MGM is a tiny stock, capitalised at just $9 million. But it is profitable, and it has delivered shareholders a total return (capital gain plus dividends) of 34.8 per cent a year overt the last five years, and 15.2 per cent a year over the last three years.
A lot of listed companies go about their business anonymously, but every so often, the news headlines refer to their territory, and provide them with a good chance to tell the world what they do. That has certainly been the case for school communications and administration business MGM Wireless Limited (MWR) this month.
MGM Wireless’ business is in school communications technology. It has patented communications solutions that enable schools to communicate more effectively with parents and guardians, to improve student attendance, welfare, safety and parent engagement. Its technology is currently used in schools in Australia, New Zealand and the US.
So when the 2016 school year began with a spate of hoax threats made against schools in every state and territory of Australia, MGM’s business suddenly coincided with the headlines. Across the country, schools were plunged into chaos by lockdowns, evacuations – in some cases, of prep students on the first day of school – and pick-ups guarded by police.
Parents were aghast, not only because of the threats, but because (as many told the media) they only found out about the threats and the evacuations of their children through social media, or even printed newsletters sent home with the children. Parents told newspapers that they were arriving for pick-up in the middle of a lockdown that they did not know what was happening.
In Victoria, the Herald Sun reported that fewer than one state primary school in four has the technology to text-message all parents to alert them to potentially critical emergencies. The paper quoted principals as saying that they wanted an automated text-message system, able to alert parents to potentially deadly situations, rolled out across all schools.
That is exactly what MGM Wireless has got. So the company got active, providing free SMS credits to its clients for all communication related to the bomb hoaxes, and making its School SMS family messaging service available to any school across Australia at no cost to respond in emergency situations.
“In the past we have provided free messaging to schools hit by severe storms, bushfires and swine flu in NSW, WA, Queensland and Victoria,” said MGM Wireless CEO Mark Fortunatow. “This current hoax is in a different category, being vexatious rather than a natural disaster, but we still classify this as an emergency, and therefore we encourage schools that do not have a system to contact us so we can implement a solution free of charge.” MGM said emergency systems for SMS could be set up within one hour.
MGM’s cloud-based Outreach mobile app is a school-specific web-based social messaging solution that allows school leaders to securely and easily communicate to parents and the school community – to the whole or any sub-group – instantly, through SMS, voicemail and email, using any internet-enabled computer or smart phone. School leaders to send messages and status updates securely even when not on the school grounds, for example, in cases where the staff and students have been evacuated.
Operated from what the company describes as one of Australia’s most secure and disaster-redundant data hosting locations, Outreach has ASIO-level security clearance, and MGM says it will withstand the direst of catastrophic events – meaning that a customer school can be confident that its SMS service will always work.
The company’s text messaging format allows high-speed short message communication from one to several thousand people in a matter of minutes (depending on individual telecommunications services). This speed of communication allows pre-emptive action by the school, minimising confusion and panic: the communication can be conducted in a relatively covert manner (without speaking). MGM says it is not susceptible to third-party intervention: for example, voice on mobile phones can be intercepted, as can police short wave radio, but text cannot.
The system allows schools to prepare in advance the wording of communications and the list of recipients. It does not require phone lines, leaving these unblocked for other important purposes. And there is an audit trail of all messages sent and received.
Of course, the company’s systems offer more prosaic advantages to schools. Outreach is more commonly used to send SMS reminders about school events, late-breaking news and changes to sport fixtures. The flagship product, Messageyou, uses SMS to enhance the school’s teaching function, automating attendance data and student management systems to increase staff productivity. This has been shown to improve parent and community engagement, which ultimately improve students’ learning and social outcomes, and also reduces schools’ operating costs.
MGM Wireless’ other products include:
- Smartsync, data exchange technology that automatically extracts parent contact data from the student management systems and securely updates the Outreach system;
- RollMarker, which combines the school’s business processes to save teaching-staff time, improve administration efficiency, and monitor and improve student attendance, safety and welfare;
- School News Channel, which provides information to parents such as school news, event reminders, sport notifications, emergency notices, late-breaking news and instant notification by SMS if a student has not arrived to school;
- MGM PinPoint, which can identify and locates missing or truant students, to give families peace of mind; and
- AllMyTribe Family Locator App, which can send an alert whenever a family member arrives at or leaves school or work, or a sports event, a party, a bus stop, a grandparent’s house, home, or anywhere. The app is designed to give children autonomy to travel independently, but have the parents know where they are; and to give the children the means to send panic alerts and automatically call emergency services.
In 2015 MGM opened www.tribewear.com, an online store for the supply of family wearable devices. The store initially offers smart watches for 7- to 14-year-old children: MGM worked with smart watch suppliers to develop a stand-alone smart watch/phone specifically for young children. The smart watch/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, connects to the AllMyTribe platform.
The newest product, MGM SchoolEvents, is being launched in the current quarter. It is a smartphone platform solution for the communication, marketing, and booking, ticketing and payment for school events, including parent-teacher interviews.
MGM describes its business proposition as empowering schools to improve their daily administrative functions, helping to improve and monitor key deliverables such as student attendance and parent engagement, by communicating more effectively with parents, guardians and the broader school community (for example, auxiliary and fundraising groups, and alumni). It is just that the other critical aspect of the communications offering – the safety of students and staff – has come into the spotlight this month.
Last financial year, MGM Wireless reported its sixth consecutive increase in net profit, this time a 46 per cent jump to $1.04 million, a record for the company. Earnings per share (EPS) climbed by 44 per cent, to 12.16 cents. Revenue rose by 19 per cent to $3.87 million. The unfranked dividend was lifted 18 per cent, from 1.1 cents to 1.3 cents. The cash balance lifted 42 per cent, to $1.53 million. Client numbers – as in contracted schools and early learning centres – rose by 7 per cent, to 1,165.
In December, MGM came out with a profit downgrade, saying it expected FY16 first-half revenue and earnings to be lower than in FY15. It said revenue for the six months to 31 December 2015 was now expected to be about $1.9 million, compared with $2.2 million in the previous corresponding period. Net profit after tax was expected to be about $100,000, compared with $600,000 in the 2015 first half, but increased amortisation and tax expense would account for about $400,000 of this movement. The cash position was expected to improve to $1.65 million at 31 December 2015.
The company also talked about “sophisticated new messaging products and services” that would be launched early in the FY16 second half: and that MGM would be “taking school messaging services to a new level.” The interim result is due to appear by the end of this month.
MGM is a tiny stock, capitalised at just $9 million. But it is profitable, and it has delivered shareholders a total return (capital gain plus dividends) of 34.8 per cent a year overt the last five years, and 15.2 per cent a year over the last three years. However the stock has gone backwards by 15 per cent over the last 12 months. But given a good reception for new product launches in the second half, and increased market awareness of the products as a result of the February bomb-hoax epidemic, MGM should be able to resume advancement. At $1.04, MGM is trading on an historical price/earnings (P/E) ratio of 8.5 times earnings – that is arguably very cheap for a growing, profitable, dividend-paying technology stock.
