There are lots of new shareholders and fresh eyes looking at Intiger, so thought it was a good time to do an overview of what Intiger has achieved, what they are about and where they are going.
This post is simply stating the facts of what the company does based on public accessible information or information given through ASX announcements and Investor Presentations/Roadshows and I've simply collated it together into this one post with some aspects of my personal views and opinions as this is not financial advice.
To start...
895 million reasons to Succeed for Mark Fisher (Founder & Director) & IAM Intiger Group.
The most successful startups and businesses are the ones where the Founder is still deeply ingrained in the business and the everyday developments, as well as being highly incentivised to make the business succeed and continue to grow.
Businesses are run by people, regardless of the product, you need good management and incentivised management are what you want when investing in a business, especially a Startup like IAM.
Mark Fisher will receive 895 million shares (including 15m options) when all Milestone Performance shares are achieved (excluding his existing 37.5m owned escrowed shares).
One of the most stand outs is the 880 million Performance Shares Milestones, M1-M4 with
$40million cumulative NPAT by 30 June 2019 that go to the founder of IAM, Mark Fisher, who currently owns only 37.5m shares escrowed.
This 37.5m shares were in exchange for a $750,000 loan Fisher provided his business and rather than taking payment in cash or leaving the company in debt he agreed to being paid back in shares and the shares being held in escrow for 24months.
Mark Fisher (Director), the Founder of Intiger IAM, gave up complete ownership of his business when he agreed to list on the ASX through an RTO by SRT thanks to Intiger's largest shareholder & Director Mathew Walker (1o5m shares) convincing him to do so.
For Mark to regain substantial ownership of the business he created he needs to achieve all these NPAT (net profit after tax) Milestone Performance targets by 30 June 2019 or he gets nothing.
Agreeing to such a deal one must believe Mark is very confident of achieving these targets, why else agree to these terms and an RTO listing when he could have continued building the business as a private company retaining complete ownership and IPO later on?
Mark is highly experienced and at the last investor roadshow as well as through interviews he has stated he is very confident of achieving all of the Milestone NPAT Performance targets for him to gain his 895m shares and get back the company he started and created. This is a very big incentive and drive to make sure the $40m cumulative NPAT is achieved.
IAM Intiger Group Limited
Technology, fintech, software & services for the Financial Planning Industry
Market Cap @ 4.1c = $38.68 million Cash: $2.9 million
277.6 million Options expire 31st Dec 2017 Cash to come: $2,221,072
Substantial Shareholder: Mathew Walker (Director) - 105 million shares (held since days of SRT shell)
Contractual obligation to reduce costs for clients by up to 40%.
The business of Intiger Group Limited (ASX: IAM), was founded by experienced investment banking and financial services executive Mark Fisher and operates an Australian software development house dedicated to supporting professional Financial Planners to meet the needs of their clients.
Intiger does this by reducing the back office and operational costs within the Australian financial planning industry. Working with Australian Financial Services Licensees and their advisers, the Intiger Group has developed and launched proprietary software platform LiLLY, which has been designed to digitise and automate core components of the financial planning process including the production of automated statements of advice.
In conjunction with LiLLY, the Intiger Group has presented the online practice management system KLIP which tracks key performance indicators of a financial planning practice and delivers oversight and control to both licensors and financial planning practices nationally.
What Does Intiger Solve?
Current financial planning industry is facing a squeeze on margins and need to find ways to reduce costs, increase profitability, increase revenue and increase efficiencies. Intiger provides a solution to all of these.
Intiger Reduces costs significantly to the financial planners and practices as it provides a high quality service at a lower cost through their Offshore processing offices and automating the current manual processes.
Intiger Automates and Digitises the financial planning process of SOA's.
As a result this leads to reducing the time spent to produce SOA's and other back office related work, which in turn equals to further cost savings and increased efficiencies for businesses and the ability to take on more work to increase revenue and profit margins.
Intiger SOA Fees, Revenue & Client Benefits
It currently takes 6 weeks approximately for the whole process to produce an SOA at a cost of $2,500:
(following from Intiger's website).
Meet adviser -> Fact find -> Client data -> Research call -> Advice request -> SOA -> New client sale -> Record of Advice.
Intiger for the same will take 5 days at a cost of $499 with a contractual guarantee of up to 40% cost savings.
There are a few different services that Intiger offers as there are varying complexities and the fee's, time frames all change accordingly.
On a basic SOA production level, the current industry cost per SOA ranges from $285 to $315.
Intiger reduces this to $49 per SOA as well as reducing the time from a week to one day.
Intiger also charges a pre-SOA admin fee of $100 per SOA.
There are 6 streams of services which ranges from $20 to $249 depending on the type of SOA (excluding the $100 admin fee).
All up the fee Intiger charges per SOA (including $100 admin but excluding charges for the softwares LiLLY & KLiP) = $120 to $349 per SOA.
As an example, a 2013 article from professional planner noted that AusSuper produced 10,000 SOA's in 2012 alone, with a target of producing 20,000 in 2013. AustralianSuper had two million members alone at the time.
Intiger has plans to target the Super industry in the future, and the above gives a basic idea of the numbers being produced by the bigger players.
As an example with Intiger's SOA fees:
@ 10,000 SOA's @ min $120 = $1,200,000 revenue
@ max $349 = $3,490,000 revenue
A key thing here would be to understand how many SOA's Sentry produce a year, ipacWA etc.
Current Client Revenue
ipacWA (Intigers second client around 2013 before listing)
Pay an annual fee of $170,000 - This is a heavily discounted fee due to ipacWA coming on as a very early client & helping to fine tune the services and systems that Intiger provides.
The last 3 years practices have been spending $30,000 to $40,000 a month each to Intiger. (November Investor Presentation 2016 source).
Intiger currently have
18 clients all paying (some of which may be discounted e.g. ipacWA).
@ $30,000 a month x 18 = $540,000 a month in revenue (depending on how payment structures are setup.)
= $6,480,000 a year in revenue
New clients are signing up regularly, as noted from the 50% increase since January, so this revenue will start to increase more and more each month, especially when the Online Portal is up and running.
Milestone 1 of $1m NPAT starts to look well within reach.
Current Known Clients
Household name clients.
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ipacWA
ipacSA
Sentry Group
NAB
Financial Framework
All Financial Services
Planwell
ipacWA
Patrick Canion, the newly appointed Chairman of Intiger, is also the CEO and owner of ipacWA.
IpacWA was the second client of Intiger before it was listed on the ASX and they have been a client since around 2013.
Touched on before, ipacWA pays a discounted $170,000 annual fee. (Discounted for being a very early client).
Patrick has stated in an interview with Professional Planner in July 2016, along with at previous Investor presentations and podcasts, that ipacWA played a significant role in helping Intiger fine tune their services and that ipacWA acted as a sort of guinea pig as Intiger refined those processes. They gave Mark Fisher and his team a great deal of input on developing these processes.
Patrick also went on to state how the impact Intigers services have had on his business have been very good, he has been able to hire further Certified Financial Planners, new business adviser, spent more on marketing and obtained more business and are able to focus on areas of ipacWA's business that add value.
IpacWA required a high level of accuracy and specificity to the work they needed and Intiger were able to do a good job for them and helped ipacWA really improve as well.
The fact ipacWA has remained a client after all these trials and developments and Patrick Canion came on as a director, now Chairman and also a shareholder, speaks volumes of the work and services Intiger provides and is a true vote of confidence in Intigers services.
IpacWA are a business, one that is also a licensee under Charter, as Patrick noted in the latest podcast, and Charter were very comfortable with allowing ipacWA to use Intigers services. So again that speaks further volumes of what Intiger are doing.
IpacWA are also 50% owned by AMP.
Sentry Group
On 19th September 2016, Sentry Group and Intiger signed a Heads of Agreement.
Sentry are one of the largest & leading independent financial planning groups outside of the Big 4 banks, with over $5billion in funds under advice and over 400 practices within the group.
The HOA agreement involved Sentry using Intigers offshore processing platforms as well as the proprietary software LiLLY & KLiP.
On the 25 November 2016, Sentry started the 6 month Pilot Program - Meaning that the 6 Month Pilot is still in fact in place and will end at the end of MAY 2017.
From the last Investor Presentation/Roadshow it was noted that Sentry had 4 practices in the pilot and the last update on the 22 February 2017, noted that the Pilot Program had 6 practice participants and was increasing from 6 to 15.
So from November they had 2 practices join and likely will be continuing with a similar plan with more practices joining the pilot along the way, rather than what many have assumed would be Day 1 after that update there would be 15 practices straight away in the Pilot. That seems to not be the case and rather as noted by Patrick and in the last update announcement the goal with Sentry is to progress towards a formal binding agreement where Sentry will roll out Intiger's services nationally.
On the 19th December 2016, Sentry and Intiger announced an agreed rollout plan was in place and all structural planning complete. Pilot practices identified and specific integration work scheduled to commence in January.
This was also backed up by the Sentry Group's CEO & Chairman, Murray Hills in an interview about Sentry, where he noted the following:
"Sentry has partnered with fintech group Intiger to provide a framework for the development and delivery of a centralised back office administration and para planning solution.
Sentry will manage the delivery of Intiger's LiLLY and KLiP tech solutions, which speed up and reduce the cost of the production of Statements of Advice for financial planners.
In this environment, the advice practice that will benefit the most will be characterised by non-institutional alignment utilising modern processes, technology and resources to ensure positive client engagement and service outcomes.
A centralised, low-cost offshore solution, coupled with industry leading software provides our advisers with a unique opportunity to reduce costs and processing risk, improve compliance, time to delivery and profit margins.
The first deliverable with Intiger and Sentry's partnership will be the establisment of a competitively priced para planning service designed to dovetail seamlessly into Sentry's operational frameworks of advisers, followed by a pilot program with a number of key practices to develop and fine tune the back office administration processes.
Sentry expects the Pilot Program to be completed early 2017 with a roll out to the entire Sentry adviser network to begin thereafter."
Sentry Group also requested an Exclusivity period as part of the 6 month Pilot Program, meaning Intiger cannot deal with another Tier 2 non-aligned practice within this timeframe.
Sentry are paying extra for this exclusivity.
Patrick Canion and Mark Fisher have both personally known the Sentry CEO for over 20 years (November Investor Roadshow 2016).
ASIC compliances require 18 steps to be taken and for IAM to pass in order for businesses like Sentry to have a deal go through and this applies to others like NAB etc. All steps with Sentry were completed in 2016 with the final step Sentry visiting the India offshore offices to ensure workplace safety and regulations met.
Sentry have invested as many resources into the Pilot Program as IAM has, with Sentry hiring a manager just to run the Pilot Program for them.
Sentry wanted an exclusive agreement just for themselves to use Intiger's services, but the price IAM would have given them not even Sentry would afford. (Patrick's statement at the November 2016 Investor Roadshow)
NAB - MOU2 - MOU3 & more MOU Deals
NAB has been noted in the latest podcast as not being MOU2, so this is quite a good thing, meaning that NAB were brought on as an extra, something of a left of field play and that there is still another large institution (Larger than Sentry Group) in discussion for MOU2 and MOU3.
NAB signed up for a mock trial, being a much larger institution and with all of the ASIC compliances it's understandable they want to see how Intiger's services work with some mock examples before giving any real data and work.
As Patrick mentioned in the podcast, if they haven't said anything has ended then it is still going, so the NAB trial is very likely still ongoing and hopefully there's some updates on that in due course, perhaps the Investor Roadshow will have something on NAB, we'll have to wait and see.
At the November Investor Roadshow, it was noted that Intiger had MOU2 and MOU3 in development, Patrick has just re-affirmed in the latest podcast interview that MOU2 is still ongoing, that Intiger has completed all the steps asked of by this Institution and that they maintain a good, close relationship with them, but the timing of when a deal happens is out of Intiger's hands and they will inform the market when they have something material.
It was also noted at the November 2016 Roadshow that Intiger didn't require any marketing to the "big players" or any "players", as they already have prospective MOU6 and MOU7 in talks, meaning that there is also MOU4 and MOU5 already in the works too, which would be expected as a business for them to be planning and progressing in such ways.
Proprietary Software LiLLY & KLiP
LiLLY is all set to go, previously was still in trial & development phase, but now it's fully operational, the company held it back a little in order to get things right but now everything is good to go.
LiLLY is charged at a 10% fee of the monthly admin fees on a monthly basis.
LiLLY is the first software in Australia to DIGITISE and AUTOMATE the Financial Planning Lifecycle.
LiLLY replicates existing Back Office & Paraplanning processes in a digitised environment to eliminate manual processing and the time & cost of SOA producation.
Significantly reducing turn-around times, cost to produce SOA's & production risk. LiLLY delivers unparalleled improvements to Practice productivity, margins & profitability.
Eliminating Manual & Paper based Processing, LiLLY transfers these online and Digitises these core processes.
KLiP also full operational now.
KLiP is the first software in Australia to track & trace the delivery of every core Financial Planning process at a Practice & Licensee level to the second. A step change in Practice Performance Management, efficiency & profitability.
Tracking all turn around times, cost per unit output for all key processes in a practice, everyday and to the second for each individual team member. This provides extraordinary insight into the true efficiency of your Back Office processes and helps to grow the clients margins, eliminate costs, drive efficiency and help scale a clients business.
LiLLY Digitises & Automates and KLiP tracks.
KLiP also has a monthly charge of 10% fee on top of monthly fees and is compulsory for clients to use & pay for when they sign up with Intiger.
Operations Update - 10th April 2017
Increase of client practices signing with Intiger ahead of the planned growth rate.
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A 50% increase from the planned number of 9 in January 2017 to today's current 18 paying clients is a pretty significant jump in clients signed, but as Patrick Canion stated in the latest podcaster interview, this is a very very small drop in the ocean for the potential clients for Intiger to sign and is only just the start of things to come.
Of this 18 we know that ipacWA, ipacSA, Planwell, Financial Framework and All Financial Services each make up 1 client, leaving 13 remaining, which it's not know if all 13 are Sentry pilots or it is still at the 6 pilots from last announcement. Either way progress is being made and likely by the Investor Roadshow there will have been a few more clients signed up.
More clients, regardless of household name, means more revenue for Intiger.
As noted before, was mentioned at the November 2016 Roadshow that each client pays between $30k to $40k a month and this was without LiLLY and KLiP fully operational.
Online Portal Client Signing
This is a huge game changer for Intiger, once fully operational the Online Portal will allow Intiger to engage with more clients simultaneously and better yet, Autonomously.
Effectively Intiger are Automating their own client signing process, taking a page out of their own services.
Intiger have noted in the November 2016 Roadshow how they had a 13 month waiting list of clients waiting to sign up and this is constantly growing.
They also noted how they were only targeting the Licensees, but it seems they are now also going for the low hanging fruit.
Intiger currently engages new clients on a one-on-one, face to face basis and it's a very personalise experience, but it's also time consuming and not every client needs this, some are smaller or others are wanting to just trial to see what Intiger can do before engaging the services further.
The Online Portal will allow this engagement and streamlines the signing up process, where clients can sign up, log in and select what they want to produce. It allows a pay-per job online order that the customer gets a one off charge to their credit card.
The Online Portal is still in development, Mark Fisher along with Charles Blake and Tim Thorton are writing the code themselves over in Perth, WA.
Once up and running this will open up a significant extra revenue stream for Intiger at a low cost client acquisition, in terms of time and resources spent and any financial planner in Australia will be able to order SOA's through Intiger.
40% of the the Financial Planning market is non-aligned, with 60% being AMP and the Big 4 Banks, so Intiger are wanting to also go after and capture this 40% of the market and they are doing so by implementing the Online Portal as well as utilising Intigers exisiting knowledge and expertise to create this added revenue streams and seek more opportunities for the business.
Cost Savings for Intiger & 3rd Global Office
Intigers 3rd Offshore Processing Centre (Ann: 19 December 2016 Intiger Launches 3rd Global Processing Platform), this office is now completely open and operational in Cebu.
The company did really well to undertake further due diligence to find another office location from the original, with the new location having significant cost savings for Intiger across the board.
The new office has been processing client work since the last week of March 2017, with a small team of 5 full time employees.
Due to demand pressure, they have had to since double the full time staff from 5 to 10 after only the first week of operations.
Business Cost Reductions
Intiger has done very well to reduce their own business costs across board.
18% Reduction in Employee Costs - Bringing human resource management & payroll processing in-house has reduced the cost by 18%
15% Reduction in Building Lease & Management - Intiger were able to find a significantly larger premises which the overall Net Cost is lower in the building lease and overall maintenance of the building.
25% Reduction in Processing - The Cebu Processing costs compared to Manila are 25% less.
That's some pretty big savings for a startup company as Intiger.
Investor Roadshow to come May 2017 - Perth, Sydney & Melbourne
There's actually more information but this is pretty much the good bulk of it that gives a good understanding of what Intiger does. It's a lot of information, hopefully it's of use to others.
Again all of this information is freely available either from ASX announcements, feedback posts from the November 2016 Investor Roadshows, Google searches of Intiger and related parties and from the Podcast Interviews on IAMLTH.
I've simply collated it all together for myself and now posting here to share with others.
This written piece is not financial advice, seek professional financial advice and conduct your own research for any investment decisions.
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