Very impressive from Patrick and the team. Here is a run down of the 2 hour Q&A with 40 attendees. By no means were these all the questions and the audience didn't go easy on them, so even though the responses are mostly positive, they are still difficult to answer on the spot with conviction and rationale:
1. Where is Mark and Sharon?
Mark is in India and Sharon is in Phillipines. Mark is showing around potential clients (MOU?) to the offshore sites, such as office, security, team/staff, systems, environment etc. Apparently some of their clients like to get a full tour and understand what goes on at IAM. Excellent clients and due diligence I say. Sharon spends 2/3 of the year in India and Phillipinnes.
2. What about PC background?
Works for Ipac WA (there's also IPAC SA, IPAC Group, IPAC East Coast). PC has deal with AMP to sell his 45% share by end of 2018. IPAC East Coast is rebranding itself to AMP Advice or IPAC Advice (can't remember). He is an entrepreneur himself, has good, long term connections across industry, including 2 decades with Sentry MD. Wish he bought more shares earlier than the ones be bought on market recently, but couldn't. IPAC WA has 26 staff.
3. What about Sentry HOA? More details please...
They are in 6 month trial period. Started this week I think. The actual work hasn't started because Sentry are waiting to hire someone full time to manage the relationship, process and implementation. But the clock is ticking on them. If both parties like what they see before 6 months, there's nothing stopping them from pulling the pilot and entering a formal arrangement sooner.
4. What about Insto investors and takeover?
IAM not talking to any instos and takeover offer not on the table now. Both are possible later, but I don't think it's of interest to IAM right now. Significant premium would be needed for T/O based on the MF/PC quote"How to value a business that is creating a new industry and that business is the nucleus of the industry and that business has high barriers to entry for competitors and that business is serving all the competitors of an industry?". Alternatively, "How do you value exclusivity?". Mind you, MF said that prior to recent IPO, he has had plenty of offers, discussions and talks with investors/instos about buying him out, taking a stake, going public in the past. He has always said no. Until he met Matt W....and even then they discussed it for 12 months before getting to anything.
5. What about Lily and Klip?
* Huge IP here. They have solved something that no one else in the market has achieved. I didn't believe this myself because I've worked in the industry for a while, but I'm starting to believe this technology and IP is revolutionary.
* Mark built the IT himself with another developer over the course of 1 year. It is tightly held and secure. Not much chance or risk of it being ripped off by someone else anytime soon.
* Lily is online fact find entered by client or advisor, generates SOA with potential for ROA and FDS later on.
* Both technologies are not fully complete and developed
* Lily is not priced yet
* Klip might be priced at 10% of monthly practice invoice and mandatory offering
* The IP is the algorithm that drives Lily. If others had this, they would already be doing it, but none of the big 4 banks or AMP are, so IAM are not lying when they say this is revolutionary.
* Lily is designed to the flexible to meet needs and nuances of clients with minimal development cost
6. What about the 4C $39k revenue?
This is not reflective of actual revenue made in quarter. IAM made $205k for the quarter and had other one off expenses and legacy costs from SRT etc.
7. What about the 20-30 new staff being hired each month?
This is frontrunning the anticipated work from Sentry and others. Mostly due to lead time in recruiting, training and attrition. IAM are not hiring to play catch up from a backlog.
8. What is IAM's marketing plan?
There is none. They don't need one. They have enough business. Even if they needed some, it's not hard for Mark Rantall to generate business using his contacts or advertising in Professional Planner Magazine etc. MF said ideally if they don't need sales people then great (likened to Sales Force), happy with word of mouth.
9. How does the exclusivity deal work and hints as to next MOU?
Well put it this way...there are 3 tiers of potential clients to chase:
1. Tier 3 - lowest level and individual practices. IAM used to chase this in the past, but no long doing this.
2. Tier 2 - Mid level independent tier. i.e. Sentry. IAM cannot tough this tier for 6 months.
3. Tier 1 - Large independents or institutions. Since there aren't many large independents out there, next MOU is most likely an insto (i.e. AMP or MLC).
10. How was Mark F previously profitable?
Back in 2014/15 he was profitable...generating $20-30k per month from practices with 100 staff offshore and basically just himself running the business with no salary. Not sure how many practices though.
11. Future growth for IAM?
1. Immediate focus is Financial Planning in Australia
2. Then expand to Financial Services in Australia, such as Super Admin or SMSF Admin
3. Expand to UK or US BPO in Financial Services. Most likely through acquisition (hint: Capital raise). Mark is very bullish on this strategy given his background and contacts.
4. Move into non-financial services (unlikely though due to FS being so large to cover).
12. IAM Recruitment
They are looking to make another senior appointment to their management team next year before 31 March. Not sure what this is.
13. What about dividends over next 3 years?
There is no plan to pay dividends in the next 3 years.
14. What would be the pitch for IAM investors 3 years down the track?
MF "In 3 years, investors may only be starting to recognise the value of IAM which you shareholders already understand today"
15. Explain the overseas locations etc.
Different locations are needed to derisk the business. There is also more skill diversity. There is also the need to operate in different timezones for their clients.
16. Why didn't IAM communicate better with shareholders earlier?
Well they are doing the roadshow seminars now. That is important to remember. They have also only been listed for a couple of months. In that 2 months, they were busy with the listing itself, managing existing clients operations, trying to sign of MOU/HOA, recruiting and making appointments. Patrick is now engaged in the social media community as well.
17. Vision, future and potential of IAM.
From MF - IAM will become the revolutionary and business market leader in a new industry with BPO and Technology. IAM will dominate the Australian Financial Planning operations market and that is just the start. There is huge potential to grow and do it better than Wipro and Accenture and to be aggressive across financial Services both in Australia (where no one dominates) and then replicate overseas.
Well done to the IAM Management Team and Shareholders. This is definitely a long term hold and as safe as they come for "speccies". I'm tipping 10+cents before end of year if MOU#2 is announced.
Good luck for the Melbourne round tomorrow.
Over and out.
Bodhi_Trader
IAM Price at posting:
4.4¢ Sentiment: Buy Disclosure: Held
(20min delay)