MXE unknown

Chairmans Address

  1. 2,687 Posts.
    MXL LIMITED 2002-05-27 ASX-SIGNAL-G


    HOMEX - Sydney



    +++++++++++++++++++++++++
    Good afternoon and thank you for attending today's meeting. MXL has
    made significant progress over the past six months and the future
    looks even brighter.



    Although we have been forthcoming with our announcements to the
    market there still seems to be wide spread misunderstanding about our
    business, the size of our potential market and lack of comparable
    product. Our Internet based management system broke new ground with
    its installation in October 2001. Consequently it was always going to
    take time for the market place to adopt it.



    eMinerva is a student/college management system that manages the
    lifecycle of a student from the time they first come into contact
    with a college through to graduation and post graduation alumni
    marketing. Owing to its flexibility and architecture eMinerva caters
    for the smallest school to the largest education institution.
    eMinerva covers the entire education market spectrum. eMinerva is a
    fully integrated student and agent information system. This leads to
    productivity gains for the college administration, for students,
    teachers, agents and potential students by accessing the same
    information. Up to date information anytime, anywhere. Without
    systems such as eMinerva colleges/education centres are in the
    future, going to find it difficult to operate. Colleges will lose
    their advantage in an increasingly competitive education market.



    I would like to give you some idea of the momentum we have
    subsequently developed. Three (3) months ago product demonstrations
    were hard to come by in a marketplace that is difficult to penetrate;
    today we are having difficulty to find the time to meet requests for
    demonstrations. To meet this demand demonstrations outside of
    business hours or in parallel are being conducted. Through word of
    mouth alone the Australian college market has started to endorse
    eMinerva.



    A characteristic of the college market is that very few colleges
    trade in isolation. Each is either part of a larger organisation or
    belong to an association. In April 2002 we signed the 350 college
    strong ARELS group in the UK as their only recognised college
    management system. Subsequently ARELS affiliates in three (3) other
    countries, including Australia are in discussions with MXL to
    duplicate the ARELS deal.



    The momentum developed by your company is substantial. At present 10
    colleges are in the process of eMinerva installation. A further 24
    agreed contracts are queued for installation, with another 12
    proposals awaiting approval. I have not included the number of
    demonstrations we have conducted or are scheduled that have not
    progressed to a more concrete status. Therefore to date we have
    contracts or proposals with 45 organisations. But to give you an idea
    of the immediate visible potential of our market; there are an
    additional 60 campuses attendant to the 45 noted above that are
    likely to follow the successful eMinerva installation in the primary
    campus. As an insight three colleges in the installation process have
    50 additional campuses between them. Around 200 average size colleges
    in Australia would pay the total budgeted costs over the next year
    out of the annuity component alone.



    Its worthwhilereflecting on the business model once more. In the UK
    for example our system sells for GBP5000 up-front, of which we will
    keep 75%, then there is the ongoing annuity of GBP5 per student, per
    enrolment, per year. ARELS has signed a more favourable agreement due
    to the number of colleges that will provide a sizeable installed base
    in the short term. These concessional fees will apply only for a
    limited time.



    Our market is highlighted by a number of undeniable factors:



    1. Theinternational market for education management software is
    immense. The college industry has an annual annuity potential above
    $1b(aud). This market potential is essentially undiagnosed. There is
    no world recognised web based college management system in
    competition at the moment. To give some indication of the state of
    the market probably the most sophisticated of college groups in Japan
    manages its 10,000 annual student enrolment on an "access data base"
    which has limited functionality.



    2. While there are a number of suppliers of software there is no
    stand-out product. Indeed prospective customers constantly tell us
    that "there is just nothing out there, and we have searched
    everywhere."



    3. People Soft dominates the university market but they don't operate
    in the market immediately below that level where MXL is targeting.



    4. The college market is going through consolidation at a global
    level and web based systems with multi-campus/multi-geography
    functionality are an absolute requirement. Portals for external
    access, "e-learning", and other student services are rapidly moving
    into this category.



    5. The importance of college management software in the education
    sector can be compared to core banking systems in the financial
    sector. Owing to the organisational upheaval that accompanies a move
    to a new platform, the decision by the colleges often takes a long
    time. The period from inquiry to sale can be protractedwith a
    consequent delay in revenue flows to MXL.



    6. The delayed revenue flows are of course offset over time once the
    annuity revenue that is at the core of our business model commences.



    7. MXL's Australian sales activity while externally appearing dormant
    through the first four months of 2002 has in fact been very active,
    and the benefits of the activity will begin to emerge through June to
    December 2002.



    8. The education sector globally is very tight knit and the keystone
    in the sales process is establishing credibility through reference
    site colleges. Success or failure in the broader market is dependent
    on getting these sites away successfully and then utilising the
    strong advocacy they bring. These referrals have just started to
    emerge in Australia and overseas. Over the last week for example we
    have had two college referrals to a number of prospective customers.



    9. Our Australian sales activity during the year so far has been
    aimed entirely at establishing these sites and raising our profile
    within the education industry. We can confirm that a number of
    influential colleges will come on line through May and June. Owing to
    the demand we have moved to a multiple installation process so we can
    install a number of colleges concurrently. Following our latest
    software upgrade in May, the multiple installations are scheduled for
    June. We also have proposals with 2 Australian education peak bodies
    regarding the endorsement of eMinerva for use in their 250 colleges.



    10. Our distributor in the UK after signing the ARELS agreement is at
    the stage of establishing reference sites and although things are
    progressing they are not as advanced as the Australian activities. We
    expect the dynamics in the UK to mirror that of the Australian market
    in that activity will quickly follow the influential sites. We have a
    proposal with a college group wanting installation of their
    Australian college by August. They have 1200 students and use a
    paper-based system to manage their students. The group also has at
    least one UK campus that is an ARELS member that represents further
    opportunity for us to consolidate in the ARELS group via Australia.
    These colleges will strengthen our reference base in the UK.



    Other activities that are taking place involve international sales
    and distribution some of which we have already announced; others,
    which are in their initial stages, involve the geographies of Japan,
    France, and several south-east Asian countries. A Singaporean based,
    but south-east Asian circulated education magazine is running a
    feature on eMinerva in its June-July edition. Our strategic push for
    Asian distribution coincides with this story. A trade mission is
    planned for mid June supported by the NSW and Federal Govt's Trade
    Development Dept's. A number of appointments with interested parties
    have already been arranged.



    Discussions are under way with a large Australian university for
    eMinerva to be used in the campuses it is establishing
    internationally. This particular group has aggressive expansion plans
    with over 100 campuses planned for south-east Asia and contiguous
    geographies. Discussions are also advanced with a number of other
    university's for the use of eMinerva in their attached college
    campuses.



    Monthly cash flow breakeven is still some months away. However, the
    dilution we are voting on today is not proposed to be ongoing with
    only modest further dilution expected until monthly cash flow
    breakeven is achieved.



    Probably the icing on the cake will be the next upgrade of eMinerva
    planned for later in 2002. The benefit of the upgraded product is
    that it will enable us to offer a tailored solution across the entire
    range of the market, from the smallest high school that may only want
    a core enrolment system, to the largest education institute in any
    country requiring full student management. This also includes the
    broad corporate market. We will have a product that can be adapted
    for all purposes. We have already been in discussion with individual
    private schools as well as one of their governing bodies, and there
    is strong interest. There are literally millions of potential
    customers out there.



    It would be remiss of me not thank the staff for the mighty job they
    have done in gaining the recognition of our product. I can assure you
    we areon the radar screens of a number of major players both within
    our target market and the I/T industry in general. Most of the staff
    are present at the meeting. All have worked exceptionally long hours
    so that your company, and theirs becomes a success. All are only too
    happy to talk to the shareholders after the meeting so you will be
    able gain first hand an indication of their enthusiasm for your
    company's prospects.



    G Tetley
    CHAIRMAN

 
arrow-down-2 Created with Sketch. arrow-down-2 Created with Sketch.