MOTIO LTD — Management Reports 2022

Sep 14, 2022

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Thanks for joining the Motio investor update webinar, my name is Adam Cadwallader, Managing Director of Motio

Joining me on the call today are Non-Executive Directors, Jason Byrne and Harley Grosser Chief Operating Officer, Michael Johnstone & CFO, Michelle Malley.

The purpose of our short meeting today is to provide insight on the annual report including areas of detail around the loss. We continue to provide an ‘open door’ policy for investors.

The areas we are covering today are important and speak to the fundamentals of the business we are building,

• Who is motio, what do we do?

• Annual report – areas of explanation

• Our progress thus far

• Capital update

• Our growth and the team – Our business is ready to get much bigger

• Liquid Thinking update

Two years ago, we relaunched the business as Motio to line up with the acquisition of Adline Media, oOh!’s Health business and the representation of the Ampol Digital Screen network.

At the time, we also represented Liquid Thinking’s Spawtz software program which we sold into Indoor Sporting and organised court-based team environments.

As I stated in the annual report, Motio has been re-built from the ground up. We have invested in our network, infrastructure, content and most importantly stood up a team of significance. We are ready to take on, continue to build and operate a business that will fulfil our vision and purpose.

In past presentation, we have spoke of our vision: To be the global leaders in Digital Place Based Media and audience experience & that we see Motio is a leading Audience Experience & Digital Place-Based media company.

We are absolutely focussed on creating engaging content & utility communication for brands

But today, we want to talk to this without the jargon

• Motio is a media sales company supported by software, data and content

• We sell advertising in over 1,000 locations around Australia in different environments as well as software in our sports business.

• We create video and imagery for the displays and make it look amazing for the audiences in the locations .

• • This information and beautiful content helps people when they are in these locations.

• Motio’s revenue is created by selling the advertising in between this great content.

• We almost always look at placing our displays within locations that have really long dwell times (much longer than a billboard on the side of the road).

• We allow these places that we have agreements with to also use our screens free of charge using state of the art software.

• When we do this, people in these locations respond positively and are more interested in the ads on our screens – this makes them much more likely to watch the ads and buy our advertisers products

• We also get data about the people that visit our locations, quite detailed and insightful data that other media companies either don’t have or have to pay a lot of money for.

• This enables us to tell advertisers with great certainty that the people they think should buy their products are much more likely to see their ads and be Interested in them.

• We use amazing software to help us bring all of these areas together.

The past couple of years

• In the last 12 months we have established a network of 600 Medical Centres, improved and enhanced our 70 Indoor Sporting Centres as well as represent 500 Petro retail locations.

MOTIO LIMITED | LEVEL 15, 189 KENT STREET SYDNEY NSW 2000 | P +61 2 7227 2277 | ACN 147 799 951

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• We have spent a whole lot of money building, renovating and creating one of the most stable networks that people actually want to look at and now, along the amazing team we have built, Motio is ready to take on more and more advertisers.

• Over the last 2 years we have changed our business in a huge way.

• From a business that had reached its last legs to a business that has a long term sustainable future with enormous headroom

• We have built a business that is ready to grow and has the people and infrastructure in place to become a whole lot bigger.

Annual Report – Areas of exploration

The team at Motio worked very hard over the past year and like many other companies, Covid played a role of significance, particularly in the first half which impacted our cash flow in H2.

We have prepared a few slides that answer some investor questions that we anticipate you find useful and insightful

Adjusted EBITDA

The board and the team felt it was important to provide some detail around the $3.6M loss stated in the report. As you can see on this adjusted EBITDA chart the $3.672M loss was made up of

• an income tax benefit of $205K

• $645K in Depreciation

• $1,23,5615 of ammortisation

• $1,513,923 of Non-cash share bed payments

• Giving an adjusted EBITDA of $482,000

Cash deployment

As I mentioned up front, we have spent the past 14 months since the acquisition of Medical Media renovating, creating and building Motio Health which is performing very well and a whole lot of headroom available as we continue to build our brand and expand our reach in the media marketplace.

At the beginning of the last financial year, we had $4.66M in available cash.

• $1.4M of this cash was deployed to Property plant and equipment (which I will move to in a moment)

• $489K was spent on the acquisition of Liquid Thinking which is performing very well

• $84K was spent on other acquisition expenses which was predominantly legals between Liquid Thinking and another acquisition that did not go ahead

• We used $527K which was supported the business cash flow based on depleted revenues through the second and third quarter of FY22

• and due to the AASB16 the Financing activities relate directly to our office lease in Sydney

• The PP&E investments this year were, as I already mentioned predominantly related to the renovation of Medical Media – Now Motio Health which takes us to 600 high quality, ultra, large and community based centres housing 800 digital displays.

• We also invested in some equipment in new Moto Play centers that were held over from 2021 replacing some older, smaller centers with larger centres.

• Setup up a help desk environment to support the network, which can support a much larger network as we grow further

• Invested in some exciting R&D for developing opportunities and then finally;

• Around $10K is set up costs as we changed the Medical Channel network software to our industry standard Content Management System.

MOTIO LIMITED | LEVEL 15, 189 KENT STREET SYDNEY NSW 2000 | P +61 2 7227 2277 | ACN 147 799 951

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Employment

Some investors have asked me about our employment changes over the past couple of years. Our team is now stable, a brilliant bunch of people.

Last year…. FY 22, we had $2.363M in total employment costs and just to answer one of the questions that was sent through, this will rise by approximately $530K in FY23.

This is due mainly to increase in finance and operational headcount, increase in statutory superannuation, payroll tax increases and general pay rises across 23 Full Time Equivalent team members.

Executive team member cash remuneration has been the same since 2019 and no cash bonuses have been paid in the past 3 years.

Revenue breakdown

In FY21, Motio’s revenue breakdown was 83% media, 15% to software and Payments and 2% in Programmatic revenue - And whilst the percentages remain somewhat the same for FY22 which was increased significantly from FY21, the variation is seen mainly through the change and significant growth of programmatic (or automated buying) revenue of a low base.

Gross margin remained stable

Motio’s gross margin has remained relatively stable FY21 69% and FY22 70%.

As I just previously mentioned, we grew revenue by 58% in a difficult year whilst maintaining gross margin %.

There’s not a great deal here to discuss, except for the healthiness and demonstration of the quality of revenue from scratch and its maintainable gross margin as we continue to grow top line revenue.

Progress in FY23

If we compare July 1, to September 14 2021 to the same period this year, the we are currently pacing 89% ahead YOY – This is a particularly strong result and with a very health sales pipeline, we expect this to improve over the coming weeks.

The notable call outs are National up 104% percent as it’s the largest part of our revenue (it makes up around 60% of total revenue) - whilst still growing, the programmatic revenue continue to rise sharply.

Software and payments continue to shine and Local remains on a solid and consistent growth line.

Already this year we have worked with incredible brands across all our channels – Health has been a continued channel choice for the Federal and state Governments, particularly in the Health sector and it was great to see new business from Dairy Farmers and Geo Targeted campaigns from Audika.

Also Medadvisor, Nervoderm, Dencorub, Cancer Council just to name a few.

Motio Play is off to an incredible start to the year with Kayo returning again and extending their sponsorship.

We have used the incredible data that Spawtz provides us to assist in targeting certain games for brands – An example of this would be FIFA targeting indoor soccer or futsal and the Athletes foot programmatically serving advertising directly to female netball players based on the game data provided by Spawtz.

MOTIO LIMITED | LEVEL 15, 189 KENT STREET SYDNEY NSW 2000 | P +61 2 7227 2277 | ACN 147 799 951

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We hope to deliver a strong case study to investors at the AGM if the moons align for other brands working with Motio on this basis.

We also did a brilliant on screen, online and sampling campaign for Berocca’s new SPORT product, we had a lot of fun with that. Great to see brands back in the sampling game post covid.

Motio Go continues to attract high quality brands using the mass reach across the Ampol Petro retail network. We predominantly attract advertisers wanting to target tradies, white collar workers on the road and super fuellers doing large kilometres, which are predominantly in fringe metro and regional areas. The data we receive from Ampol is excellent and incredibly helpful for brands to invest in this channel.

The network is large and ready to grow

The theme of the day is certainly where we’ve invested over the past 12 months.

In FY22 we managed to build out a large base of inventory and the next year will be about enhancing yield on that inventory.

Our inventory works like a hotel, the incremental cost of selling an additional unit of inventory is minimal, meaning it will drive higher NET margins and operating leverage as we do (no different to traditional out-of-home.)

The network is stable and sizeable – Our partnerships are in place and we are continuing to develop our commercial relationships through providing excellence in utility.

Motio has developed a stable and sizeable network – Our partnerships are in place and we are continuing to develop our commercial relationships through providing excellence in utility. The network is young and fresh – Each display we deploy will provide us with 4-6 years of service and in some cases beyond that.

Cash and capital

• Our current Net cash position (as at September 14) is $2.01M

• We have been operationally cash flow positive sinch July 1 this year

• We have $366K flagged for remaining deployment and capital projects which is significantly lower that FY22

• Motio remains debt free and have no requirement for additional cash funding within our current operations

• • The team, the network and our expanding software and payments has been built beautifully and we continue to see strong revenue growth

Motio’s management and board are committed to organic and acquisitive growth that makes sense for the business and its shareholders.

We want to grow and are always hunting for new opportunities that are within our reach and often outside of our reach. There continues to be organic opportunities to evaluate.

As you all know, we have disciplined framework that we operate within. To date, it has served us well and continues to do so….

Our team

What a great team we have.

We recently refreshed our values. We wanted them to be real – things we live by, not a framed bunch of words on a wall.

These values set the standards we expect from each other at Motio. The guide our decision processes. They are team play, communication, openness and equity.

MOTIO LIMITED | LEVEL 15, 189 KENT STREET SYDNEY NSW 2000 | P +61 2 7227 2277 | ACN 147 799 951

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The team have delivered revenue growth in a highly disruptive year, have executed on our M&A plan and Motio has an aligned board and management team that own a large portion of the company between them with a strong demonstration of commitment to the success of motio.

We have a growing and dedicated team of professionals that care about the business and work as owners every day.

Liquid thinking

The team both here and in the UK remain on track with our strategy.

The UK team are ahead of their targets and remain on track to achieve the milestones set out –

We are delighted with the acquisition and the opportunities that it has revealed both in Australia, the UK and more recently great conversations in New Zealand.

Questions

MOTIO LIMITED | LEVEL 15, 189 KENT STREET SYDNEY NSW 2000 | P +61 2 7227 2277 | ACN 147 799 951