Sounds like the forum is coming back to life (or death depending on who's posts you read). Shedding my thoughts on a few recent topics:
• Great interview with MF and hosted by GG on iamlth.com - Well done on enhancing their PR channels and giving holders the first opportunity to hear from Mark himself. I personally appreciate this and impressed with the effort and lengths you go to, to engage with IAM Management.
• As always, I appreciate the educational posts, humour and alternative views from all the regular posters here. You know who you are.
• Announcement today was positive (obviously) since the pilot has increased its scope of practices. Share price is a different story and I'm not entering that debate. There was no bad news in it, so I'll take that as a good thing, although potentially a "filler" between now and MOU2 which couldcome in March (personal opinion only based on how I interpreted MF's response in the interview, which was the MOU2 is inevitable, but possibly not sealed and announced in Feb as many had hoped based on PC's comments). My money is still on Garvan (MLC/NAB), despite the talk of CBA and AMP.
• Here is my analysis of potential revenue figures and will/won't they achieve M4 with Sentry alone: - There are 300-400 planners within Sentry. I'll take 350 as the average. - Assuming 3 planners per practice = 116 practices - IAM has the potential to generate $20k revenue per month from each practice = 20k x 12 months x 116 practices = $27m - It would take 1.5 years, fully operational to achieve $40m revenue (not NPAT) - For NPAT, assuming IAM's profit margin is 40% (complete guess), cumulative gross revenue would need to be $100m ($40m/0.4) by 2019.
- If they can generate $27m per annum with Sentry, it would take just under 4 years to hit $40m NPAT using the above assumptions. - These are simplistic calcs only for ease of following and open up discussion.
Notes:
* $20k per month per practice? This is what has been mentioned by IAM in the past as potential revenue per practice. It equates to $240k per annum or roughly 2-3 support staff in a FP practice. I'm not sure how reasonable this is for a 3-man practice, but I would guess it would be unlikely they would have 2 support staff now or spending the equivalent of $240k now. However, this is based on averages and sketchy data, so it's possible for larger practices and if IAM provides value and time back to planners, then they could certainly spend that much in future if the practice revenue increased (similarly for PC's business).
* 300-400 planners? This was taken fro ASX announcement on 19 September where is sated more than 400 Corporate and Individual Authorised Representatives. Authorised Reps effectively means being qualified to give financial advice.
* 40% profit margin for IAM? Just made this up. Could be anything, who knows.
* 3 planners per practice? Based on industry experience and an average only. Most are either 1 man bands or larger businesses with 5 planners or more
Bottom Line:
It would be a challenge (and impressive) for IAM to achieve M4 with Sentry alone. The above numbers would certainly need to change, but not very much. For example, changing the monthly revenue per practice from $20k to $25k, provides annual revenue of $35m (not $27m). Alternatively, having 2 Sentry's signed on would certainly get us there.
However, I don't think any LTH's bought IAM so we can experience a one hit wonder with Sentry. Instead, we know there are other deals to come both within the FP industry (<3 years), other industries in Australia (< 7 years), and then move overseas (< 10 years).
Today, most people would see IAM as further derisked.
(20min delay)