Capital Structure:
IPO price: 20c
30,000,000 shares on issue to public
41,273,131 shares currently in cirlce
10,000,000 convertible notes
10,000,000 to LM
10,000,000 major shareholder loan repayment (Keith Scudds)
2,500,000 options on issue @30c
15,300,000 performance rights
of these securities 43,495,995 shares will be in escrow for 2years.
Total securities available: 121,073,131 (incl. otions and performance shares)
Securities on trading at IPO: 62,277,136 (I've included options since there is a probability this could open 30c+ allowing them to be converted adding shares into the structure quite easily)
MC @20c = $12.5m
Cash = $6.4m
EV = $5.25m (Incl. Cash from option conversion)
Diluted MC @20c (For a very long term outlook after 2years, assuming all performance milestones are hit) = $24m
Performance Milestones that will need to be hit for the fully diluted MC to come into play:
- Cash flow positive for an entire quarter
- $50m revenue in 12months
- Share price VWAP for 10days exceeds 60c
Free float: 20,000,000 shares free floated (<5%)
Management:
Full disclosure here: This is the only part of this company which I think is lacking still a few stars in the team. Given the low MC and tiny EV I think its still going to provide good upside regardless
Nick Cernotta (N.E Chairman) -
Director of Operations FMG. 30years experience in Mining Industry over multiple commodities. Previous roles includes; COO Macmahon Holdings ($350m Revenue, $39m EBIT FY2016 however during the period Nick was CEO was at $1B revenue, $30m EBIT), Director of Operations Barrick Gold.
Brett Quinn (CEO & MD) -
Diverse industry experience; mining, defence, recruitment, property. Named W.A 40 under 40 in 2008. Founder of QFS which is a recruiting specialist company with a turnover of $10million in 2years. QFS went broke after two of its creditors (Monarch and View Resources) went into administration and failed to repay QFS $525,000. Full details here:
https://www.businessnews.com.au/article/Gold-industry-woes-hit-QFS-Australia
Red Flag is Brett failed to contain any contingency and dealt in the riskier end of the market.
Brett declared bankruptcy in 2012 which was soon annulled in 6months after the debts were settled.
Also held a senior position at Rio Tinto.
David Newman (N.E Director) -
Head of Business Solutions, Executive Director of SENTRY Group with 240 A.R. This is the man that would’ve helped struck the deal with IAM and their MOU with Sentry. 30years experience in Financial Services Sector.
Bryan Hardcastle (N.E Chairman) - The companies legal adviser. Commercial lawyer, recompliance and takeover specialist. Also N.E director of CR8, MHM, AYA.
Sam Buick (C.O.O) -
Global Studies and Operation Readiness for Rio Tinto. Board member of a new business providing aboriginal recruitment and training for mining services. More about Sam can be found here:
http://www.yatedo.com/p/Sam+Buick/normal/52dd30ab5d65e3fd73f82c0db75ec9d2#
Brett Hungerford (C.T.O) -
15years I.T Experience. Also experience in Travel, Telco, Project Management.
Product:
Corporate Business Model:
As currently visible the Servtech group wholly owns 100% of multiple subsidiary businesses. As it currently stands and seen above there are 7 core businesses within ServTech.
1. ServTech Global India Pvt: Mainly outsourced it designs and develops technology solutions for business’s specializing in transactions technology.
This SaaS app tech solution is used internally known as the “Angel Platform” which integrates real estate sales, mortgage brokerage, conveyancing and property management into a single app.
However what is this Saas Tech capable of in other industries?
The first industry they are targeting is the legal industry. A software which is for the intellectual property sector and specifically for trademarks/patented attorneys to be known as Fulcrum. Other industries they plan on expanding into include financial services, insurance and wealth management.
The software can be customized to meet the requirements in any business in any transaction based industry.
Angel Platform which is the real estate version has already been set out for trademarks in over 7 countries. While a subsidiary for ServTech India has begun the trademark process for project “Fulcrum” the legal version.
The "Angel Platform" has three levels of customers currently:
The money raised will essentially go towards development to further commercialize option c). Which will be B2C direct to homebuyers.
The platform was awarded winner for Real Estate in W.A (REIWA) innovations in 2016
Features of the tech:
Angel Platform:
- When a property lists the marketing and collection of photo and data means the agent must contact multiple suppliers and dealers which create lag and frustration. The Angel Platform automates this process to minimize agent interaction and make it a seamless task.
- Property tracker is the heart of the Angel Platform. It combines thousands of real estate transactions into one central location and can be monitored by agent real time. It also measures comprehensively a record of transactions and actions taken by a user which makes compliance/risk mitigation for the agency easy.
- Marketing solution is a “one stop shop” for multiple marketing products and services available to agents during a property listing, rather than have an agent contact multiple contractors for marketing. The products and services are all able to be updated and scaled when the market demands/needs for it. (Also see REAPS. ProMs)
- Home manager allows the agent to manage all their property dates/resources on one page. This includes home openings, closures, visits, times, payment dates all which are integrated in common property websites. With a click of a button these can be changed or cancelled in real time. They also have a feature exclusive to withdraw the property for sale and make that withdraw process autonomous.
This is combined with their Event Management system which manages all contract clauses, expiries, critical milestone dates into one page which ensures no important dates are missed and helps mitigate risk and increase compliance.
- Feedback page allows profiling of home owners, history of a buyer, seller feedback allowing others to make informed calculated decisions on the properties sale strategy.
- Buyer management, although its still under development due to be released to an internal audience in Q1 2017 the purpose is to manage multiple buyers for one property on a single page. Rather than individually managing and updating each one this will keep track of multiple buyer information/bids/enquiries on the property in question. Will also keep a database of all the buyer information.
The 4clicks Platform Feature:
- A CRM platform which assists in building and maintaining relationships in multiple industries. Profiling multiple customers and clients into one database. 4clicks has been in internal beta testing for 4months and will be available to the public in Q1 2017.
The REAPS/ProMs Platform Features:
- Real Estate Agent Performance Software (REAPS) assists to monitor, measure and manage performance of individual agents within the agency. This includes multiple data points such as appraisals, listings, sale and settlement speed, customer service feedback. It has been used by the group subsidiaries internally for 4years and its due to be launched for public in Q1 2017.
- REAPS Design system allows all agent and agency marketing material to be customized by the user using templates available. Allows for photos, content, updates and comments to updated on a agents profile.
- Furthermore, ProMs can also be used to do passive marketing and promotions for an agency and allows all marketing activities to be organized on a single database including time schedules, budgets and design formats. ProMs also allows for the passive marketing to then be outsourced if the agent does not have the time themselves.
The RefMe Platform Features:
- RefMe is a referral platform which ensures the agent all referrals made are being dealt with accordingly, the system collates all referrals in one place and allows the user to manage multiple referrals and take action simultaneously while keeping the referrer updated. The provider and referrer can also communicate directly via this platform.
Problem/Idea/CoMMs/MessageHub/Voice Platform Features:
- All these platforms are internal communicative platforms between employees within the agency which increases communication, integration and interactivity within the business.
- Problem allows management/employees to report any issues, conflicts or business related problems in one platform. It also allows to see progress of the problem, whether its being mitigated, rectified, acknowledged or solved.
This combined with the ITSupport platform makes solving IT issues simpler, with IT System updates/notifications or issues. Also allows to instantly call up external IT service providers if need be.
- Idea encourages employees to interactively put new ideas to improve the business and explore any new opportunities available.
- CoMMs ensure important messages, tasks can be communicated from managers to staff, or between employees and ensures acknowledgement of the messages. Ultimately letting the leadership team engage with all employees at once. Think of it as a internal E-mail service.
- Cross business communication and replaces the “reception” of a business into a electronic platform format, also can be internalized for the individual business but it encourages brand presence.
Voice is a vocal messaging system. Simply a vocal e-mail to save time.
2. ServTech Global Ph/Performance: BPO services for designing and providing cost effective business operations for the real estate market. Think of this as IAM for real estate agents.
The BPO also is integrated with the application, and further acts to reduce costs and increase workflow on more significant tasks.
The combination of both the app and BPO (Business 1 and 2) is:
3. SLP: Real Estate Agency with an alternative business structure. Has grown to employ over 180 property consultants nationally, revenue growth of 370% in two years.
Awarded Real Estate in W.A as most listing sold with $320.2million of transactions of property in 2015-2016. Total of 594 sales that year. 3
rd place for value sold. Liam Finnigan given 12
th place for Top Rookie with $6m of individual sales.
Also awarded BRW (Fairfax Media’s AFR) 8
th place for the fastest growing 100 Australian Companies in 2016. For some perspective 7
th place has $35m revenue and has been operating for 10years whereas SLP has been in operation for 2years.
The only other property company ranked higher in the Fast100 is ThirdiProperty ranked 5
th has been in operation for 9years with $70m revenue.
4. Capitol Asset Management: Property management and investment services for owners.
5. Complete Settlements: Property conveyancing services to vendors and buyers. Legal contract transference of ownership.
6. Value Finance: Brokering service for mortgages
7. TechnoBrave: Promote and facilitate the Servtech Groups software products to external markets. Commercialises the softwares produced by Servtech India. Technobrave is 49% owned by Brett Quinn and 49% owned by Kavit Goswami and 2% owned by Mr. Goswami’s family members. Servtech India will soon be incorporated into Servtech Group and Technobrave will then be deregistered and all its assets will be moved into Servtech group.
Business Model:
General Breakdown of the model:
Core Focus of the Business:
Competitive Edges:
Revenue Models General:
Revenue SLP:
Revenue Capitol Asset Management:
Capitol asset management generated $280,000 FY15 in its inaugural year and has a client list (rent roll) of 200 properties, with revenue generated from management fees. Also in process of acquiring two other rent roll lists to add to its database.
Revenue Complete Settlements:
Generated $290,000 FY15 its inaugural year.
Revenue Value Financing:
Generated $290,000 revenue FY15 and financed $49million worth of loans. Value financing is currently aiming to restructure is fee basis where broker pays a fix annual fee and lower the transaction fee.
Business Expansion Procedure:
Other than the general real estate volume increase and revenue the company plans on expanding is software tech
Finances:
I wont go deep into this as its relatively straightforward
Here is a summary of their growth over the two years:
430% growth in revenue, consecutive drops in loss margin moving to cashflow positive.
All together last FY: $8million revenue and -$109k EBITDA. I think they'll be cashflow positive quite soon if they can cut costs and optomize the business the right areas. This should be done once the raise is complete and they have more to work with.
Players:
Assenna Capital have taken a decent stake in the IPO and they have good history with IPO's and some decent stakes: CR8, CFO recently. I know they were involved in SMN heavily and a few other tech multibaggers.
Otsana is also L.M here with Faldi Ismail behind the scenes of this who is also another reputable player - DTZ, CR8, ESE, XPE.
Summary:
- MC @20c: $12.5m
- EV:$5.25
- Cash: $6.4m
- Revenue: $8m
- EBITDA: -$109k likely to be cashflow positive
- Management: Few bright minds - David Newman especially, but a redflag present too within Brett Quinn
- 7 Business streams with multiple competitive edges. Looking to move into financial services, insurance. Already established in real estate and started off legal sector too. Multiple awards from REIWA. Fairly new tech with very few competitors in the space (IAM being one of them similar in creating a new industry BPO for other sectors). Does the entire lifecycle of real estate management rather than contacting multiple vendors and they plan to do this with other sectors.
- Small free float
- Otsana IPO
- Cons: No X-Factor in the management team, No big contracts involved which I like to see with techs. Even if its just one big player ie. SAS: Virgin, SYT: AT&T, CR8: Nationwide, BRN: "Talks with F500", CFO: U.S Navy, IAM: Sentry/NAB others from the top of my head: XPE, DUB, SMN, EMC, RAP.
- Hot evolving sector, Low EV, high growth (430% over 2years)
