MSL : Chairman and CEO AGM Address to Shareholders

For personal use only

Chairman and CEO Address to Shareholders

Chairman's Address - Tony Toohey

Good afternoon and thank you for joining us for the 2021 Annual General Meeting of MSL Solutions Limited.

My name is Tony Toohey, and as Chairman and Executive Director of MSL, I will be leading today's meeting. Due to ongoing COVID-19 restrictions, we decided to hold our AGM online again this year and I hope this allows more of our shareholders and other interested parties to participate in today's proceedings.

Before we move into the formal business of the meeting, I would like to take this opportunity to reflect on MSL's achievements, not just over the past 12 months but throughout the past two financial years. This period has enabled our company to significantly improve our outlook and laid the foundations for future growth.

There is no doubt that the past 18-plus months have been challenging for many businesses, particularly those with which we partner, as the global pandemic forced lockdowns, travel restrictions and capacity limits, and looks to have affected the way businesses will operate day-today for the foreseeable future.

However, the management changes and clearer business strategy put in place at MSL some two years ago have allowed our company to emerge from the pandemic much stronger than how we entered it. The initiatives to right size our operations, better focus our portfolio of software and services - making material improvements to our cost base without compromising on quality - have returned MSL to positive earnings and operating cash flow with a very strong and flexible balance sheet with no interest-bearing debt when compared to FY2019, and, in so doing, met a multi-year objective to lift these metrics back into positive territory. I couldn't be prouder of what the whole MSL team have achieved and in particular the Board for making many critical, strategic and structural decisions. It's never easy.

I would also note that when the business listed on the ASX at 25 cents per share, it owned none of its own intellectual property in point-of-sale technology. MSL now owns two complementary POS technologies which are earnings accretive and therefore have, and will continue to contribute to, shareholder value.

In FY21, MSL generated revenue of $24.7M, slightly below the $25.1M in FY20, a significant achievement in light of the fact the pandemic impacted the full 12 months of FY21 versus less than half of FY20. EBITDA of $3.118M and a Net Profit after Tax of the Group in FY21 was $886,000, inclusive of an Income Tax Benefit.

We understand that in order to grow our business it is important to pursue opportunities and over the past year we have made important moves in this regard. Our acquisition of SwiftPOS in November 2020 demonstrated the value that we can unlock through strategic transactions. With

For personal use only

the competitive environment for our core point-of-sale software business relatively fragmented, we continue to investigate new earnings-accretive opportunities. SwiftPOS has expanded our proprietary technology and produced revenue growth of 20 per cent plus, on a like for like basis, for the business during FY21.

Last month, we announced our acquisition of Australian hospitality point-of-sale systems business OrderMate for $7.5M, comprised of $5.5M cash and $2M worth of MSL shares. This acquisition has grown MSL's footprint to more than 8,000 venues with annual POS transactional value from those venues of more than $7B.

The combined integrations of OrderMate and SwiftPOS support complementary sectors which enables MSL to broaden its offering to new customers and grow its footprint into new territories. The OrderMate acquisition was part-funded by $4.5M in Convertible Notes issued to US-based Taubman Capital, with the partnership allowing MSL to leverage Taubman Capital's significant investment portfolio. This aligns with our strategy to expand in the US market, providing access to new US venues along with opportunities to grow in payments and point-of-sale as well as exploring possible synergies, such as with Venuetize, in which Taubman Capital also recently invested.

As part of our OrderMate acquisition, we also undertook a Share Purchase Plan for eligible existing shareholders and we received an overwhelming response to this, with applications totalling $6.5M, well above our cap of $4.5M. This was a very gratifying result, demonstrating shareholder support of our strategy for growth, and we thank all of our shareholders who participated in the SPP and believe we have created positive shareholder value as forecasted at IPO.

Other operational developments during the year included an agreement with OpenPay which allowed us to offer our golf club clients a buy now, pay later payment option via our platform. We also established a partnership with Doshii to broaden the services available to MSL's client base while delivering new business development and marketing opportunities, including access to food delivery platform Deliveroo.

We are a client focused company in a business-to-business services market, and we continue to offer our clients support to deal with ongoing challenges, as well as innovative tools to improve efficiency and access to services such as in-seat ordering, which can increase venue operators' flexibility and revenue potential as these functions become more widely adopted. The Company has made significant improvements in our overall customer service, we still have further improvement to reach our customer service objectives

Our Board has played an important part in leading MSL through its evolution over the past two years, and we have now reached a point where we would like to add more experience and diversity to the Board's skillset to ensure we can continue to grow and adapt and meet future challenges. This is partly the reason why we are looking to increase the Directors' remuneration pool as one of our resolutions to be decided at today's meeting - to ensure we can attract the best possible leaders today and in the future.

I would like to thank our management team including CEO Pat Howard and all members of our staff for their contribution during the year - they have been at the centre of MSL's flexibility and

For personal use only

growth, which has been achieved during very challenging and uncertain circumstances and is a testament to the hard work and commitment across the team.

Finally, I thank my fellow board members for their ongoing commitment and counsel. The achievements of the past year would not have been possible without their expert guidance and support.

I now hand over to Pat to provide a more detailed update on our operations.

For personal use only

CEO's Address - Pat Howard

Good afternoon everyone and thanks for joining us.

I'd like to thank Tony for his introduction and reflection on our achievements over the past few years. The past two years has seen significant change for the industries we work in and for MSL more broadly, and we are pleased with the progress that has been made. I would now like to speak on a few areas of our business in more detail.

As a global provider of software solutions to businesses in the sport, leisure and hospitality industry, MSL employs 160 staff and has grown its footprint to service more than 8,000 venues around the world, compared with less than 1,500 venues only two years ago.

We have built an iconic portfolio of brands including SwiftPOS, GolfLink, GolfBox and as Tony mentioned, our recent acquisition of OrderMate which has extended our existing footprint and offering. This is all In line with our strategy of POS growth.

In FY21, we have reported strong fundamental performance and progress across all three of our operating segments - point-of-sale, golf and digital - and we are encouraged to have achieved this despite the lockdowns and capacity limits experienced by our hospitality and venue customers.

One part of our business which we have focused on improving in recent years is our capital management and our FY21 results demonstrate this effort.

In our acquisition of OrderMate, we issued Convertible Notes to the value of $4.5M to Taubman Capital and completed an oversubscribed $4.5M Share Purchase Plan to our existing shareholders on the same terms as the Convertible Notes.

These activities demonstrated the support of our acquisition and the opportunity it provides us to strengthen our market position, particularly in the United States as we leverage the relationships that Taubman Capital has established, and the large opportunity that North America presents.

Our ability to achieve growth through accretive acquisitions over the past few years has reflected well in our financial position, which is clearly much improved. We will continue to pursue further strategic acquisitions and strategic partnerships that can drive our positive EBITDA and cashflow and add to our overall shareholder value.

In terms of our acquisitions, it is a year since we acquired the SwiftPOS business and I am so pleased with how this has integrated into our operations. This grew our portfolio of digital assets to more than 26,000 point-of-sale terminals in 28 countries. In about 7 ½ months of FY21, following completion of the acquisition in November 2020, SwiftPOS added $2M in revenue to our FY21 results and I'm excited to see what this integration can achieve in the years to come.

Building on this, our OrderMate acquisition provides MSL the opportunity to strengthen its market position and achieve scale as a focused point-of-sale provider in Australia as well as internationally through an expanded client base, particularly restaurants, fine dining and quick-service food outlets, and by adding to our technology capabilities. MSL sees great opportunity in leveraging MSL's existing sales channels through resellers and the UK to drive organic growth. OrderMate

For personal use only

complements the SwiftPOS customer footprint and will significantly increase the annual value of transactions facilitated by MSL. Our early indications from OrderMate have been positive and well timed, with New South Wales and Victoria emerging from Covid-19 lockdowns in October, resulting in OrderMate achieving its highest sales month of the year to date.

I would also like to provide an update on our agreement with AIT Kappture which we signed in May 2020. The 18-month anniversary of the Kappture agreement has seen revenue achieve levels above pre-Covid numbers. Marquee customers such as ASM Global, Manchester City and Arena Racing are all working with our subsidiary MSL-Verteda and Kappture to enhance their offering in the new normal in the wake of the pandemic.

Partnering with Kappture was an incredibly important strategic decision to broaden MSL's full suite of POS offerings, and its purpose-builtsoftware-as-a-servicepoint-of-sale solutions are ideal for UK stadium. The Kappture technology has been implemented in 45 stadiums, racecourses and arenas over the 18 months which has contributed strongly to the 40% increase in UK sales in Q1. The uptake has surpassed all expectations and is now greater than our pre-Covid operations.

In terms of our Golf operations, this has continued to perform steadily over the past 12 months with participation boosted by a resurgence in the sport nationally, which has lifted membership numbers for Golf Australia. Our European subsidiary, Golfbox, continued to improve its profitability despite the pandemic, through ongoing contracts with long-term partner federations in Norway, Switzerland and Denmark, among others. Our decision nearly two years ago to rationalise our product offering to focus on golf and point-of-sale products has helped us to achieve strong results.

The digital space is a growth area for our company as many businesses look to grasp the efficiency and profitability gains that digital adoption can deliver. We have a number of partners that must integrate with our POS, that includes driving revenue from ordering apps and payment partners which continue to expand our digital capabilities, but also increase value for customers.

We have started FY22 in similar positive territory, delivering strong revenue growth in the first quarter, driven by sales in our point-of-sale business in the UK as well as via SwiftPOS which have acquired 120 new venues in the first quarter of FY22. We are proud to maintain our consistent record of generating healthy levels of positive operational cash flow, and have been delighted to close several significant enterprise sales deals for SwiftPOS in Australia, including new wins at AAMI Park in Melbourne, MyState Bank Arena in Hobart, Logan City Council in Brisbane, Sydney's Theatre Royal with Trafalgar Entertainment and the NSW National Parks and Wildlife Service.

We are now looking forward to delivering on our growth plans from a lean but competitive operational foundation, as we continue to explore acquisition and partnership opportunities that offer the capacity to strengthen the Company's technology platform and product mix. Our opportunities for growth, both organic and otherwise, are favourable, and as a Brisbane-based enterprise SaaS provider servicing the sports and leisure markets, we are also excited and optimistic about the award of the 2032 Olympics and Paralympics to our home city.

I look forward to what we can deliver in the remainder of FY22 and I look forward to keeping you updated.