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Swift Networks Group Ltd: DEEP DIVE
OVERVIEW

Swift Networks Group Ltd plans swift media transformation

Swift’s investors will vote on its planned acquisition of ad specialist Medical Media.
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OVERVIEW: SW1 The Big Picture
Swift Networks hopes to buy Medical Media and become Swift Media

Swift Networks Group Ltd (ASX:SW1) investors will have their say on the company’s evolution as a media company at an upcoming general meeting, voting on a name change and the planned acquisition of Medical Media Group.

The company based in Perth’s Technology Park hopes shareholders will back its move to change its name to Swift Media Limited.

READ: Swift Networks’ strategic acquisition highlights both growth and takeover potential, says Hartleys research

Swift will ask shareholders to back both the name change and acquisition at a general meeting at its Watts Place offices near Curtin University in Bentley on February 12, 2019.

Last month, Swift unveiled its plan to acquire out-of-home advertising specialist Medical Media.

The acquisition target operates more than 2,300 digital screens in Australia, delivering content and advertising to more than 5 million viewers each month.

A Swift acquisition of the media company could give the group entry into a high-growth industry vertical at scale to its existing offerings and accelerate the development of the Western Australian company’s emerging advertising business.

Swift has estimated a merger of the two companies could result in cost savings of about $3 million a year.

READ: Swift Networks to acquire Medical Media screen advertising business

Swift chief executive officer Xavier Kris told Proactive Investors Medical Media’s business was similar and complementary to the group’s business.

Kris said, “We provide, effectively, advertisers access to consumers who are hard to reach — from a technology standpoint, from a content standpoint, and from an advertising standpoint — because they’re in these captivated, rather than captured, environments.

“When we looked at Medical Media, they have the opportunity to go from simply providing the service within medical practices to providing it in veterinary practices, within dentists, within the other closed-loop environments where there is that high dwell time.”

The opportunity for potential expansion to Medical Media’s audiences is an opportunity Swift is familiar with after the company that listed on the ASX in June 2016 expanded from its original offering of content to audiences at mine sites.

Swift is now delivering content to audiences in other so-called captivated environments such as aged care facilities, hotels and oil rigs.

READ: Swift Networks wins contract to deliver entertainment and connectivity services to mining project

Kris told Proactive, “They are environments that have high dwell times, where people are drawn to use the technology or drawn to the screen, and (we) provide them with engaging technology and content, and of course, get the advertisers access to those individuals.”

Swift serves up TV and movie content in these captivated environments and has content deals with major Hollywood studios.

The group has a number of exclusive deals to deliver its content in captivated environments.

READ: Swift Networks signs exclusive deal with Hoyts to provide eSports content in Australia

Among those deals is a December 2018 arrangement with cinema giant Hoyts.

Swift will provide eSports content to the cinema chain, to be broadcast to cinema audiences on the big screen.

Hoyts and Swift signed a three-year agreement and will share revenues from ticket sales.

Each party can choose to extend their arrangement for another three years.

The agreement came after Swift inked a content licence and distribution agreement with US-based eSports company Real Big Hits in September 2018, giving Swift live broadcast rights to popular eSports content.

Swift will also provide entertainment and connectivity services to a large construction camp in Western Australia’s Pilbara region.

The 780-room construction camp is for a multi-billion dollar mining project for a Tier 1 miner.

The group expects the contract to provide a material boost contract to its revenue base.

READ: Swift Networks expands presence in the aged care sector

Also last month, Swift signed a contract with leading aged care provider Infinite Care to provide its services to the group’s newest facilities in Queensland.

Early in 2019 Swift will begin providing its aged care-specific package to 350 rooms across multiple sites, including Infinite’s state-of-the-art facility in Mt Lofty, Toowoomba, due to open to residents in a week.

Swift will later deliver the content package to a future facility at Cornubia, southeast of Brisbane, also expected to open early this year.

Earnings and milestones

Brokers and Swift investors have both responded to the potential transaction with Medical Media by looking at underlying revenue in the business.

Kris said, “The underlying Swift business continues to grow from strength to strength.

The managing director noted Swift had continued to experience a strong first-half to the 2018-19 financial year.

Kris said, “Swift has delivered on each and every promise it has made to its stakeholders whether it be staff, clients, or investors since the day it has listed (in 2016).

“Those promises and commitments have been reflected in the performance of the business from both an operational and financial standpoint.

“We have a business that has had a 900% increase in sites since listing. And it is a business that has had an over a $4 million dollar EBITDA turnaround and 458% gross margin increase.

“That can only come about if a business understands where it’s going.”

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