AGM Address - Tribewear Smartwatch online store announced
Released
Released
Announcement PDF
Address by the Chairman, Mark Fortunatow
to the 2015 Annual General Meeting of MGM Wireless Limited
Friday 13 November 2013
MGM Wireless launches new revenue stream.
Announces opening of Tribewear online store for smartwatch phones
On behalf of the directors, I would like to welcome shareholders and guests to the
2015 Annual General Meeting of MGM Wireless. While it is always a pleasure to
meet with, and address, shareholders, this year is particularly pleasing on two
counts:
(1) our financial results in 2015 were the best yet recorded by MGM Wireless; and
(2) we are now ready to announce the beginnings of a new revenue stream for the
company which leverages our proven capability in smartphone and wearable
applications that promote child safety and welfare.
First our 2015 financial results. The company’s net profit after tax of $1.04 million
was up 45% on the previous year’s, and record result of $717, 541. Revenue was up
19% to $3.87 million and year-end cash at bank up 60% to $1.4 million. The increase
in cash balance was recorded after reducing borrowings by 25% and funding research
and development expenditure of $1.1 million.
Your company has a long history of reinvesting retained earnings in research and
development of products that will drive further growth, but we also subscribe to the
discipline of providing shareholders with some distribution of the year’s surplus.
Accordingly, the annual dividend was lifted from 1.1 cents per share to 1.3 cents per
share. Total Shareholder Return over the course of the financial year was 60%.
These exceptional growth rates are a result of a combination of 3 factors in the year’s
results.
First, ongoing growth in the number of contracted schools and early learning centres.
At 30 June 2015 a total of 1,165 schools and early learning centres in Australia and
New Zealand were under contract, up 7% on the previous year’s figure of 1,088.
Particularly pleasing was our success in retaining the Western Australian
Department of Education contract for a further two years after it was retendered.
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The second factor was the market success of the cloud and smartphone based
products we have developed. As anticipated, the financial benefits of the investment
we made in products such as RollMarker and Outreach Plus really emerged during
2015.
For schools and their communities these products are attractive for their
convenience and economy as they perform tasks that were previously paper-based,
time-consuming, and not integrated with school systems. For MGM Wireless, the
products have generated additional revenue streams from existing customers, as they
use more of our products more often in day-to-day tasks. The financial benefits were
evident in our results as revenue growth outstripped customer growth and earnings
and cash generation exceeded revenue growth.
The third factor in the earnings and cash results was the effort made to manage
expenses. Our continual streamlining, automation of business processes and cost
reduction contributed to an 11% improvement in cost of sales.
We increased our commitment to research, development and commercialisation of
new products. We successfully trialled a new product, MGM SchoolEvents. This
product provides schools with a smartphone platform solution for the
communication, marketing, and if necessary booking, ticketing and payment for
events including Parent Teacher interviews - all via smartphone. SchoolEvents
proved popular at its trial schools and, with many schools averaging one or more
event a week, we see a receptive market for the product when it launches in the
March quarter 2016. SchoolEvents will add another revenue generator to our suite of
products and make it much easier for our school client base to more effectively
manage school events. Another labour-saving product from MGM Wireless.
The success of products such as RollMarker, Outreach and hopefully SchoolEvents
has been borne out of our capability to build and innovate products that exploit new
technologies to provide convenience, cost or peace of mind benefits for users.
Of course, technology continues to develop and provide new opportunities. Our
research and development has positioned MGM Wireless to participate in the next
wave of technological adoption: the proliferation of wearable devices and what is
known as ‘the internet of things’ being created as internet connectedness expands
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from computers and smartphones to everyday items as rudimentary as watches,
household devices, clothing or pet collars.
It’s a trend that is already underway, having started with fitness bands, and shifted
into smartwatches, glasses, medical devices and so on. Adoption rates are growing
with the variety and affordability of wearable devices. Earlier this year, leading
network technology company Cisco forecast a five-fold increase in the number of
wearable devices in the five years from 2014 to 2019, with growth from 109 million
devices to 578 million devices. 1 And, as an indication of the future use of connected
‘things’, mobile traffic generated by wireless devices was forecast to grow 18 times
over the same period.
For MGM Wireless, the adoption of this new technology has intersected with the
child safety capabilities released last year in our MGM Pinpoint software application.
Customer feedback, gaining a deeper understanding of our clients’ needs, further
innovation and product development resulted in the company releasing an updated
new product, rebranded as the AllMyTribe app, during 2015.
AllMyTribe is a calculated next step to expand our company and market reach
beyond schools and Australia into broader family living, welfare and international
markets. Using smartphone and wearable device capabilities, AllMyTribe essentially
provides a family locator platform that connects all the members of the modern
family, to increase peace of mind for caregivers and improve the safety and quality of
life for all, from the elderly to children and pets.
Provision of the product for free via the Apple App or Google Play stores is
supporting the scaling of market presence with a view to monetisation in the longer
term.
AllMyTribe is among the very first family living, welfare and health software
products in the world developed to work across all mobile networks globally and both
Apple and Google platforms. The app’s capacity to connect devices together
regardless of phone type and mobile network type is unique.
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Cisco® Visual Networking Index™ (VNI) Global Mobile Data Traffic Forecast for 2014 to 2019,
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The AllMyTribe app provides a natural leverage point for the sale of wearable
devices, especially reliable, competitively priced models that promote broader
adoption of our product.
Tribewear online wearables store
Accordingly it’s my great pleasure to announce today that the company has opened
an online store for the supply of family wearable devices. The store, which can be
found at www.tribewear.com, will initially offer smartwatches for 7- to 14-year-old
children.
MGM has been working with suppliers of these watches for some time to develop a
standalone smartwatch phone specifically for young children. The smartwatch phone
can make and receive voice calls to a pre-set safe callers list (without the need for the
child to also have a smartphone), track the child’s activity and importantly, in the
coming months, connect to our AllMyTribe platform to enable parents and other
family members to be notified that their children have arrived at school, home,
grandparents’ house or any other important location.
Customers can order our affordable children’s smartwatch phones right now at
www.tribewear.com.
From early next year, as we develop the online store and our services, customers will
be able to purchase a wearable device bundled with an active mobile and data plan
for a monthly fee in the order of $25-$40 from anywhere in the world. The wearable
devices will be shipped preloaded and enabled with our AllMyTribe app.
Sales will be focussed initially on Australia, with functionality progressively
expanded and product range increased from the initial release. We will be looking to
open the store for global sales from around March-April next year.
In the not too distant future, the range of smart devices available on Tribewear will
be expanded to include seniors’ smart devices for health and activity management;
smart collars to locate pets that have strayed; and more, all at prices that encourage
family use. It is relevant to note that we are not talking about exotic applications or
aspirational demand that needs to be stimulated. It’s simply about a product that
addresses routine day-to-day concerns and tasks involved in modern family living.
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We are starting from scratch in a new market segment which is currently at a very
early stage of its development, globally, and forecast to grow rapidly in the coming
three to four years.
As with any new and evolving market, business models and value chains are not
completely known. But what is clear is that MGM Wireless has the product and
capabilities relevant to the latent demand that exists and is expected to emerge and
grow with broader adoption of wearable devices.
Turning to our current trading results and the future.
Our first quarter results, announced earlier this month, were entirely in line with our
expectations. We are on track for a half-year revenue result similar to the record of
$2.21 million recorded in the 2015 first half. The December quarter has customarily
been an important sales season and the coming weeks will provide a clearer
indication of the half-year earnings outlook.
Our longer term outlook is positive. The need for attendance management within
Australian schools is not diminishing. MGM Wireless offers the most sophisticated
and integrated solution for schools, which we continue to improve and refine. We
expect to continue to grow our earnings from our core attendance products. The
emergence of internet based messaging platforms is creating new opportunities
which, in the tradition of your company, we aim to exploit with products that deliver
benefits for users and revenue and earnings for the company.
Ongoing market penetration by our newer products such as RollMarker and
Outreach Plus will add further impetus to earnings, as will the new contribution that
is expected from MGM SchoolEvents after its launch next year.
Collectively, these products amount to a leading school business that is generating
strong cash flow sufficient to fund R & D of new products and dividends to
shareholders.
On top of this, we now have the significant and large global opportunity in wearables,
which, as I have outlined today, aligns with our existing product capabilities and
which we are prosecuting with vigour.
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It’s an exciting time for the company. While we expect initial progress will be
gradual, we are keenly looking forward to continuously achieving milestones and
reporting further on our progress.
Finally on behalf of my fellow board members, and all shareholders, I would like to
thank the members of our small team for the contribution to the year’s results and
their ongoing efforts as we take MGM Wireless forward.
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