Ann: Notice of Annual General Meeting/Proxy Form, page-62

Financial results and business strategy

Again, the financial results and business strategy of the new Alcidion are well summarised in the Chairman’s AGM address and discussed on the HC forum.

What I would note is that Alcidion is looking to reduce its operating costs. Using the latest 4C as a rough guide and excluding one-off expenses, we should be expecting $4m in operating costs per quarter which is in my view too high. The management needs to identify measures to reduce this and I am confident they will. Any cost efficiencies measures would not flow through immediately but I would be happy if they can reduce it to around $3.6 million or $3.7 million in Q3 or Q4 of FY18.

At the end of the day, I personally would like our margins to be higher than the current 4 percent or so. Alcidion either has to earn more revenues (via contract wins and additional cross-selling) or reduce its costs. Alcidion needs to deliver on both and I will be watching carefully on both fronts.

On the revenue front, I do recognise the challenges of offering a fair-valued business proposition to customers. Alcidion should not price themselves out of the tender process given it is still a relatively new company without a long-term track record. There is also a potential trade-off between earning lower margins in the short-term but higher margins in the longer-term once our system is entrenched within the customer system.