, because they have to fit in with their installation and downtime schedules, that's on 2 oil rigs, oil platforms. We've also been awarded significant infrastructure work. In March, we had first big contract with Roy Hill for Swift Access. So that was for $3.5 million represents 3 years on 1,700 -- 1,700 rooms on a take-or-pay basis. Since then, the camp has actually grown by over 1,000 rooms to 2,774 so we expect to drive a lot more revenue from that as we grow with Roy Hill. And we've also been involved in the village expansions on the communication side as well. We've also re-signed an expanded 5-year license agreement with some bigger movie houses. And this has expanded our contract -- content contract to include the suite of James Bond movies, Fast and Furious, a lot of that sort of go to movies that when people have [indiscernible] Netflix account and can't find what they want, they can always go back to some of the coupons, The Bourne Identity, all that cycle suite of good solid movie content that we have in our library. We've also been awarded multiple subscription agreements to many, both in Aged Care and into Mining, both the Broadcast and Access product. And what we're seeing is this real move towards premium products within the mining industry, which has driven a pioneer of it by both Roy Hill and Mineral Resources because really their goal is to try and make their camps a bit more resort-like and really to have a better experience with their staff. Looking at the first half. We nearly finished the first half of FY '23. We've been awarded multiple further infrastructure projects. We did the debt refinancing, the mineral resources deal was signed up just in October. Our overhead savings, as I mentioned before. We're also nearing completion of the rollout of the Swift Access product to Roy Hill. So that will be completed, we hope by Christmas. So when we look at what we've achieved today, we're basically targeting about $2.8 million of project work by 31 December, that's about a 47% increase on the prior corresponding period and has largely been driven by the Swift Access installation costs. And as I said, things like the INPEX one, we still have in the next financial -- sorry, next calendar year. Just focusing a bit on our debt facility. The debt facility is with Pure Asset Management. Pure Asset Management is also the second largest shareholder group within Swift. We have a very good relationship with Pure. This facility we previously had an [ $9.4 million ] facility. So we basically paid down some of the facility and renewed it for a 3-year term and also secured a rollover of the 9.5 inches grade continuing throughout the whole term. So that's fixed for the whole 3 years, which is quite good given the market that we are currently in for interest rates. So really, our goal at the moment is to use any excess cash flow generated to reduce this debt. This is a real sort of focus of the business, just to try and reduce debt as soon as possible. Looking at the markets and really what's influencing our markets. We're still seeing a real focus on worker experience on sites. There's still competition for workers. We're seeing that just for locally with just the amount of ads on the radio and TV, where mine sites and miners are actually advertising to try and attract people to their site over another site. So this is where the tailwinds come from the mining sector, which is currently sitting at 158,000 rooms in Australia. We're also seeing bandwidth and to the issue that over the years, so I think well, mine site should just increase the bandwidth that they have. But what happens is as the vehicle telemetry, autonomous vehicles, surveilling data, we're seeing a real increase in the consumption of bandwidth on the production side, which still doesn't leave much available for the town side of the line site. So it still -- it works very well for our product that works both in low bandwidth environment and high bandwidth environments. And it's also important to think that a lot of the larger mining players that have a number of sites want consistent offering across their camp. So they might have one camp that has good bandwidth, but another camp has poor bandwidth. From an HR point of view, moving people from one camp to another, they need a stability and consistency of the offering. We're also seeing the ESG requirements, basically, the environment and social, governance that's something which is really driving our engagement piece. So that's Indigenous First Nations content, the environmental content and dashboards that we're offering, also governance, it's the HSC type content. All of those things are basically catch load down engagement piece in our platform. In the aged care sector, what we've really had to relaunch the product. We've launched Swift as it was a Swift on Demand in the Aged Care sector, at the start of COVID and that really put the brakes on our launch in Aged Care. So now with coming out of COVID, we have access back into the aged care sector not just to sell the product but also to install some of the deals that we actually have done going back 2 years. It's now allowed us to get into that sector again, and that really wasn't relaunch at the [ ACOA ] conference recently. We're also seeing again with the government focused in aged care, the introduction of a rating system in aged care. So we're very cognizant of how that rating system works and the engagement pieces that relate to that, whether it's the communications, factors driving wellbeing. We could basically design our product to help enable aged care provides to meet their requirements to get a better rating system. It's a bit like, I suppose, a hotel star-based system. So if you've got better entertainment, better connectivity, better content, whether that's exercise content, wellbeing content, health care content and access to services content, that all helps basically come to enjoy our engagement piece and helps facilitate that from the aged care provider. We're also looking further into at home care and also disability care, which sort of falls into the same sector. This is again where the engagement piece, access to support services becomes quite important and something that we are basically spending instead all the time of developing content that relates into that. We also are still in the hospitality sector. And we hope to see the revival of the hospitality sector, and we still have a fair bit of income that comes from that sector. And that's something we'll continue to grow. Defense is also another area, which we do currently sell into. And that we've seen some growth happening in that area as defense spend increases within Australia. So really looking at our growth opportunities. Really, for this year, it's -- again, it's monetizing Swift Access and Swift Broadcast products across all our existing markets. We're basically bundling our support services, and we're also -- thank you. We're also looking at additional room expansion within the mining and resources sector, because there still remains a lot of load bandwidth opportunities for Swift in which the partner in which to get access to those rooms, to be able to look at using the Swift Access platform because the Swift Access platform is unique in the way it manages its bandwidth in those low bandwidth environments and that allows us a full-fledged product to be put into that area. We're also continuing to focus on our strategic partnerships in Aged Care and also Retirement Living. And we'll continue with developing premium content offering across both of those sectors. Networking support and installation, again, we'll see more demand for that. So it's not just demand driven by our Swift Access or Swift Broadcast products, it's demand [ or just ] basic communications, improvement WiFi, accessibility, both in mining and in aged care. We're also looking further -- so we've been looking out for and we started on a year or so ago was the development of -- more of a consumer home based type product. So looking at our technology evolution, as a business, we've been pretty much focused on the business-to-business side of things, in the mining, aged care, retirement living, which has basically been around a closed-loop environment. So we have a good sales history that is particularly in mining that's growing. Aged care is really starting up again. So scope for growth within that. But where we see our technology evolving is getting more towards the business and consumer, this is more in the at-home space in Retirement Living and also in disability services sector. Now to deliver that in those sort of non closed-loop environment means evolving our product into a cloud-based delivery and really also backing our content more specifically tailored to that sector. So really it might be psychological content, things like access to local support services and specific demographic related content and that's where we sort of see our technology evolving as we move the platform into a flat-based platform going into the future. So looking back. A bit of our achievements for FY '22. Just in summary, we've developed a new product being Swift Access and Swift Broadcast. We've sold it already into 6,000 rooms with 3- to 5-year significant contracts. We basically moved past the sale of the Medical Media business. We've fixed the issues in the past. So we've now got a clear landscape in front of us to really pursue our current business and to move forward. We've also -- this is now starting to translate into the total contract value. So that's increased to 30 June to be $17.9 million. So that's the total contract work as at $39 million that we have signed up in the book whether that's subscription or project revenues. So since then, obviously, we've done more sales that will have increased that number. Looking at our focus into FY '23, we really want to continue our focusing on monetizing our current products. There's a lot more scope for sales for both our current products in aged care and mining, and we wish to pursue them quite vigorously. We've spent a lot of time. And as of this year and also increasing our marketing presence and the quality of our marketing material. We've launched our on-site tonight campaign, which feeds to the [indiscernible] or the fly in and fly out community so they can see what's actually happening with our new media releases that come up on site. We'll continue again to drive our growth in Aged Care and Retirement Living, again, focusing on partnership opportunities. This will give us quicker access to those markets through people who offer other services into Aged Care usually on a technology basis. But also -- and this is something we also need to make sure we do is to grow revenue ahead of costs and not let cost get out of control and surpass revenue growth. So really, where I see it at the moment now is the right time, I suppose, to rediscover Swift. We have some grand clients. We've got great industry-leading tech, which really at the cusp of really monetizing with tech to be what I believe will be the product of choice in mining and aged care. And this is, again, it's all been developed in-house in Australia -- and supported in Australia. So really I'd just also like to thank everyone for attending and also to thank Rob Sofoulis for his guidance and my time with Swift and wish you well in your retirement. And thank you, everyone, for dialing in and attending this AGM. Thank you.

We'll be taking questions.

Any questions from the floor? No questions.

Thank you.

Thank you, everyone. Good bye.