Hi all, Thank you for all your contributions, in particular...

Hi all,

Thank you for all your contributions, in particular forrestfield that alerted me to Mathew Walker and I got in on the options at 1.2 cents.

Had nothing really to contribute, but recently finished typing up my notes from the Sydney seminar so thought to share in case anyone found my notes helpful.

I was in the orange T-shirt asking questions about the code; I was sitting next to hoppy, across the aisle from Greg, The Samurai and Lisa.

I am happy for you hoppy that you got your losses back from the GFC; that is a long and patient wait.

May you all have a great Christmas as I won't be posting anything as I rarely have anything worth saying.

Intiger Group Limited Investor Presentation - attended on Thursday 3rd November 2016
(Booklet states 27th October 2016 because done around Australia at different times)
IAM – Intiger Group Limited
PC - Patrick Canion
CB - Charles Blake
MF - Mark Fisher (through Skype or video link – was in India)
SW – Sharon Wright (through Skype or video link – was in Manila)
MW - Mathew Walker
SOA – Statement of Advice
Meeting conducted by Patrick Canion
Charles Blake present, just joined IAM
Skype with Mark Fisher and Sharon Wright
Vizzy - program they use between offshore centres and Australia
80% Australians not use Financial Advice
Had choice of two approaches to grow company
Option A: Aim for short term growth
13 month waiting list of practices examine and use IAM services
This option more revenue in the short term (6 - 12 months) but less revenue long term
Or
Option B: Aim for long term growth by targeting Key Licences
Option B less revenue in the short term but more revenue long term
Aiming another licence this quarter (Oct to Dec)
Aiming another licence next quarter (Jan to March)
Greg: How likely is MOU2 in December?
PC;

• Intiger is aiming to have everything signed off for client’s December board meeting, otherwise client’s February board meeting.
• The financial planning practices are calling their licenses saying IAM will reduce costs, increase profit and this is resulting in licenses calling IAM
• Current MOU2 has 19 steps that IAM have to comply with before going to their board meeting. 19th step is site visit to India, eg number of security guards per floor, number of smoke detectors per certain area, spaces between desks etc
• IPAC Western Australia and IPAC South Australia are clients of IAM
• Want to be the most successful Australian startup
• IPAC pay $170,000 to $180,000 fees annually to IAM
• All 9 current customers of IAM are authorised representatives of other licensee holders

Why did IPAC Western Australia use IAM services?

• 26 people in business
• Want to maintain client relationship therefore needed to outsource back office so can spend more time face to face with clients
• MF’s 1st customer referred PC to MF
• Nov 2014 IPAC WA picked 3 administration processes for IAM to work on
• Dec 2014 IPAC WA picked another 3 administration processes for IAM to work on
• Took 6 months to move everything admin wise to IAM

Process to move back office to IAM is now even smoother - takes about 3 months
Focus now is on Financial Planning, and in the future will consider doing back office operations for Self-Managed Super Funds and other super funds
The Financial Planning Networks are aware of IAM
IAM is not marketing directly to financial planning practices, but rather speaking with the bigger fish, those who hold the licence
IAM has pre-existing relationships with decision makers in large dealer groups, hence no need currently for marketing
Board’s focus is not on short term growth and immediate share price growth, but rather building a company for a generation
Lilly
Currently not generating any revenue
Now getting the finishing touches
It is a propriety algorithm that MF was involved in writing
Can convert verbal data entry into text
Engaging something called K_Punta_9 algorithm
The client’s data never leaves Australia, assuming the customer’s computer server is in Australia
Lilly takes into consideration the licensees parameters, the pre-approved funds, and Lilly is the interface
Lilly accesses the data on financial planner’s servers: the data never leaves the servers
There will be another senior appointment early next year whose role is to finalise Lilly so it can generate revenue
The fee IAM will charge for the use of Lilly will be 10-12% of monthly administration services
KLIP
It is compulsory for all clients that use IAM
KLIP is added as a 10% monthly fee on top of whatever that monthly fee was
KLIP is licensed to IAM
KLIP manages all the steps and processes involved in a practice so it can monitor the efficiencies and costs.
KLIP produces a weekly summary of data for that week and as well as year to date.
IAM’s existing customers are already breakeven but Sentry is paying the full price from the start (based on this, it most likely would be the case that future clients will be paying full price from the start)
Sentry
Sentry wanted exclusivity however IAM said Sentry can have exclusivity only during the pilot program (i.e. IAM will not do an MOU with any other groups in the same tier as Sentry whilst Sentry are in the pilot program).
As part of the HOA, IAM agreed to discuss exclusivity during the pilot program but not committed yet; i.e. not used IAM services yet.
If a bank wanted exclusivity in the use of IAM services, then the bank would just buy out IAM, but at the moment there are no such discussions.
The pilot program lasts a total of 6 months and IAM cannot sign another MOU with another mid-tier company because Sentry is a mid-tier company.
The 6-month pilot has started and Sentry has their stuff ready, they have employed a person for the purpose of the pilot program.
PC has known Sentry’s new employee for 15 years. Sentry already has 4 practices in the pilot program.
IAM
There have been no conversations on institutional shareholding ownership of IAM because IAM is still too small for them to consider.
IAM has 2.5 employees in Australia. (I think this means one person works part time).
The big 4 banks have centralized paraplanners but do not have centralized administration for their financial planning businesses.
AMP is rebranding IPAC East.
Sentry has to sign within the 6-month pilot which has already started.
I asked about IAM’s competitive edge and although there are no other competitors currently in Australia, did there exist other overseas firms that may compete with IAM in Australia and what has IAM planned in order to maintain their competitive edge to minimize the impact of overseas competitors on the the growth of.
PC- There are other platforms overseas (very large companies that do back office administration) that can see Australia has a target market.
I wanted to know about the potential of overseas markets for IAM services and so asked if he knew of other western nations where English was the main language that have a higher culturally accepted use of Financial Advice in the general population than what Australia does.
PC answered he does not know which other western nations where English is predominantly spoken have a higher culturally accepted use of Financial Advice than Australia where 20% of the population use Financial Advice.
I wanted to know the reasoning behind having several overseas centres instead of just one larger overseas processing centre, as one centre would offer larger economies of scale.
PC – IAM uses several centres in different countries because of the differences in skill levels, proficiencies in English as well as rents.
Will more capital be raised such as share placement?
PC – share placement may occur but for the purpose of acquisitions in order to increase scale. IAM wants capital placement costs to be minimal.
SW spends 2/3 of her time between Manila and India overseeing the IAM’s offices
MF currently in southern India in Tamil Nadu
SW currently in Manila
China
One of my main concerns is potential risks of another firm developing similar code or copying the algorithm through reverse engineering, in particular a firm from China for China is notorious for copying overseas patents, designs, software etc. and rebranding it and making it available at the fraction of the original designer’s costs. Hence, I asked questions relating to China’s ability to become a competitor through designing similar algorithms.
Hence, I asked, how difficult is the access to the code?
PC;

• IAM owns the right to the code for Lilly outright
• The code is not shared with anyone
• A person cannot go onto the Lilly platform to copy or see the code because it is structured in such a way that it is impossible to get access to it

Hence, I asked how difficult is it to replicate the code?
PC;

• In Australia they have tried for the past decade to replicate but couldn’t
• CRM and Coin have made some inroads, but current capability still needs 5 – 6 hours work (I am assuming per SOA)
• Spoken to 6 investment houses because realised Lilly is the first automated solution
• If others were able to understand the algorithm and write the code, then they would have done it

Who wrote the code, was it MF or was it outsourced?
MF;

• The code was written by two people; by MF and another person he paid to write the code with him
• It was written in Perth, the other person sat with MF for one year and only worked on computers in a secure environment controlled by MF, where the employed code writer could not remove or send or download any code and so could not make a copy for themselves
• The code was finished and MF begun operating. About 12 weeks after beginning operating, he was offered to be bought out by China, and after that he was approached by many in South East Asia.
• MF rejected many finance offers and he knew that he did not need to list. However, MF had been talking with MW for over 1 year and decided to go with MW because of the successful track record of MW and so listed on the ASX for the capacity to scale much quicker than remaining unlisted.

MF explained that Lilly has inbuilt flexibility to absorb changes between different financial planning groups. This inbuilt flexibility will result in quick turnaround times, resulting in financial practices benefiting from Lilly very quickly
MF;

• Australia has still not recognised what IAM will become
• It will take 3 years for Australia to recognise what we already know now
• (AI - I take this to mean that MF believes in 3 years’ time, he expects IAM to have grown significantly such that it will be known as a company)
• There are no plans for dividends for the next 3 years
• (AI - I take this to mean that as much money as possible will be reinvested into the business, so that the company continues to grow its profit. This decreases risk as it shows management are not here for a quick buck, but rather are always thinking strategically and for the long term. This gives me confidence as the long-term growth of the company means short term share price fluctuations are less of a concern)
• IAM’s strategy to grow IAM is by approaching the larger practices within the larger licensee groups. These larger practices are motivated to provide more quality time with clients whilst reducing costs to remain competitive. These large practices quickly see the benefit of using IAM and so the large practice quickly articulates IAM’s benefits to the licensee who then chases IAM to examine our services.
• Hence, IAM does not need a sales team and therefore does not have one.
• (AI - I take this to mean that this sales approach would be more successful, less costly, more relational, and has a greater probability of success in the long term for it is a pull rather than push approach to sales. The potential client does not need to be convinced what is being offered for they are doing the chasing having already being convinced it is something worth considering and pursuing)
• Currently not have sales team but need Client Relationship Managers. Many practices use IAM and then the licensee group sees IAM as a whole group, because the practices cannot operate without the use of IAM’s services.
• Hence the importance of a very strong relationship between IAM and licensee. This means that for some large licensees, there is a high probability the licensee may need to own the provider outright, i.e IAM.
• A buyout figure is difficult to determine because of the competitive advantage of IAM; there are too many unknowns.
• IAM in the past was profitable. In 2014 / 2015 IAM was profitable. Practices spending $30K-$40K / month.
• MF wants IAM to start as one of the most successful start-ups in the past 10 years.

SW;

• Asked question ‘How difficult is it to balance growth with cash flow, getting more staff vs revenue?’
• Football field sized office, aiming to train 20-30 new staff every month
• Training staff to be ready (AI - proactive rather than reactive); not playing catch-up but looking at what is needed in the future
• Takes about 2 months to train each person, may not be happy with 5 people per month, hence some attrition
• SW is confident because the employment and HR company that IAM uses gives a monthly report on best industry practices and have staff lined up to work for IAM
• The staff are very happy working for IAM. For example, some staff in Manila went to work in the IAM office during the recent public holiday and they did not want days off in lieu because of their work on the public holiday. They have a very strong work ethic
• SW has a very close relationship with the staff. The staff go above and beyond industry best practice

MF;

• Broking houses have approached IAM
• IAM is looking to get traction with brokers and it depends on how fast Patrick can run

PC;

• Growth, Strategy, Acquisition

• AMP knows about IAM because AMP owns part of IPAC WA.
• AMP has got up to 2018 to buy out IPAC WA
• IPAC WA had negotiations about being rebranded to the new brand i.e. AMP Advice
• Current IAM customers have Charter as the licensee; IAM cannot do an ASX release of this because AMP will have to approve it
• KLIP gives practices instant, relevant information, a snapshot of their business
• The advantages of KLIP is the financial planning practice is able to quickly make decisions on increasing practice efficiencies, decreasing costs, increasing profit. Hence, KLIP will be in great demand
• Sentry exclusivity is only to the mid-tier space, therefore, IAM may sign, for example, another MOUT tomorrow, but it won’t be to another firm in the mid-tier space, but IAM is able to sign right now with a larger firm
• Marketing is not needed. If IAM wanted to do marketing, all that is needed is just 1 page in the Financial Planning Magazine / Journal that is widely read by the Financial Planning Network