whooooshhhh, page-2

business and strategy overview, april 2004
looking good...@ 6cents imho....DO YOUR OWN RESEARCH

Business and strategy overview, April 2004

Agenda
• Brief Historical Background
• Vision and Mission
• Business Strategy
• Group Overview, by Business
• Summary of Financial Projections
Business and strategy overview, April 2004
Brief Historical Background
• Commenced trading 1992
– Selling PCs (commodity products)
– Office Automation
– Network infrastructure services
• 1999 listed on the ASX
Made a number of acquisitions (32 over 2 years) to grow by:
• Expanding geographical footprint (34 offices in 8 countries by the end
of 2001)
• Broadening the range of IT services – added: recruitment, education,
finance, hosting, storage, application development, various consultancy
services...
• 2002 Change in strategic direction
– Focus on own IP
– Non-core businesses and assets divested
– Business restructured to support new business model
• 2003 Business transformation completed
FY 03/04 (current) is the first full fiscal year with only “new”
business operational
Business and strategy overview, April 2004
Vision
To be a leading global vendor of IT products and services.
Mission
• Supply our customers with high quality software products and IT
services that deliver clear benefits, to forge and maintain lasting
relationships.
• Pursue a high quality recurring revenue model to reach the 50%
recurring income level by the end of FY04/05.
• Grow revenues by 50% pa over the next few years whilst
maintaining 25% EBITDA margin.
• Achieve financial goals by balancing the interests and needs of
our customers, staff, and shareholders.
Powerlan is on a mission to:
Business and strategy overview, April 2004
Business Strategy
Focus on creating, marketing, and delivering software products and IT
related services where Powerlan owns the Intellectual Property (IP), to
ensure the quality of offering and to maximise the profitability.
A product/service that fits new Powerlan business strategy
Ø is, or has the potential of becoming, a leader in its field,
Ø has a global market appeal, and
Ø lends itself to recurring or transactional income model
Business and strategy overview, April 2004
Powerlan House
Powerlan Group comprises of functionally self contained companies that share
Vision, Mission, and the fundamental business strategy, as well as
Ø Offices and related infrastructure
Ø Central Finance and Administration, HR, and other such hi level corporate services
Ø Standards and methodologies such as Software Development Life Cycle (SDLC)
Business and strategy overview, April 2004
Develops and implements carrier-grade Operational Support Systems (OSS) and
Network Management Systems (NMS) for telecoms and enterprises.
DESCRIPTION
Yes! Global leader in end-to-end OSS and NMS MARKET LEADER?
Yes! Over 95% of revenues are presently derived from overseas clients. GLOBAL POTENTIAL?
Yes. Traditional maintenance and support contracts account for approx 15% revenue.
The first long term software rental customer signed up in October 2003 (Mobitel).
RECURRING/TRANSACTIONAL
INCOME POTENTIAL?
Major customers include:
T1: TFN (Taiwan), PLDT (Philippines), Reliance (India), SLT (Sri Lanka)
T2: AAPT (Australia), Time (Malaysia), Mobitel (Sri Lanka)
Selling direct, or through local partners in third world countries.
On global scale partnering with leading BSS (billing) vendor to offer comprehensive,
quick to implement, end-to-end solutions.
CUSTOMER BASE AND MARKETING
STRATEGY
On target to achieve $15m revenues and EBITDA $2.4m (16% EBITDA margin). Financial Forecast for FY03/04
50% pa growth in revenues with EBITDA margin increasing to approx 40% over the
next couple of years.
3 YEAR OUTLOOK
Telecommunications and Utilities INDUSTRY
Business and strategy overview, April 2004
Develops and implements financial software solutions for the retail and wholesale
international foreign exchange market.
DESCRIPTION
Yes! IMX is the market leader in market sectors it operates in. MARKET LEADER?
Yes! Over 95% of revenues are presently derived from overseas clients. GLOBAL POTENTIAL?
Yes. In addition to traditional maintenance and support contracts that account for
approx 30% of its revenue, IMX has started offering some of its products on
subscription and transaction fee basis.
At present these contribute approx 5% to IMX revenue, but the uptake is
encouraging, set to grow to over 25% of revenues over the next couple of years.
RECURRING/TRANSACTIONAL
INCOME POTENTIAL?
Major customers include:
Travel money products: AMEX (globally), Start Amadeus (Germany), MyTravel
(UK).
FOREX products: Credit Suisse First Boston (Switzerland), Royal Bank of Scotland
(UK), and Commerzbank (Germany).
Selling direct, and through local partners in third world countries. Significant growth
opportunities in Europe and Asia.
CUSTOMER BASE AND MARKETING
STRATEGY
On target to achieve $7m revenues and EBITDA around $2.5m (35% EBITDA
margin).
Financial Forecast for FY03/04
300% revenue growth over the next 3 years (averaging around %50 pa, compound),
maintaining the EBITDA margin above 30% whilst growing.
3 YEAR OUTLOOK
Financial Services – FOREX, Banknotes, and Travel Money INDUSTRY and Segment
Business and strategy overview, April 2004
Develops and implements a comprehensive multi-currency investment management
system designed for professional investment managers to manage their portfolio and
trading activities in major domestic and international markets.
DESCRIPTION
Second in Australia with approx 20% market share. MARKET LEADER?
Yes! The first off shore customer was signed up in 2002 (in NZ). Today Garradin has
five off shore customers in total, 3 of which in HK.
No immediate plans for aggressive off shore expansion at this stage, until such time
when the domestic market presence is secured.
GLOBAL POTENTIAL?
Yes! Garradin has been selling on subscription and a fee per transaction basis since
early 2003. The licencing arrangement with the FinancialBPO is also based on the
“funds under management” basis, which is expected to become a significant part of
Garradin future revenues stream.
RECURRING/TRANSACTIONAL
INCOME POTENTIAL?
Clients range from T1 investment managers (Macquarie Bank, Perpetual Mutual) to
boutique funds managers.
Current lead marketing strategy is to attack the market in partnership with the
FinancialBPO – offering the clients both traditional system ownership (Garradin
licence) or business process outsourcing (FinancialBPO service).
CUSTOMER BASE AND MARKETING
STRATEGY
After a couple of good, profitable and growth years, Garradin stumbled in FY03/04.
Forecast is $300k loss on $2.3m revenue.
Financial Forecast for FY03/04
During FY03/04 the operations have been completely overhauled, the management
changed, and the sales rebuilt, to put Garradin back on the growth track. Prospects
for FY04/05 are good for achieving pre-FY03/04 levels of revenue - $3.5m and
EBITDA $1.1m - then growing by 50% pa and 40% EBITDA level, partly on the back
of the FinancialBPO activity.
3 YEAR OUTLOOK
Financial Services – Funds management INDUSTRY and Segment
Business and strategy overview, April 2004
Provides business process outsourcing (BPO) services to the financial services sector,
focusing on back office administration related to funds management, using Powerlan’s
Garradin software as its technology backbone.
DESCRIPTION
FinancialBPO is the largest BPO provider in the sector where it operates, in Australia. MARKET LEADER?
Yes. GLOBAL POTENTIAL?
100%! The business model is entirely based on long term recurring fees services
contracts, where the level of fees charged is related to funds under administration.
RECURRING/TRANSACTIONAL
INCOME POTENTIAL?
The seed client is OFM operational as of 1 April 2004.
A number of prospective clients approached FinancialBPO after the OFM deal was
made public. Some of those are in advanced contract negotiations stages.
The most simple marketing strategy – just announcing the deals made – is expected
to be sufficient for a while, as the “operationalisation” of each new client takes time
(3-6 months) and is the main limiting factor for FinancialBPO’s growth at the moment.
CUSTOMER BASE AND MARKETING
STRATEGY
The business will only be operational for the fourth quarter of FY03/04. Nevertheless,
FinancialBPO is expected to bring in approx $1.2m revenue and a small profit or
around $50k.
Financial Forecast for FY03/04
In FY04/05 FinancialBPO is expected to generate $8m revenue, then grow by 100% pa
over the next few years. The EBITDA margin is expected to start at around 20%
initially, then grow and level off at around 50%, as new clients are signed up with little
additional infrastructure costs and operational expenses.
3 YEAR OUTLOOK
Financial Services – Business Process Outsourcing INDUSTRY and Segment
Business and strategy overview, April 2004
Provides IT security, application hosting, and secure networks and communications
design and management services.
DESCRIPTION
Probably, in Australia. The industry segment is in the early development and
consolidation stage, so it is early days for anybody to claim a clear leadership.
MARKET LEADER?
Yes. Zento is presently providing secure application hosting to a number of IMX’s
clients in Europe and North America.
GLOBAL POTENTIAL?
Over 90% of Zento’s revenues are from long term service contracts (3y+). The
balance is from professional services fees related to new client setup.
RECURRING/TRANSACTIONAL
INCOME POTENTIAL?
Zento’s clients are medium and large enterprises, who see value in specialist managed
services, and who can afford them. Majority are in financial services, to whom IT
security is of a great concern.
Major customers are Telstra, Qantas, and Toyota Finance in Australia, and Start
Amadeus (Germany), AMEX (UK and USA), and Bank of Scotland (UK) overseas.
Zento sells, at the moment, almost exclusively through sister Powerlan companies -
IMX, Garradin, FinancialBPO – whose clients require services that Zento provides in
order to deploy securely (on line) their products and services. Zento also provides all
IT infrastructure services to Powerlan and its subsidiaries.
CUSTOMER BASE AND MARKETING
STRATEGY
The forecast for the current FY is $1.85m revenue and $750k EBITDA (41%). Financial Forecast for FY03/04
Based on passive sales, on the back of sister companies, in particular IMX and
FinancialBPO, Zento’s business is expected to grow by around 10% pa, maintaining a
steady 40% EBITDA margin.
3 YEAR OUTLOOK
IT Services – Managed Services Provider (MSP) INDUSTRY and Segment
Business and strategy overview, April 2004
Provides a cost and time effective conversion of Microsoft Office files from older versions
to the current version.
DESCRIPTION
The only one of its kind in the world. MARKET LEADER?
90% of the business today is in the USA. Plans to spread globally over the next 3 years. GLOBAL POTENTIAL?
Yes. The business model is based on licensing the tools and the methodology (up front
fee) together with a long term services contract to support the client in their file
migration by way of training and remote support. Recurring income component is
expected to ramp up to over 50% over the course of two years.
RECURRING/TRANSACTIONAL
INCOME POTENTIAL?
ConverterTechnology is essentially a startup operation. The products, consisting of the
tool (Office Converter) and the methodology on how to plan and execute file migration
using the tool, was developed and refined over the last three years. In the process the
product was tested on a number of large paying customers such as Wells Fargo and
Nissan in the USA, Woodside Petroleum and Ford Motor Co in Australia, and Microsoft
globally.
After the global deal with Microsoft in December 2003 all sales and marketing efforts are
now focused on servicing Microsoft account managers, as that brings sales opportunities
in excess of ConverterTechnology’s ability to service them at present.
CUSTOMER BASE AND MARKETING
STRATEGY
The forecast for the current FY is $1.65m revenue and ( $950k) EBITDA loss. Financial Forecast for FY03/04
Significant revenue growth in the next fiscal year is expected to provide further funding
for business expansion. The forecast for next year is $6m revenue and $500k EBITDA
(8%).
In Y2 and Y3 revenues are expected to grow by 100% pa, with EBITDA ramping up to
about 70%, after the operational costs level off in Y2 and sales continue to grow.
3 YEAR OUTLOOK
IT Services – Tools and Utilities INDUSTRY and Segment
Business and strategy overview, April 2004
Business Innovations is Powerlan’s R&D division, where innovative business solutions
are researched, architected, developed, and implemented. Some of these solutions
grow into fully fledged product divisions – eg Office Converter.
Except for the very early stages of research and a proof of concept, all other work is
paid for by a prospective customer.
DESCRIPTION
N/A MARKET LEADER?
N/A GLOBAL POTENTIAL?
N/A RECURRING/TRANSACTIONAL
INCOME POTENTIAL?
As Powerlan’s divisions sell their products and services they often come across
prospects waiting for solutions that are not available, yet. Such leads are fed to BI,
who then turns some of those into projects that result in a solution for the customer
(for which they pay, usually on T&M basis) and a new piece of IP for Powerlan.
CUSTOMER BASE AND MARKETING
STRATEGY
The forecast for the current FY is $1.18m revenue and $150k EBITDA (13%). Financial Forecast for FY03/04
BI is expected to grow with the rest of Powerlan business, but at a modest rate of
around 10% pa revenue growth with EBITDA margin around 10%.
The real “profit” from BI operation comes in a form of IP creation.
3 YEAR OUTLOOK
IT – Software Development INDUSTRY and Segment