Synety Group PLC - Disclaimer
These slides have been prepared by Synety Group plc (“the Company”) in accordance with the proposed placing of new ordinary shares of the Company (“the Placing”) and the admission of such shares to trading on AIM , a market operated by London Stock Exchange plc. These slides do not constitute a prospectus nor do they constitute or form part of any offer or invitation to purchase, sell, underwrite or subscribe for, or any solicitation of any such offer or invitation to purchase ,sell ,underwrite or subscribe for ,any shares in the Company nor shall the slides or any part of them or the fact of their distribution form the basis of or be relied on in connection with any contract therefore. Offers will only be made and applications accepted on the basis of formal placing letters.
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The Executive Team
Simon Cleaver
Executive Chairman
Simon is an entrepreneur and highly experienced director who has built, developed and sold a number of successful
companies in both the private and the public arenas. He has in depth knowledge of acquiring and building companies, often
under distressed circumstances.
Businesses that he has built and sold include Legend Communications plc, Host Logic plc, RDP Ltd and Dalehart Ltd. Simon
and Mark have worked together at Legend plc and Host Logic plc.
Mark Seemann
Chief Executive
Mark has 14 years experience in the Internet and telecoms sectors and has been directly responsible for various technical
innovations including one of the UK's first telecom web control panels and patented VoIP technology now owned by Cable &
Wireless.
As a shareholder and chief technical officer of Outsourcery Limited, Mark and his team were responsible for winning the
Microsoft Worldwide Hosting Solutions Partner of the Year 2010.
Paul Williams
Chief Financial Officer
Paul Williams is a Chartered Management Accountant with over 18 years experience in the technology services sector, having
worked previously for IBM, ECsoft Group plc and most recently, Ciber as Group Financial Controller and Interim CFO of the
International Division.
Paul was involved in multiple acquisitions and start-ups, achieved Sarbanes-Oxley compliance, successfully implemented
several company-wide ERP systems, controlled audit and external reporting and was instrumental in the creation of a new IT
Synety - Integrated Communications
Synety provides clients with a cloud-based solution which meets
the demand to link CRM systems and telephony in a cost effective
and reliable way.
•
UK Cloud Software Company & Cloud Telco
•
Calls can be controlled (initiated, recorded, forwarded, conferenced) remotely by
software, browser with or without a phone
•
Specifically designed to easily integrate with other software programs such as CRM
Solving a Known Problem
CRM, Telephony & Recordings Brought Together
•
Typically, Contacts, Calls & Recordings use multiple systems
•
Historically CTI attempts to link these disparate systems
•
Requires compatible hardware/software
•
Expensive on-premise solution
•
Moving CRM to Cloud can disconnect integration
•
Challenging for smaller businesses where upfront CAPEX is an issue
CloudCall – A different approach
Synety is Both Software Company & Telecoms Provider
•
CloudCall - four elements in one…
•
Telco| Hosted PBX |Call Recording |API Link with CRM
•
Can operate as an ‘overlay’
•
Works with existing phone system (inc mobile & VoIP)
•
Cloud based Service
•
No CAPEX or onsite servers needed
•
Designed to be quick & easily deployed
•
API Driven
•
Built from ground up with API layer
CloudCall Service
A tiered service offering from ‘simple’ click-to-call service, to complex call centre functionality – delivered from existing integrated
CRM system
Features Include
•
CRM Integration: Click-to-Call, Call Recording, Call Logs & Categorisation
•
Full PBX Functionality: Follow-me, Hunt Groups, Detailed Call Reporting
•
Call Centre Functionality: Screen Pops, Wall Boards, Dialler, Call Sync
Income Streams
Recurring Service Fees - SaaS
•
£10 - £30 per user per month service fees
Telecom Income
•
‘All you can eat’ packages or pay-as-you-go
•
Approx. 30% of group GP
Two Highly visible Income Streams
Additional Income
One Off Income
•
Set-Up Fees
•
Hardware Sales
Other Recurring Revenues
•
Enhanced Support Package
•
Add-Ons – Extended Recording package
•
Additional DDIs
Go to Market
Sales Approach
•
Leverage Marketing of Integrated CRM partners & their resellers
•
Advantages for CRM partners
•
Customer demand shows that CRM users want telephony
integration
•
Incremental revenue – 15% to 20% of CloudCall SaaS fees as
commission
•
Low call costs can help sell CRM Seats
•
18 CRM platform Integrations in about 18 months
•
Offer Free 14 Day Trials
The CRM Market
•
Gartner predicts that the Global CRM market grow by
15.1% CAGR to $36bn by 2017
•
Large global brands represent 45% of the market
•
The remaining 55% is made up of smaller niche players
•
Not encountering competition in small/niche sectors
•
Land grab
•
Board sees considerable value in CRM
relationships as well as End Users
Competition
•
Limited competition in the ‘global’ brand CRMs
•
New Voice Media Ltd , Interactive Intelligence Inc,
Inside Sales Inc,
•
Primarily ‘Call Centre solutions’
•
Tend to be more expensive
The Opportunity
Update - Current Position
All KPI’s up and still accelerating
•
New user sign up per month is accelerating
•
ARR (Annualised Recurring Revenue) up approx. six fold in 2013
•
ARR up 35% in 2 months
Key Performance Indicators (KPIs)
31 Dec
2012
30 June
2013
31 Dec
2013
Two Months
28
thFeb
2014
Growth
No of End Users
564
1,336
2,678
3,571
+33%
Av NEW Users per Month
55
128
224
447
+100%
No of Licences
794
2,149
5,160
7,212
+40%
Av Users Per Customer
5.8
7.9
10.1
11.6
+15%
Sales Acceleration & Dynamics
Growth in addressable UK market
•
Increased as CRM’s integrate
Product Improvements
•
CloudCall Contact Centre
Maturing go-to-market Strategy
•
Winning Larger Customers
CRM confidence takes time, but is building
Financial Results and KPIs to 31/12/13
2013 Highlights
•
Seven-fold y-o-y revenue growth
•
Six-fold y-o-y licence growth -
In the trading update of
7
th
January 2014 CloudCall licences KPI was referred to
as ‘sales’ this was actually ‘orders received’
•
68% gross margin
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Total Number of Licences
Key Performance Indicators
Year ended 31 December
Financial
Revenue
547
76
Gross Profit / (Loss)
374
29
Operating (Loss) before non-recurring items
(3,041)
(1,326)
Net (Loss) after non-recurring items and tax
(3,583)
(1,706)
Net Cash Outflow from Operating Activities
(2,224)
(2,389)
Cash and Cash Equivalents
2,300
2,704
£
£
Annualised Recurring Revenue (ARR)
£870,587
£149,000
Recurring Revenue per. User (RRPU)
£24.10
£22.80
Non-Financial
No of Licences
5,160
794
2013
£000
2012
£000
Use of net funds
£4.5 million firm placing & £0.5m open offer
UK Expansion Plans – £2.75m
(net of fees)
•
Ongoing expansion of UK Sales and Marketing
•
Increase in provisioning and Customer Services Departments
•
Additional resource to integrate with further CRM platforms
Platform Expansion - £0.5m
•
Increase in platform resilience, capacity and territorial reach
•
Better able to provided service for international Companies
Initial Market Entry - US £0.95m
•
Sales & marketing, office and overheads - £0.75
•
Platform build - £0.2m
Open Offer
•
Any funds raised in the open offer will be used as working
capital
Use of funds (detail)
Use of funds
Funds raised (firm placing)
£4.5m
UK
Globalisation
US Entry
Platform resilience, disaster recovery, storage upgrade
(£0.3m)
Office relocation
(£0.1m)
Strategic partner acquisition
(£0.3m)
Marketing and channel development
(£0.4m)
Increased sales team (Leicester)
(£0.7m)
Telesales team
(£0.2m)
Customer services
(£0.5m)
Working capital
(£0.25m)
Fund Raising Costs
(£0.25m)
Platform build and software enhancement
(£0.5m)
(£0.2m)
On-site staffing – 7 heads, 12 months)
(£0.65m)
Why the US?
•
Pull from existing CRM partners – most of whom are US companies
•
US home customer bases are usually far larger in size than their UK customer bases
•
Not a cold entry
•
Integrations & relationships already exist
•
Already have live customers in the US
•
Some initial marketing already agreed
•
Larger partners require Global solution
•
Global Companies
•
Salesforce
•
SSP
•
Swiftpage (ACT! and Saleslogix)
•
Cost effect market entry strategy
•
US – Primarily Sales Office
•
UK – CS | Billing | Technical
Key Partner Companies
Estimate of
Seats in UK
Estimate of
Seats in US
Bullhorn CRM (US)
6k
60k
Salesforce.com (US)
0.3m
5m
ACT! (US)
0.6m
3m
Microsoft CRM (US)
0.25m
3m
Sage 2000 & CRM (UK)
0.2m
1m
GoldMine CRM (CA)
.01m
0.8m
NetSuite (US)
0.08m
0.8m
The estimates above are based on available market information and the reasonable estimates of Synety and its directors and are only intended to
Summary
•
Solution to a Known Problem
•
Tiered Product Suite with Broad Appeal
•
Highly Visible Revenues from SaaS and Telecoms
•
CRM Market Large and Growing
•
Minimal Competition in Small/Niche CRM Space – 55% of the market
•
Demand / Pull from CRM Partners
•
Excellent Traction Over First 14 Months
•
US Expansion Broadens Addressable Market
•
The Board has demonstrated its effective use of capital
Timetable
Investor presentations:
7
th
– 17
th
March
Close book:
19
th
March
Placing letters out:
19
th
March
Announce:
21
st
March
General Meeting:
8
th
April
*connected parties
16th January 2014
Shares
% of Issued
Share Capital
Mark Seemann *
869,553
13.6%
Mellinckrodt 2 SICAV *
614,458
9.6%
Herald Investment Trust
500,000
7.8%
Jason Kendall *
482,214
7.5%
Commerzbank AG
398,270
6.2%
Aquaglow Limited
386,700
6.0%
Simon Cleaver *
298,334
4.6%
Cloverleaf Holdings
251,295
3.9%
Graham Ward *
206,795
3.2%
Southern Fox Investments
190,500
3.0%
Fidelity Worldwide Investment Managed Funds
178,177
2.8%
4,376,296
68.2%
Financial Results and KPIs to 31/12/13
Consolidated Statement of Comprehensive Income
For year ended 31 December
Before non-recurring items Non-recurring item (Note 6) After non-recurring item
Group Group Group Group
2013 2013 2013 2012
Notes £000 £000 £000 £000
Revenue 5 547 - 547 76
Cost of sales (173) - (173) (47)
Gross profit 374 - 374 29
Sales & marketing expenses (648) - (648) (38)
Administrative Expenses 7,8 (2,042) (710) (2,752) (424)
Share Based Payments (216) - (216) (371)
Total administrative expenses (2,258) (710) (2,968) (795)
Research & development expenses (509) - (509)
-Acquisition costs - - - (522)
Operating loss before non-recurring items (3,041) (710) (3,751) (1,326)
Financial income 9 10 - 10 10
Financial expenses 9 (1) - (1) (18)
Net financing income/(expense) 9 - 9 (8)
Loss before tax (3,032) (710) (3,742) (1,334)
Taxation 10 159 - 159 18
Loss from continuing operations (2,873) (710) (3,583) (1,316)
Loss from discontinued operation (net of income tax) - - - (390)
Loss for the year attributable to owners of the parent (2,873) (710) (3,583) (1,706)
Other comprehensive income
Foreign exchange translation differences - - - 91
Other comprehensive income - - - 91
Financial Results and KPIs to 31/12/13
Consolidated and Company Statement of Financial Position
At 31 DecemberGroup Group Company Company
2013 2012 2013 2012
Notes £000 £000 £000 £000
Non-current assets
Investment in Subsidiaries 13 - - 2,311 1,574
Property, plant and equipment 11 266 256 1
-Goodwill 12 339 339 -
-Other intangible assets 12 1,110 1,407 8
-1,715 2,002 2,320 1,574
Current assets
Inventories 15 23 13 -
-Trade and other receivables 16 155 179 3,062 846 Research & development tax
credit receivable
95 - -
-Cash and cash equivalents 17 2,300 2,704 2,164 2,552
2,573 2,896 5,226 3,398
Total assets 4,288 4,898 7,546 4,972
Current liabilities
Trade and other payables 18 (467) (270) (274) (199)
(467) (270) (274) (199)
Non current liabilities
Deferred tax liabilities 14 (239) (303) -
-Contingent consideration 6 (1,211) (501) (1,211) (501)
Total liabilities (1,917) (1,074) (1,485) (700)
Net assets 2,371 3,824 6,061 4,272
Equity attributable to shareholders
Share capital 21 1,266 986 1,266 986
Share premium 52,288 50,654 52,288 50,654
Translation reserve - - -
-Warrant reserve 33 34 33 34
Financial Results and KPIs to 31/12/13
Consolidated and Company Cashflow StatementsFor year ended 31 December 2013
Group Group Company Company
2013 2012 2013 2012
Notes £000 £000 £000 £000
Cash flows from operating activities
Loss for the period (3,583) (1,706) (341) (1,176) Adjustments for:
Depreciation and amortisation 390 174 4
-Fair value of contingent consideration 710 - -
-Foreign exchange losses/(gains) - 112 - 18
Loss on sale of property, plant and equipment - 72 - -Loss on discontinued operation, net of cash disposed of - (978) -
-Financial income (10) (13) (10) (11)
Financial expenses 1 1 -
-Equity settled share-based payment expenses 216 (371) 190 (371)
Taxation (159) (16) -
-Operating loss before changes in working capital and provisions
(2,435) (2,725) (158) (1,540) Decrease / (Increase) in trade and other receivables 24 383 (2,215) (552) Decrease / (Increase) in inventory (9) 115 - -Decrease / (Increase) in trade and other payables 196 (321) 75 (186)
Cash absorbed by operations (2,224) (2,548) (2,298) (2,278)
Tax (paid) - 159 -
-Net cash absorbed by operating activities (2,224) (2,388) (2,298) (2,278)
Cash flows from investing activities
Net Interest received 9 13 10 11
Investment in subsidiaries - (75) - (75)
Cash assumed on acquistion of subsidiary - 75 - -Proceeds from the sale of property, plant and equipment - - - -Acquisition of property, plant and equipment (91) (188) (13) -Development expenditure capitalised and other
intangible assets acquired
(12) - -
-Net cash absorbed by investing activities (94) (175) (2) (64)
Cash flows from financing activities
Interest paid - (1) -