Swift TV Ltd (STV) Earnings Call Transcript

Good morning, ladies and gentlemen. Welcome to the 2023 Annual General Meeting of the members of Swift Networks Group Limited, at which the financial -- annual financial report, Director's report and auditor's report for the financial year ending 30th of June 2023 will be considered amongst other items of business. My name is Charles Fear. I'm the Non-Executive Chairman of Swift Networks Group Limited. Copy of the Swift's Constitution share register are available, should any member wish to view them. Suzie? Thank you. Today's proceedings will be in 2 parts. Firstly, we'll be dealing with the formal business of the AGM, including the Notice of the Meeting itself. The second part will involve a company update shareholder presentation. I have satisfied myself that in accordance with the constitution of, a quorum is present, and I therefore declare the Annual General Meeting open at 9:01. 9:02 actually. Seated in Swift's Boardroom are Swift's Managing Director, Brian Mangano; Non-Executive Director, Brad Denison who's caught up with traffic, will be here shortly; Company Secretary, Suzie Foreman; and our CFO, Ryan Sofoulis. Joining us by video conference is Swift's Non-Executive Director, Pippa Leary. Also in attendance is the company auditor from BDO, Dean Just. Mr. Just is in attendance to answer any questions you may have for him regarding 2023 audited accounts. Company did not receive any written questions submitted before the AGM for the auditor. I've been informed that the Notice of Annual General Meeting dated the 2nd of October was made available to all registered members within the notice of period required. A copy of the notice is available on request. I now table the notice. And unless there are any objections I will take notice convening the AGM as read. Are there any objections? No objections. Thank you. The motion is carried. We will now move to the formal business of today's Annual General Meeting. Proxy voting instructions received and the summary of each proxy voting instruction are now tabled for and available for inspection. I declare the proxies valid in accordance with the constitution. In my capacity as Chairman, I will today request a poll on each of the resolutions. The poll will be taken once we have been through each of the resolutions. Ballot papers were given to eligible shareholders at the time of registration, which I ask you to complete. The poll will be taken with results released on the ASX platform following the meeting. I'll further explain the procedure of the poll at that time. Swift Networks has received proxy voting instructions from members representing a total of 177,502 -- 177,502,326 voting shares of the company -- in the coming constituting approximately 29% of the issued capital. I table a summary of the proxy votes for all resolution. And note, during the meeting, I will refer to the table displayed on the screen for how proxy votes have been casted on each resolution. The proxy vote received are significantly in favor of each resolution. There are 6 items of business to deal with today, and I propose to keep the process as quick and as simple as possible. Please note the following. Voting will be conducted by way of poll. When asking questions or making comments, would members please identify themselves. I intend to vote all proxies cast in the Chair's discretion in favor of each of the resolutions being considered. I will now commence with considering each item of business and voting on each resolutions contained in the notice. I refer to the first item of the business of the notice and table Swift's Annual Report, for Tuesday, for the financial year ended 30, June 2023 which includes the annual financial statements, the auditors report, directors reports and the remuneration report for the financial year ending 30 June 2023 for consideration by members. Members should note that the financial statements and reports tabled are only for discussion and not for approval by members. Are there any questions in relation to the financial report? There are no questions. As this matter does not require a vote, we will move on to the next item of business. I refer you to Resolution 1 of the notice regarding the company's remuneration report for the financial year ending 30th June 2023. I note that this is a nonbinding ordinary resolution. The resolution and the proxy results for the Resolution 1 are published on the screen. I refer you to Resolution 2 regarding notice -- of the notice regarding the reelection Pippa Leary as a Director. The resolution and the proxy results for Resolution 2 are published on the screen. I refer you to Resolution 3 regarding the approval of the issue of securities to Mr. Brian Mangano, comprising A, 8,445,946 shares and 8,445,946 performing rights. The resolution and proxy results for Resolution 3 can be seen on screen. I refer you to Resolution 4 regarding the renewed approval of the Swift Employee Securities Incentive Plan, for approval for the approval -- for approved issue up to 13 million securities under the Employee Incentive Plan. Note, this is the requirements under the listed rules to specify and obtain approval for a maximum number of securities issued under the plan. The Resolution and the proxy results for Resolution 4 are published on the screen. I refer you to Resolution 5 of the notice which relates to the approval of an additional 10% placement capacity in according with listing Rule 7.1A. Resolution and proxy results for resolution 5 are published on the screen. I know this resolution is a special resolution. Does any member have any questions related to the resolutions? No. I will now hand over the call for each resolutions #1 to 5.

[indiscernible]

Thank you. Well, I'd now like to open the floor for general questions for the Board and management. Are there any questions? There being no further questions, that concludes the Q&A session. As there is no other business that can probably be brought before the meeting, I formally declare the meeting closed at...

9:09.

9:09. Thank you. Thank you for your attendance and participation in Swift's 2023 AGM. I thank you for your attendance, and your continued investments in Swift. Swift Networks Director, Mr. Brian Mangano will now provide an investor update and company presentation. Thank you, Brian.

Thank you, Chair. Good morning, and good afternoon to those of you on the Eastern States. For those of you who don't already know, trying to encapsulate what Swift is in a short brief outline, it's something that's always been a bit of a challenge to the company because we do multiple things. And really what Swift actually is, is a tech company that is reimagining the television. By doing so, we are able to deliver expanding almost ever-expanding range of capabilities that are currently available through a traditional smart TV. We -- basically summarized those capabilities in 3 distinct areas being: entertainment; engagement; and enablement. And for those of you who don't know Swift's history, we started really within communications in remote mining villages. So when you look at those 3 key features of what we do as a business, this is all enabled through as what we call the Swift Access to buyers, which really takes the standard TV or even a smart TV to be on the capabilities of what is imagined even within a smart TV of today. So when we look at entertainment, Swift offers an entertainment solution that basically is ahead of Netflix or a Stan or a Foxtel. By doing so with a release window that sits ahead. So basically straight up to cinematic release. As a business, we're also able to tailor our entertainment offerings, specific target sectors, such as mining and aged care, the 2 principle sectors that we're currently involved within. We can also tailor other content sites, maybe content, whether that be exercise content within the aged care sector or specific content for indigenous or well-being in the mining sector. The engagement feature that we basically categorize a lot of offerings is the feature which we're basically expanding within the business. This is an area which shifts Swift apart from its competitors that just offer an entertainment solution. This is an area where we can customize the offering, whether it's personalization or integration within facilities that we operate the system. That can mean, putting on menus within both mining or aged care sector. We're acknowledging the guests for details with regards to alerts or messaging that can actually be targeted or reticulated to certain people on a particular site or in a particular facility. And this is all brought together by the word enablement. This is where we provide the ICT services, the network infrastructure to support the installation and this is all wrapped together in a user interface that's sector-specific. So we actually can do a user interface for mining sector, which has a traditional small remote control, for instance. Whereas new user interface and the remote control for aged care is a high visibility remote control suited to that market. All of this is tailored within our offering. So if you look at the 2 products in the 2 categories that we offer, mining is strictly different from aged care. In mining, the resident is seen as a guest. So what we're trying to aim for within mining is a create a true result style experience. So that means the latest movies, all those capabilities that you'd expect if you're in a 5-star hotel. And that's the attractive start to mine site. It's very important in this day and age. We also -- mine sites have a unique issue with terms of bandwidth. Some mine sites can actually allow 3,000 guests on a one time. So we need to be able to construct and organize the bandwidth, which is catered on site in the facility. We can also offer, as I mentioned earlier, alerts, messaging or specialized content for a facility that's designed specifically for that facility with that provider. Aged Care is distinctly different. With Managed Care, the room is the rest of his home. So we're trying to develop a more personalized experience. So with recognition of the person, with -- also trying to integrate more within the community. And this could be things like streaming -- live streaming of a church service, those in managed care would take break or who can't make it to the service, scheduling of activities, and other curated content specifically to that market. Now looking at our journey today. And really, I'm just taking us back 18 months, it's really that sort of the most primary window is really had a bit of a rebirth with the launch of Swift Access. This has brought together everything we had as a business. And that was launched, if you remember back in early '22 in March. So over that last 18-month period, we've now achieved a revenue base, in subscription revenue which is real, probably, leading indicator in FY '23 to $14 million. Importantly, we've also established partnerships within the aged care industry, particularly with Checked in Care, who are a leading provider in IT services and support within that industry. And we've also partnered with Hubify during the course of the year. And now we really have over 11,000 Swift Access subscriptions sold to date. Now looking in marketing, we've basically built this foundation. And now we're embarking on our next level of development, and that is separating that from engagement platform from our entertainment platform to provide what we call as the ACE platfor Swift Access Aged Care Engagement platform. This is something we're working on currently, which we expect to launch in FY '24. We also see this -- the capabilities of this platform because we're offering an engagement platform that is separate to the engagement piece, this gives us scope to also offer this solution internationally. Looking at our achievements to date, we've actually got some very impressive compounded annual growth rate figures both in mining and in aged care, it's 60% compounded annual growth in mining and over 500% in aged care. So what these graphs show is the rooms that have been sold but they're timed based on when those rooms are installed. So once it's installed, that's when we can generate revenue. So that's why these graphs go out to March 24, because [Technical Difficulty] that we sold to the end of this month -- beginning of this month, sorry. They are then due for installation later into March. So that's why you see that the estimate numbers for December and March because what will happen these are contracted rooms already. So anything that we sell between now and then -- installed at that time period will only increase those numbers, it won't decrease those numbers obviously. So we've already achieved a 7% share of the mining market in a very, very short period of time of our Swift Access products. This is very, very significant. In Aged Care, we see scope for considerable growth. And at the moment, we're just targeting the Australian market. When we look at how our product mix has evolved, this is something that's come up a few times. People saying, well, when you've sold these sites, we're seeing there's announcements, these numbers, but we're not seeing a commensurate jump in our subscription revenue. What's happened there seems to be a bit of a transition from Swift as a business selling predominantly Foxtel-only rooms under the reseller agreement to now selling Swift Access alongside Foxtel and in some cases, Swift Access as a stand-alone product. So both of these ground -- all these grounds are showing that, that gradual change that's happening within the business. We will continue to sell Foxtel, as clients want that product. We also want to sell Swift Access alongside that. And that's very important. We're not to selling Foxtel generally as a stand-alone product by itself. And the result of this, it's improving our margins. Our margins are going from 34% in subscriptions revenue to 44% in that period of time. And we're seeing that whole mix shift to Swift Access as the market wants something more than just pure entertainment package. They need the capabilities to provide, especially in mining, the whole Internet experience. If you can imagine on the mine site, most people don't sit in front of their computer all day. They don't have access to the company Internet. They might be driving equipment. They might be working on site. So their only interaction with the business is actually through the TV. So they miss notices, unless they're actually broadcast through the TV. And that's where this big capability and a gap to the markets we're providing that as part of that engagement solution. And same applies in aged care. So that's where we're seeing considerable demand for a product that satisfies more than entertainment. So this brings us to really the market opportunity. And aged care is really where we see a great growth opportunity for the business. We continue to sell to mining. That's got slow, steady. We're not that slow, the percentage that show a compound annual growth, but a good steady growth rate to it. But Aged Care is a vast opportunity to it. With an aging population with -- probably most of them in this room will be over 85 in 2062. That's triple what the numbers are now. Some of us are calculating. We might be just in that neighborhood. So the -- if you look at the market internationally, the global margin is $1.1 trillion in Aged Care services in 2022. That's going to grow 6.5% compound annual growth to $1.8 trillion. And just looking at the slither of that, which is really the Australian Aged Care market, that's 220,000 beds. That doesn't include anything in retirement living. So our product, our Aged Care Engagement product has scope within retirement living, which is something like 7x that number. So when you look at the U.S. number, that's purely Aged Care, those include, those are 1.7 million the same with the U.K. market. If we just look at -- if we add Canada and New Zealand to that, it's something like 2.6 million beds in just in Aged Care line. So something like 10x that in the time of living. So when you look at -- this slide then brings together our existing product and where we're heading with our new product. We keep calling the Aged Care or ACE Engagement product. That is taking -- we currently have capabilities within our engagement product for internal communications, menus, events, services, external communications, such as a My Family My Community app, which allows the residents families to upload pictures straight to their screen saver or present screens to connect with them visually. We also offer the wellbeing content plus the premium TV and broadcast content plus all the engagement metrics that providers require. But where we're moving to is more of an integrated solution that actually plugs into the ecosystem of the aged care environment. For instance, we're adding the functionality of a noncritical support function, in aged care environment, it has analytical call system, which is for critical incidents, but unfortunately, it's used for everything. So if we can have a housekeeping button or noncritical support button on the screen that goes into kitchen or housekeeping, that can save a lot of nurse time and tie up that, majorly it's support of critical issues on noncritical functions. One of the other things that's come out of the government's review of Aged Care is a raft of government regulatory quality standards. We're aligning our product to try and satisfy as many of those standards as possible. Whether that's staff surveys, whether that's personalization management, the screening of Summary Care Plans for the resident so that can actually be seen by only the resident or potentially their family, when they come to visit. So there's a whole lot of capabilities that we're adding into this product to have a real stand-alone engagement product that sits alongside the entertainment products. So the entertainment product becomes an add-on. Hence, the engagement product becomes effectively a software-as-a-service product that we can sell internationally. So this provides benefits obviously to the residents, carers, being their staff, improve profitability to provider and also satisfies those regulatory requirements, so focus of the industry at the moment. Just taking a quick look at our financials for FY '23. We have a revenue approaching $20 million with an enterprise EBITDA of $2 million, less our corporate cost which is our ASX listed costs of $900,000 to get us to a group $1.1 million EBITDA. And importantly, as I mentioned earlier, we have $14 million of subscription revenues. So much of this is on 12 months to, in some instances 5-year subscription terms. We have a cash position sitting at about $1.7 million, and that's stable at the moment. Looking at our achievements to date. During FY '23, we've installed over 8,000 rooms of Swift Access. As I mentioned earlier, we've established partnerships with 2 of the major aged care providers. We've also invested considerably in brand recognition. That's something that's really helping us considerably in terms of the aged care market and our identity within that market. We can't compete with our competitors across the whole retailers market, but we can compete, and we do compete and we do offer a very good marketing presence in both mining and aged care. When you also look financially, in the last 18 months, we've also reduced -- paid down $2 million of debt, which has not insignificant for a company of our size. So when you look at '24, the major things we want to achieve is to develop and launch our ACE platform. That's the end goal for next year. In addition to that, we want to engage or list at one major Aged Care provider with 1,000-plus rooms, come onboard or to added to the current suite of aged care providers that we sell to. And obviously, we also want to continue to pay down debt. That's something which we're continually focused upon as the interest cost is something which we're -- into the cash flow of the business. Looking at our clients, one of the things that Swift really has going forward is the association with many clients, whether they'd be biggest players in mining and oil and gas or the constructors of mining villages, to all the major aged care providers. So we have already a path to market for our products. So as a company, path to market is very, very critical for a tech company. Most tech companies might have great idea, but they have no chance of getting through their mark, if they don't have the scale, if they don't the relationships. We already have that relationships, which has been built over many years. So why invest in Swift? Well, to me, it's not just those list of things on the side, $20 million of revenue, subscription revenue [indiscernible] we have a very low market cap. We've got a market cap of about $10 million. That's half our revenues, and that's an established revenue number. So effectively, we're a turnaround story. We spent the last 18 months reengaging the market in terms of the trade market in both aged care and mining with our Swift Access product, fixing up the back. And so we have capabilities to grow the business without growing costs at the same time. So leverage of that customer base. So what you have is that a basically style of company that doesn't require capital to get to the next level. We have the in-house technical expertise to develop revenue based platform and to take it to an international product. So that's all allowed for within the sustainable business model that we currently operate in. So I'd just like to thank everyone for attending. Thank the Board for their guidance during the year and also our major shareholders who have also been very involved in help guiding the business and provides valuable insight. We're very attuned now to what shareholders would like to see from this business. And this is something we're focused on. And in some ways, we've spent the last year, fixing up certain historical label issues, which are now behind us. And we feel now, we have not only a strong, sustainable business with the current major products but a really good future in front of us, the current products that we are developing, which is really, I suppose, a next-generation product. So it's not reinventing the wheel. It's adding capabilities for our current product range, but also we're also launching with a totally new user interface, which will be state of the art, beyond anything that our competitors currently do. So that's something that we will be also rolling out into the mining industry and also aged care. So as I mentioned earlier, the 2 unique different offerings and the interface being different for each offering. But basically, it'll provide an intuitive ability to find what people want and when they want. So please feel free, those of you have my number to call me if you'd like to give further details. And thank you for your time.