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Week's Special: MCL: EMERGING INVESTMENT COMPANY WITH STRONG SHAREHOLDER SUPPORT INVESTED IN DIVERSE FRONTIER TECHNOLOGY COMPANIES By Jenny Prabhu and Gerald Stanley
M2M Corporation Ltd, a Melbourne based investment company trading at below a cent, is in the fortunate position of having a stable and supportive shareholder register that account for some 50.4% of the shares on issue – that not only gives the company the ability to raise funds as it pursues its investment agenda, supporting its investments in frontier technology companies in a diverse field including video cards, online services in Vietnam and carbon credits – but largely prevents it from becoming the plaything of daytraders.
This is mainly because its investors share the vision and have knowledge of the track record of executive chairman Ian Clarkson, a Chartered Accountant who after a career with an international firm of chartered accountants, in 1985 left the industry to join Newmedia, at the then frontier of the hitech internet industry. Newmedia launched its first interactive CD ROM for pharmaceutical products in 1994 in conjunction with Rhone Poulenc Rhorer. In 1995, Newmedia built an online shopping system in partnership with Woolworths Supermarkets, with Newmedia's Intellectual Property later purchased by Woolworths. In March 1996, Newmedia purchased the "Australian Food Finder Publication", a hard copy catalogue for the Australian Food and Beverage Industry, launching its "Foodtrack" project, the Internet version of the publication, in September 1997. During 1998, Newmedia undertook a number of major projects including the Raine and Horne extranet for managing property listings and corporate communications online over its 350 franchise offices. It also developed an in store kiosk network for Coles Myer to deliver product information through touch screen kiosks connected to a corporate Intranet. It was also contracted by Telstra and the Supermarket to Asia Council to supply content, design and management of the internet project called FoodConnect Australia. In May 1999 Newmedia was awarded the contract to build the interactive website for Quality Food Australia, a supplier directory of Australian foods and services. Newmedia had traded profitably for five years before the Greenchip acquisition in a reverse takeover.
M2M Corporation currently has three major investment areas: It has a 27% investment in Bluefish, the producer of high definition digital interface video cards for video and post production – a $US10/11 billion global market growing at 8/10% per annum; a joint venture with an internet provider of services to the dominant telco in Vietnam for VOIP; and Carbon Planet, a multi-service carbon credit company.
Value will be realised, as with all venture capital companies, in the eventual sale or sell down of operating businesses, or dividends and revenue streams in due course from early stage investments. M2M envisages long term annuity type income streams to eventuate from its Vietnam telco joint venture and from the Carbon Planet businesses. The company believes it could have significant revenue and become profitable as early as next year.
M2M intends to consolidate its existing shares on a 20 to 1 basis, resulting in approximately 85 million shares on issue.
M2M CORPORATION LTD – A SNAPSHOT
M2M Corporation Ltd (MCL) listed on February 7 2001 via a reverse takeover by Greenchip Investments Ltd of Newmedia in 2000 for around $6.65 million in scrip and cash. Newmedia had a variety of clients in several sectors, providing B2B services, and had traded profitably for five years before the Greenchip acquisition. In 2001 shortly after listing MCL was trading at around 50c.
Investments
Bluefish: M2M Corporation has a 27% investment in Bluefish, a producer of high definition digital interface video cards for video and post production, a $US10/11 billion global market growing at 8/10% per annum. Bluefish 444 exports 90% of its product to the US, Europe and Canada. It has now begun shipping EPOCH, the latest version of the Bluefish product, overwhelmingly supported by its customers and OEM partners.
Although the loss in Bluefish increased during the previous year, M2M believes its future as an operating business is sound with strong revenue and profitability prospects.
Bluefish case study LiberoVision based in Zurich Switzerland develops revolutionary enhancement technology for sports broadcasters. In 2008 LiberoVision's DiscoverEye was nominated for a Sports Emmy in the category Technical Achievement Award for its work on the ESPN Axis. It has been applied in the 2008 European soccer championships by TV networks including ESPN/ABC in the US, ZDF in Germany and ITV in the UK. LiberoVision incorporates Bluefish444 technology, first with the HD/Fury card and now with Bluefish's newest Epoch Horizon card in all products. DiscoverEye can create unique perspectives from arbitrary viewpoints where no camera is located. Broadcasters can move the virtual camera behind the player and show his perspective, show the view of the linesman or offer a birds eye view of the tactical formation. The World Cup 2010 qualifying coverage is being enhanced by LiberoVision.
VOIP and internet services in Vietnam M2M has a joint venture with internet operators affiliated with the dominant telco for the provision of on line services in Vietnam, pursuant to a 10 year licence which extends similar operations within Australia (the SIPme business). This joint venture has an OSP licence which allows operations in all areas of the Internet in Vietnam (not just VOIP) On September 28 MCL announced it has commenced the sale and marketing of VoIP products and services in Vietnam through its j/v with Vietnamese company AVA Communications Corporation under the name SIPme Vietnam. M2M'ws products and services will be rolled out progressively throughout Vietnam nationwide and to the growing number of businesses and subscribers currently utilising its services. Vietnam has around 20 million internet users, 24% of the population with the government planning to inject $US6.3 billion by 2010 to increase penetration to 35%. J/v partner AVA provides internet hosting services, games online and other services and more recently SMS gateway services to all the major telecom operators in Vietnam.
Carbon Planet +SE Asia developer, further investment proposed in carbon credit sector M2M has in October 2009 signed an agreement to purchase the Carbon Planet business for scrip. This agreement is subject to conditions precedent both regulatory and commercial. The global carbon credit market was worth $116 billion in 2008 and is forecast to be $2/3 trillion by 2020. It is one of the world's fastest growing industries.
* M2M Corporation Ltd on November 17 announced through its 100% owned subsidiary m2m Ventures Pty Ltd has agreed to provide as Project Financing Facility and Development Assistance (JPFDA) to a project developer operating in the South Pacific region and Asia. The developer has access to a substantial pipeline of projects for future development. M2M has the right to provide project financing for all the developer's projects. The maximum amount to be advanced is $3.3 million while project processes are developed, with draws against mutually agreed project plans. The developer's project cover a range of industries, technologies and countries. The initial focus is on projects for the development of forestry carbon credits from rainforests, the first of which is expected to be completed by March 2010 giving revenue of $800,000. MCL expects an annual income stream of approximately $4,000,000 for the calender year ending 31st December 2010 from other carbon credit projects. The carbon market has a number of elements: 1/The compliance market, where country-specific legislation requires market participants to reduce their carbon emissions and compensate for them by purchasing instruments that represent carbon reductions. 2/The voluntary market – where socially responsible companies seek to minimise their carbon footprint through the purchase of carbon reduction instruments, eg: investment in long life forests. 3/Trading in instruments, already well developed in Europe.
On October 27 Carbon Planet announced a Voluntary Carbon Unit Purchase Agreement (VCUPA) has been signed with a large European Carbon Credit company for the purchase of 10 million VCU's which when completed will give Carbon Planet commission revenue in excess of $US2.25 million.
M2m has committed to expand the investments in this sector.
M2m’s country manager in Asia is in initial discussions with a CDM project in Vietnam and a provincial government in China to provide carbon credit services.
Chinese WiFi and video surveillance business This is still a work in progress. M2M executives have returned their focus to this for further development in the coming months.
As with all venture capitalists, value for M2M will eventually be realised from investments either through dividends or revenue, sale or partial sell down of operating businesses and other corporate activity. M2M envisages long term annuity type income streams to eventuate from its Vietnam telco joint venture and from the Carbon Planet businesses. The company believes it could have significant revenue and become profitable as early as next year.
M2M Corporation Ltd Financials Last Traded price 0.5 cents Shares Issued 1.7 Bln Market Cap $8.5 Mln Year ended June 30, Values in $000s
INCOME 2009 2008 Op Revenue 230 726 Op Profit (loss) (1772) (1236) Discontinued Ops (2237) (1729) Net profit (loss) (4009) (2965) EPS (Cents) (0.16) (0.13)
BALANCE SHEET 2009 2008 Current Assets 227 1156 Non Current Assets.. 800 1359 Current Liabilities 2464 1035 Non Current Liabilities - 562 Net Assets & Shareholders' Funds (1437) 918 Intangibles 157 216 Net Tangible Assets (1594) 702 Gearing (Net of Cash) % 100 31.4 NTA per share (cents) (0.12) 0.07 Shares Issued (Millions) 1317 958
Cash Flows: 2009 2008 Cash on hand (at open) 142 884 Operating Activities (2046) (2298) Investing (155) (272) Financing Activites 2204 1739 Foreign Exchange impacts 3 89 Cash on hand at Year end 148 142 1/ The Auditors have qualified their Audit report: “Material uncertainty regarding continuation as a going concern” and with more detail. 2/ The Current ratio is 1 asset to 9.2 Liabilities being short funded by more than $2.2 million 3/ The Directors raised $700 million by the issue of 200 million shares at 3.5 cents. Report dated 5/11/2009 4/The company has proposed to consolidate its shares on a 20 for 1 basis, subject to shareholder approval.
Directors Ian Barry Clarkson, executive chairman, appointed a director February 2000. Mr Clarkson is a Fellow of the Institute of Chartered Accountants in Australia. As a partner in an international firm of Chartered accountants for over ten years his professional experience covers the fields of audit, management and cost accounting, tax as well as budgeting and cash flow preparation. In 1985 he retired from accounting to enter industry, and was an executive director of a number of non listed and diverse international trading companies. He was a Director of NewMedia which was the subject of a reverse takeover by Greenchip Investments in 2000. He was appointed chairman of M2M in October 2001. David Stephen Glavonjic, non exec independent director, appointed a director November 30 2006. Mr Glavonjic has executive experience in the IT and communications sector over more than 25 years, initially qualifying as an accountant. He is currently CEO of Moore Business Systems Ltd, a position he has held since October 1 2008 and is an independent non exec director of E-Business Systems Ltd which is listed on the NSXA. He has an indirect interest in 0.158% of issued capital. Timothy Owen Lebbon, non exec director, appointed April 2005. Mr Lebbon has over 25 years experience in consulting and corporate advisory work and over ten years experience in accounting and auditing. He is a Certified Valuation Consultant. He is a director of Leadenhall Australia Ltd and Chairman of Leadenhall VRG Pty Ltd. Mr Lebbon has 16.75% of M2M Corporation. CEO: Peter John Saunders. Appointed CEO and acting from 1 Jan on the departure of Michael So as CEO and director. Peter has considerable experience in the IT area, in IP and in commercialising technology. He has also worked in Asia and in diversified telco, international software development, and services. Company secretary: Mourice Garbutt. Has over 30 years experience, and provides secretarial services to several companies including those listed on the ASX.
Major shareholders Tim Lebbon, 16.75% (has been a shareholder since 2000) – had 30% in 2006, partly diluted down by subsequent issues. Gregory J Bound, 6.834% - had 19.5% in 2006. Ian Clarkson 1.3% The 20 largest shareholders currently account for 50.4% of shares on issue. There are also approx 27,000,000 million of options on issue.
ends
MCL Price at posting:
0.3¢ Sentiment: Buy Disclosure: Held
