ASX Announcement: Friday 2 Apr 04 - 12.02PM -
Management Team Secured for Multiemedia
The board of Multiemedia is very pleased to
announce the re-appointment of its current CEO, Mr Adrian Ballintine for a
further 3 years.
Mr Ballintine has managed the Company since its
inception and has been the principal architect of business strategies and
growth.
The recent inclusion of the Company into the ranks
of the S&P/ASX Top 300 is an early-achieved goal and Mr Ballintine and his
team are actively working towards the Company's elevation to the S&P/ASX Top
200.
The Board is also pleaed to announce the
appointment of Mr Stephen Batten as Chief Financial Office and Company
Secretary. Mr Batton has considerable experience in all facets of Financial
Management having previously been General Manager Finance & Planning at
Mayne Group and Chief Financial Officer of Diners Club Limited. Mr Batten holds
a Master of Business Administration Degree and is a member of the Institute of
Chartered Accountants.
Before Christmas, Multiemedia secured the services
of Mr William Masson to head up Sales & Marketing and Mr Michael Eakin as
Chief Technical Officer. Their contribution to early growth is noticeable and
with Mr Batten and Mr Ballintine, the Company's Senior Management Team is
complete.
John Walker (Chairman) Multiemedia
Limited
----- Original Message -----
Sent: Wednesday, March 31, 2004 9:54
AM
Subject: [sharechat] MUL - MULTIEMEDIA
PROFILE AS AT MARCH 31, 2004
Good morning to all,
Re: MUL - Multiemedia Profile as at March 31,
2004
I was recently asked for information on MUL. There was
quite a bit of work involved so it makes sense to share
with all.
To-date MUL has been viewed as a short-term 'trade'
rather than an investment, causing price fluctuations, however; MUL's
profile is rapidly evolving to that of a longer term high
growth investment as time progresses and achievements are consistently
notched up.
In February 2004, MUL announced plans to
acquire IP Access International, then abandoned plans as their direct
relationships with International satellite vendors were growing stronger and
their need for external assistance was diminishing with employees gaining
increased skills - or in other words, the
value equation for this acquisition tipped to more favourable
outcomes from non-acquisition. Note none of the summary points below
was dependent upon an MUL acquisition and therefore; has no bearing on
the profile as presented.
Also in February 2004, MUL secured sponsorship
from Bank of New York to establish a Level 1 American Depository
Receipt (ADR) Program with the ultimate intention of trading on the
NASNZQ exchange.
In March 2004, Standard & Poors added Multiemedia to
their ASX300 listing, no doubt because this company is set to do
extremely well this year and beyond. Standard and Poors listings are utilised
by Investment Fund Managers so now is a good time to
review MUL's profile as they begin to attract interest from longer
term holders (which will increasingly stabilize the SP).
It is no secret that there is some higher
risk associated with MUL's high total share volume but, in
consideration of this; MUL is managing the current market situation
far better than most others with far lower share volumes, and
this is a great omen for its future SP growth. For a stock with this
type of potential, it is not uncommon for demand to outstrip supply, resulting
in a climbing SP. As a comparative example; Oxiana's issued
share capital is 1,184,509,930. Similar to Oxiana (SP growth >350% over 2 years); the share
capital will be of decreasing concern as MUL's potential is
realised (which in view of their profile, is likely to occur much faster
than with OXR).
I have extracted info from Findlay & Co Stockbrokers Limited - Corporate Research Report -
August 2003 which can be viewed in its entirety on Multiemedia's
website. Parts of this report, eg; sales contracts; have been updated
with ASX announcements to-date, and I have included some of my
own notes*.
I think you will agree, the report
presents compelling reasons to view MUL as a longer term high growth potential
investment.
1) Forecast Earnings & Yield
2004-2006
a) NPAT A$m
2003 - $1.3m - yield o%
2004 - $34.0m - yield 13.3%
2005 - $82.0m - yield 32.2%
2006 - $139.0m - yield 54.5%
b) Multiemedia
commenced commercial satellite operations on October 1, 2003 with a 5-year
contract to increase from 1 to 3 transponders. Each transponder generates
A$100m in revenues at current prices. In FY2004 the rapid deal flow from
Multiemedia’s superiority is expected to generate operating revenues of A$100m
including 70% from space & end user equipment.
c) We
value Multiemedia @ 10-15x FY2004 earnings forecast at A$34m implying a
valuation of A$340-510m representing 37-56c per share using current issued
capital of 910m securities. We have assumed a dividend payout ratio of 25% if
the business plan is realized.
d) Multiemedia achieved pre-launch letters of intent revenues of
A$22m after 45 days in FY2004 implying an annual revenue achievement in FY2004
of A$183m.
e) We forecast a transponder would take 1 year to sell such
that by FY2006, Multiemedia could have fully sold its 3 transponders of
capacity.
f) *Initially, costs
incurred in establishment of infrastructure for this type of service are very
high, however; costs will decline and profit margins will continually
improve.
g) Additional
Revenue Sources: MS SPLA Licensing Program, Tracstar
Antennaes
h) MUL - Multiemedia
- Overview of Half Year Report to 31 Dec - released to market Friday, 27Feb,
2004
Negatives:
- Revenue $8,202,000 (down from same 6mth period
Jul-Dec 2002 - $14,505,000)
- Net Loss $4,558,000 (up from same 6mth period Jul-Dec 2002
- $518,000) - Loss in in line with the Board's expectation of loss for
this period Jul-Dec 2003.
- Cash burn rate - associated with sales and development
work in progress
Positives:
- Current Assets UP since June'03: $14,923,000 ($4,101,000 -
June 2003) ------------ *NB Revenue Genrating
- Non-current Assets UP since June'03: $3,651,000 ($2,026,000
- June 2003)
- Curent Liabilities DOWN since June'03: $3,833,000
($6,893,000 - June 2003)
- Non-current Liabilities DOWN since June'03: $296,000
($369,000 - 2002)
- Board is confident work in progress will see a substantial
turnaround by June 30th. (NB Refer positive announcements since 31
December.)
- 1,376% increase in assets over liabilities.
- Cash at bank (as at Dec03) - $11,000,000
- Disposal of non-core businesses has been
finalized.
Supporting Info:
- Businesses: Both of the following synergistic
businesses have been branded for global recognition in conunction with
independent marketing and advertising agencies.:
High speed satellite broadband: NEWSAT - Newcastle
based teleport being developed into a world class facility with the capacity
to initially provide hi-speed broadband connectivity to 60% of the world's
population. Customers secured in Aust, PNG, Timor, Iraq, Iran, Bahrain,
Saudi Arabia, Lebanon to-date.
Technology Distribution: MTD - For the
Jul-Dec'03 period, this segment contributed the majority of
revenue.
h) Sales Contracts and Licensing Fees:
$ Transcom ISP in UK for A$15m over 3 years for 1,000
sites
$
SP Telecom in Australia (not
disclosed)
$
Australian Private Networks for A$1m
$
Microsoft SPLA Licence worldwide with sales potential of A$150-$200M on a 2-3
year time horizon
$ People
Telecom in Australia (not disclosed) with 16,000
customers
$ US Military - US
Agency for International Development - A$5M (to possible
A$40M)
$ WaveCall, the world's leading provider of Maritime Satellite Voice
and Data Services selected Multimedia's NewSat services to exclusively deliver
broadband to ships at sea within Aust coastal waters utilizing SeaTel's state
of the art antenna system. Service available during first quarter
2004
$ Airworks -
significant contract signed with Airworks on behalf of major Airworks client,
Woolworths - based on satellite broadband to 700 Woolies stores - includes
additional hardware sales opportunites
$
MS Licensing - $ unknown - a typical 1st Tier MS distributor in Aust
records sales of A$150-A$200m in annual revenues and can be sub-licensed to
resellers ..... NB MUL's SPLA licence is worldwide.
2) Key Points - Market, Market Share, Forecast
Growth & Earnings:
a) Data &
Internet Solutions in Australia including ISDN have an estimated market of A$6
billion.
b) The bandwidth
capacity in Australia provided by cable and satellite combined is estimated to
have increased by +655% to 2,100 Gbits/s during
2000-2003.
c) Revenue
forecasts for the period 2004-2006 for Multiemedia reflect
market shares of 2% - 8% with 1 satellite transponder in 2004 rising to 3
transponders in 2006.
d) Additional Market
Growth Factors: Sadly, terrorism is good for MUL's business and there is a
definite 'pull market' factor as evidenced by the US Military deal in Iraq
(see Item 3g below)
e) Related Products:
MS Licensing - The SPLA program of Microsoft is a new application software
licensing agreement allowing the licenceholder to licence Microsoft's products
on a monthly subscription basis to end users. The end customer may choose to
allow the SPLA Program licenceholder (Multiemedia) to become the licensee of
the MS software by acquiring licences through the Program. (In 2003
Microsoft won a 6-year US$471m software supply contract for the US Army's
494,000 PCs involving software reseller Softmart, a key endorsement for its
efforts to improve the security of its software. The US Government are
upgrading IT systems throughout the security services as part of its 'war
against terrorism' and the increased focus on national
security.)
f) Related Products:
Tracstar Systems partnership (America's leading developer of auto
self-deploying antennaes) to rebrand (rebranded to NewSat) and sell its
products in the 60 countries covered by the NSS6 beam. Mobile
broadband is an emerging giant worldwide and Tracstar technology is deployed
in organisations such as US Dept of Defence, CBS, Homeland Security and EMS
Services. Tracstar's antennaes are utilised in Broadcast, Emergency
Services, Security, Defence, and Telemedicine industries. NewSat customers
will have the ability to deliver internet, VoIP (voice over IP), and other
broadband related services into regions which until recently were unable
to utilise these communication mediums. Mobile broadband will be
possible in any area capable of sustaining a 4WD vehicle, eg; medical
emergency in jungles of Indonesia, filming in remote locations, etc. NewSat
technology will therefore be capable of delivering instant communications via
notebook to any country in the world.
3)
Operational/Competitive Advantages:
a) Comparative
Downlink speeds:
Multiemedia - 60,000 kbps (100%
coverage)
Optus - C1 - 35,000 kbps (100%
coverage)
iPStar 1 - 8,000 kbps (70%
coverage)
ADSL - 256 kbps (70%
coverage)
Cable 256-2000 kbps (30%
coverage)
ISDN - 1,920 kbps (96%
coverage)
Videoconferencing requires up
to 784 kbps.
ADSL
only within 3.5 kms of telephone exchange.
b) Technology: Multiemedia claim a superior
VSAT terminal infrastructure for 2-way communication using PCMA (paired
carrier multiple access) reducing bandwidth by 50% on the downlink space
segment cost for the service. (The satellite hub & terminal
equipment infrastructure will be provided by USA-based ViaSat to Multiemedia.
ViaSat are up to 5x faster @ 1,650 kbps compared with competitors Hughes @ 250
kbps and Gilat @ 300 kbps.)
c) Technology: The
characteristics of NSS6 provide Multiemedia with a competitive advantage over
all other satellite broadband service providers because Optus, Telstra,
Telecom NZ all use Optus’ satellites with access to only one spot beam for
2-way uplink/downlink bandwidth speed - compared with 6 by New Skies’ Inc’s (Multiemedia’s) satellite NSS6.
d) Technology: For Optus, Telstra, Telecom NZ
to compete with Multiemedia’s satellite broadband hub and infrastructure
equipment will need to be upgraded at the service providers’ cost.
e) *Footprint: Footprint is a term used to
describe satellite area coverage. Multiemedia's 'footprint' through NSS6
covers the Asia region with connectivity to Europe & USA. 15
transponders have been allocated to each market; MIddle East, Indian
sub-continent, S-E Asia, Australia, China, N-E Asia. 6 spot uplink beams,
per transponder (each covering 650 klms) target metropolitan cities in
coverage areas:
China: Bejing, Tianjin, Hong Kong, Shanghai,
Wuhan
Japan: Tokyo, Osaka
Korea: Korean Peninsula
Taiwan: Taiwan
Australia: Sydney, Melbourne, Adelaide
India: Delhi, Mumbai, Chennai, Bangalore
*Now that's a footprint!!!
Satellite broadband is also well-suited to
Australia's (indeed the world's) vast regional areas where cable and ADSL are
either not available or too slow. Consider in terms of the percentage of
regional businesses (mining, etc), public services (schools,
medical, etc), that have been underserviced and overlooked for far too
long. (For example; SP Telecom has already established a hub and terminal
agreement with MUL to service customers seeking high speed broadband internet
in regional NSW.) Then of course there is the
potential for worldwide applications, such as MUL's
deal with the United States Agency for International Development
- initially worth $5 million to Multiemedia, it could be worth
up to $40 million as the group intends to roll out additional sites
across Iraq as part of its post-war enforcement and governance
program.
f) Technology: C and Ku band frequencies are
relatively congested providing Ka band with an advantage of bandwidth and
speed. Ka band offers smallers terminals than Ku band. Importantly for Optus'
newest satellite, C1 launched in 2003, Loral have entered Chapter 11 in the
USA for financial restructuring, and for AsiaSat's satellites 3 & 4
launched in 1999 ad 2003 Boeing have decided to withdraw from the manufacture
of commercial satellites to focus on military applications. This implies New
Skies have the youngest fleet with the best technology and configurations for
the future with the satellite industry analogous to the airline industry from
a fleet perspective.
g) Market: Re US Military multi-million dollar
deal - Tuesday, 11 November
2003 - While the deal is initially worth $5 million to Multiemedia, it could
be worth up to $40 million as the United States Agency for International
Development intends to roll out additional sites across Iraq as part of its
post-war enforcement and governance program. Multiemedia
Chief Executive Adrian Ballintine said the wireless two-satellite service
would allow the US military to communicate from anywhere in the Middle East.
“There is only one service provider in the region
providing any form of satellite service, and that is quite old. The US
military will now be able to set up sites across Iraq and simply, by pointing
their dish in the right direction, will have Internet and communication
service equivalent to anywhere in the world,’’ he said. ... ' + more promising
news - view complete media release on website. ' ... Mr Ballintine said Multiemedia had not planned to activate
the satellite beam over the Middle East/Africa until next year because of the
cost involved. “However, with the US military and other customers we signed in
Dubai, we have brought it forward 12 months earlier than anticipated.’’ ... '
The significance of this statement is in the 'pull
market' factor (as opposed to a 'push market' factor), that is;
this scenario is indicative of a large untapped market demand
that caused Multiemedia to bring forward plans by 12 months. A 'pull market' factor is
extremely rare and therefore; highly significant.
h) Product: The Tracstar partnership
(antennaes) was prompted by an influx of enquiries from end-uers - CFA, Police
Departments, Ambulance Services, local news broadcasters,
and numerous other internationally based support services. This
NewSat initiative is the first commercial <$30K, immediately available
mobile solution.
i) Product: Through the addition of
products/services, eg; MS SPLA Program, Tracstar; Multiemedia has added
another dimension to their business and appear to be progressing toward
a 'full service' business, or if you like, a 'one stop shop'.
h) And finally, MUL have new staff on board
with skills to drive both businesses.
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