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SWIFT TV LTD Interim / Quarterly Report 2018
65874_rns_2018-01-28_3dfb7cd7-9d22-4e8f-a7eb-d1bbe3898933.pdf
Interim / Quarterly Report
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INVESTOR UPDATE January 2018
Networks Group Limited (ASX: SW1)
Swift Networks Group Limited is a diversified telecommunications and content solutions provider, entertaining guests and connecting them to the world.
Our services include free-to-air television, pay television, telecommunications, internet, data, wireless networks and video on demand with content from some of Hollywood's largest studios.
We empower guests to watch, play, connect and interact and offer accommodation providers meaningful data insights with opportunities to drive new business.
Simply
better. Connection for entertainment, content and communication.
Delivering secure closed networks, with customised communications and premium content. Anywhere.
Whether it's via satellite to isolated locations or via broadband to luxury accommodation in the city, Swift can deliver the solution.
From planning, installation and support through to bespoke communication requirements and premium content. Swift give you control of fixed and portable devices within your private network.
| Carl Clump | Non-Executive Chairman |
|---|---|
| Xavier Kris | Chief Executive Officer |
| Paul Doropoulos Non-Executive Director | |
| Ryan Sofoulis | Executive Director |
| Robert Sofoulis | Non-Executive Director |
| Trading Information | |
|---|---|
| ASX ticker | SW1 |
| Share price (as at 19 January 2018) | $0.44 |
| Shares quoted on the ASX (free float) | 71.3m |
| Market Cap (free-float) | $31.4m |
| Escrowed Shares | 41.6m |
| Performance Shares | 33.3m |
| Options | 17.3m |
| Market Cap (fully diluted) | $71.9m |
Networks Group Limited (ASX: SW1)
Share Price Performance v. Indices (1 January 2017 to present)
| Top 10 Shareholders | Holding | % IC | |
|---|---|---|---|
| Position | Holder Name | ||
| 1 | SOFOULIS HOLDINGS PTY LTD | 30,000,000 | 26.64% |
| 2 | HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED | 7,927,213 | 7.02% |
| 3 | J P MORGAN NOMINEES AUSTRALIA LIMITED | 3,990,959 | 3.53% |
| 4 | SUETONE PTY LTD | 3,195,000 | 2.83% |
| 5 | ARADHIPPOU GROVE PTY LTD | 3,162,386 | 2.80% |
| 6 | BNP PARIBAS NOMS PTY LTD | 2,977,231 | 2.64% |
| 7 | TRI-NATION HOLDINGS PTY LTD | 2,408,889 | 2.14% |
| 8 | JAMES FLORIAN PEARSON | 2,222,223 | 1.97% |
| 9 | PAUL DOROPOULOS | 2,128,889 | 1.89% |
| 10 | BURRWOOD INVESTMENTS PTY LTD | 1,411,110 | 1.25% |
| Total | 59,423,900 | 52.62% |
Note: 38m shares escrowed to June 2018; 3.6m escrowed to August 2018 Report Generated 22 January 2018
Swift Networks operates on a global basis and our guest experience solutions drive guest engagement and additional revenue for our blue-chip clients.
Watch
Television FTA TV Pay TV Movies on Demand TV on Demand Bespoke content Custom videos Sector specific content
Connect
Internet Wi-Fi Telephone Mobile Skype Data
Play
Games Social Media apps Brain training Radio
Interact
Alerts and bulletins Notifications Infographics and analytics Messaging My Family My Community Digital Compendium Digital Signage & Advertising
It's what we do.
system middleware server
The system.
A fully integrated content, telecommunications & information delivery network.
The Swift system is infrastructure and content agnostic allowing deployment across a wide range of sites and verticals.
The system also provides for client specific content such as training and health and safety videos and integration to PAGA systems and local CCTV.
Premium Alliances for International Content
Swift delivers premium content with international distribution rights from major content providers globally.
TV/MOVIES/MARKET SPECIFIC CONTENT:
Content curated from a range of genres including lifestyle, education and health and wellbeing. Entertaining, informing and enriching the lives of residents and guests.
Delivering the highest quality content anywhere, anytime.
Markets Overview
• IPTV
"The global IPTV market was valued at USD $34.67 billion in 2015 and is expected to reach USD $93.59 billion in 2021, growing at a CAGR of around 18.01% between 2016 and 2021." 1
• DEMAND FOR CONTENT
"Spending on subscription and video on demand services...rose 31% reaching USD $9.5 billion in 2017" 2
• ADVERTISING AND DIGITAL SIGNAGE
"The global digital signage market size was estimated at USD $16,044.1 million in 2016 and is anticipated to reach USD $31,714.1 million by 2025" 3
4. https://www.statista.com/statistics/264024/number-of-merchant-ships-worldwide-by-type/
• RESOURCES
Swift market dominance continues
• AGED CARE
Lifestyle community and aged care providers represent over 327,000 rooms in Australia. Government forecasts point to 900,000 rooms by 2020 as the population ages.
• MARITIME
As of January 2017, there were 52,183 ships in the world's merchant fleets.4
Strong growth continues in hospitality, student accomodation and government & enterprise
Revenue
Recurring revenue model for provision of:
- System / support
- Content
- Telecommunications
Upfront / deferred payment options to assist sales cycle
Gross Margin
- COGS aligned with revenue for cash flow
- Access to wholesale discounts due to size
- No minimum guarantees
- Minimum target of 30% GM
Earnings
- Low deployment costs means overheads are essentially fixed
- Profitability intrinsically linked to growth in gross margin
A fully integrated content, telecommunications & information delivery network provided through established partners, delivering recurring business with marquee customers.
- Best of breed technology capable of delivering a large suite of products and services to "closed loop" communities
- Premium content library capable of global deployment with no minimum guarantee arrangements with suppliers
- Shortened sales cycles due to flexible and bundled pricing strategy
- Strong new partnerships with System Integrators leading SW1 into attractive domestic and international markets
- Marquee customers across all target markets
- Long term contracts providing recurring cash flows and contracted revenue
- Sustainable profitability due to scalability of business
- Large analytics database and unique viewers provides potential to extend business model into digital advertising
Key Facts
Acceleration of financial growth in first half of 2018, delivering on strategic objectives. Achieved 100% increase in EBITDA year on year.
INCREASING PROFITABILITY
100% increase in EBITDA year on year 26% increase in gross profit margin
CONTRACTED REVENUE
71% increase in annualised contracted revenue since June 2016
STRONG RECURRING REVENUE
80% of FY2017 revenue is recurring
STRATEGIC PARTNERSHIPS
Wholesale discounts with content and communication providers; strong systems integrator relationships
In resources, lifestyle villages, aged care & hospitality sectors BLUE-CHIP CLIENTS
GROWING CUSTOMER BASE
300+ sites providing Swift services*
SITE GROWTH
902% increase in contracted sites since SW1 listing
* Numbers as at 31 December 2017
Key Highlights
Strong, steady news flow since listing as management delivers on implementing the key objectives identified in its business strategy
| June 2016Announce acquisitionof Swift Networks andlisting on ASX via IPOfor $4.5m | October 2016Swift extends intoHospitality vertical withnew Hotel contract wins | Jan-Feb 2017Swift announcessignificant newcontracts in OffshoreEnergy market withInpex and Shell | July 2017Swift completessuccessful $4.5minstitutional capitalraising and establishes$3m debt facility withBank West | September 2017Swift commencesoperations of newlyacquired VOD business | December 2017Swift SignsExclusive ResellerAgreement withAST |
|---|---|---|---|---|---|
| July-September 2016Swift wins multiplesignificant Resourcescontracts with Rio Tintoand Compass | November 2016Swift completesuccessful $2.0mcapital raising toacquire Living Networksand Web 2 TV | and Resources | May-June 2017Swift wins multiple newcontracts in Aged Care | August 2017Swift releasesmaiden full yearresults delivering$17m revenue and$1m EBITDA | October 2017Swift SignsAgreement withDXC Technology |
| .10 |
Key Financial Results 100% Earnings Growth. Key Financial Results 1H 2018 (preliminary unaudited) Acceleration of financial growth since listing in first half of 2018; delivering on strategic objectives
1H 2018 (preliminary unaudited)
| Highlights | 1H 2018(A$m) | 1H 2017(A$m) | Change | |
|---|---|---|---|---|
| Revenue | 10.38 | 7.84 | 32% | |
| Gross Margin (%) | 39% | 31% | 26% | |
| EBITDA* | 1.02 | 0.51 | 100% | |
| EBITDA margin (%) | 9.9% | 6.5% | 52% | |
| Cash at bank | 4.12 | 2.61 | 58% | |
| Operating cash flows | 1.25 | (0.61) | $1.86m | |
| Cash receipts | 9.83 | 7.40 | 33% | |
| Annualised Contracted Revenue | 14.74 | 8.64** | 71% | |
| Share price (A$/share) | 0.465 | 0.190 | 145% | |
| Market capitalisation(as at 31 December) | 52.51 | 17.09 | 207% |
**EBITDA excludes depreciation and amortisation of $998,287, finance costs (net) of $37,974, share based payments of $1,157,734, fair valuation loss on financial liabilities (performance shares) of $6,020,833, unrealised FX losses of $2,109 and income tax benefit of $1,901,906.
** represents 30 June 2016 figure
Accelerating annual revenue growth & cash receipts
32% increase in Total Revenue year on year 33% increase in Cash receipts year on year 71% increase in Annualised Contracted Revenue (ACR) since June 2016
Significant improvement in profitability
26% increase in Gross Profit margin year on year 52% increase in EBITDA margin year on year 100% increase in EBITDA year on year
Strong financial position
Fourth consecutive quarter of positive operating cash flows; $1.86m turnaround in cash flows from operations year on year 58% year on year increase in Cash
- 207% year on year increase in Share price
- 207% year on year increase in Market Capitalisation
Significant growth in new customer sites since listing through organic and inorganic Growth/Prospects growth with a strong outlook for future growth through current sales pipeline.
Operational Update VOD acquisition integration 95% complete.
| Highlights | Benefits |
|---|---|
| Material new contract winsdeployed on time and on budget | Proven large scale roll out capability andsubsequent recurring revenue recognition |
| Global content deals withoutany minimum guarantees | Significant reduction in content costs as SW1moves further up the content supply chain |
| Reseller and partnershipdeals with industry leaders | Fast track SW1's growth in domestic andinternational markets |
| Single "go to market" strategy,product and pricing across all sectors | SW1 business is scalable and primedfor continued international growth through directand channel partner sales |
| Fully integrated system with BYOD Applicationlaunched to market | On demand premium content available anywhere,on any device |
- Accelerated earnings growth and cash generation
- Technology infrastructure in place
- Marquee customers on board
- Generating positive cash flow and strong recurring revenue
- Experienced management team
- Strong organic growth with ongoing news flow expected
- Continued market penetration and high customer retention
- Success in new, open and high growth verticals
- International growth strategy being executed
APPENDICES
- Swift TV
- Pay TV
- Movies
- BYOD
- Infrastructure Agnostic
- Internet
- Wi-Fi
- Remote Monitoring & Management
- 24/7 Support
Resources/Maritime
Site Specific Channels
Providing the ability to relay information regarding site specific information, compendium, social club updates and corporate content. safety notices, OHS, induction videos.
Safety And Weather Alerts
Safety and weather alerts, including weather warnings can be broadcasted simultaneously across thousands of rooms. Weather and warning updates are provided directly from the Bureau of Meteorology (BOM). For offshore environments, integration with PAGA system is available.
Dry Mess Menus & Transport
Customisation of content channels to provide residents with menu details and up to date flight or bus schedule details.
Health And Wellbeing
Specialised curated content for your workers regarding Health and Wellbeing with partnerships between Beyond Blue and Lifeline.
- Movies
- My Family
- My Community
- Aged Care Content Library
- Telecommunications
- Resident Messaging
Aged Care Content Library
A multitude of curated content specifically tailored towards residents in an aged care environment including: virtual travel, trivia, relaxation videos, chair based exercises, dementia specific content, music therapy and vintage cinema
My Family & My Community
He resident's family members and friends can share images and messages from anywhere in the world, direct to the screen of their loved ones. From family holidays to birthday parties, the my family app is designed to make sure they never miss those important moments.
Digital Facility Notice Board
A fully customisable and facility branded dashboard of curated content – seen as soon as any TV within the facility is turned on. Allows management to advertise internal and external events, promotions and news.
International Radio Stations
Embrace and cater for the needs of your multi-cultural residents by implementing a variety of radio stations from across the globe.
- PMS Integration
- Smart TV Integration
- Movies
- BYOD
- Internet
- Telecommunications
- Swift TV
Digital Compendium
Provide your guests with easy access to all your hotel information. Save on printing costs and ensure your compendium is always up to date.
Technical Support
Select from a variety of support options including 24/7 support to meet the needs of your business and limit unnecessary interruption to your guests
Exclusive Hotel Channels
Promote your complete hotel operations with dedicated channels curated by you.
Guest Messaging
Keep your guests informed by sending messages direct to their TV. With the ability to broadcast messages one-to-one or one-tomany, our messaging options will cater to your requirements.
Additional Revenue
Enjoy additional revenue by using the swift solution to promote your own services or local businesses and tour operators in the area directly to your guest's TV.
Integration With Your PMS
The swift solution connects seamlessly with your property management system to deliver streamlined and exceptional quality of service to all guests.
For more information, please contact:
Xavier Kris George Nicholls Chief Executive Officer Chief Financial Officer t: +61 8 6103 7595 t: +61 8 6103 7595 e: [email protected] e: [email protected]
This document is a summary only and does not include all information about the Company's assets and liabilities, financial position and performance, profits and losses, prospects and the rights and liabilities attaching to the Company's securities. Any securities that may be issued by the company should be considered speculative and there is no guarantee implied or explicit that there will be a return on the capital invested or that any dividend will be paid or that there will be an increase in the price or value of the Company's shares in the future. Some of the statements or implications in this presentation are forward looking which include but are not limited to, statements or implications about raising capital, issuing shares, listing on the Australian Stock Exchange, operational costs, outcomes of regulatory processes and applications. Although the Company believes that its expectations reflected in forward looking statements or implications are reasonable, such statements and implications involve risk and uncertainties, no assurance can be given that actual results will be consistent with the forward looking statements and implications. The Company does not purport to give financial or investment advice. This presentation contains technical information derived from third party sources and not generated by the Company, as such while the Company considers the information presented and any conclusions drawn correct it is unable to guarantee the veracity of the information or therefore the appropriateness of the conclusions reached.