Inabox expects to double EBITDA in FY16

Interviews

Transcription of Finance News Network Interview with Inabox Group Limited (ASX:IAB) Managing Director and CEO, Damian Kay
 
Lelde Smits: Hello I’m Lelde Smits for the Finance News Network and joining me from Inabox Group Limited (ASX:IAB) is its Managing Director and CEO Damian Kay. Damian, welcome back to FNN.
 
Damian Kay: Thank you very much.
 
Lelde Smits: Inabox Group has just announced its first full year profit guidance. Could you provide us with an overview?
 
Damian Kay: We always knew FY15 would take quite a hit, mainly from the acquisitions that we’ve done year to date, starting with Neural. We bought Neural Networks early in the financial year. Obviously more recently, we acquired Anittel Group Limited (ASX:AYG) with significant acquisition costs associated with that. And then more recently, after we sort of had our hands on the wheel with Anittel, we really understood what the business was doing. And we announced quite significant restructure costs, and realisingthe synergies from Anittel.
 
All in all, it’s added up to around about $600,000 in one-off costs. But what it means for FY15 is that compared to an FY14 result, full year result and EBITDA (earnings before interest, taxes, depreciation and amortisation) of $2.4 million, would deliver around about $1.9 million. We’ve got significant amortisation, interest and depreciation costs associated with the rollout of HCFs in Tasmania, which is going really well. We’re now over 10,000 deployments, on our way to over 15,000 by the end of the first half of FY16.
 
But all in all, what this has really added up to, it’s set us up really well to deliver, I’m pleased to say, deliver a result that is more than double our result this year. And we’ll more than double our EBITDA to at least $5 million in FY16, from everything that we’ve been doing. So it’s been quite a busy year for us to date and we’re very excited about, all the work that we’ve been doing will pay off in FY16.
 
Lelde Smits: As you mentioned, you are optimistic about 2016, what are your growth plans?
 
Damian Kay: As we know, we’ve got three main channels being enablement with a very large cornerstone customer, continuing to do very well. They’re continuing to put on customers and services, and that’s growing rapidly. The wholesale division, the wholesale channel, we’re investing heavily in sales. And we’re bringing on a lot more new service providers, mostly in the managed service providers’ space, and existing Telco’s looking to find an end-to-end sort of white-labelled solution, that we provide.
 
And obviously Anittel, which we came out recently as well and said,that will deliver $2 million. And a lot of the cost savings, the $3 million in cost savings that we announced more recently, we said that out of that $3 million, we would invest $1 million back into sales capability. And most of that sales capability’s in the Anittel channel, where we’re putting in more sales guysthat really know how to ask those questions, and deliver a greater sales result.
 
Lelde Smits: Earlier this year Inabox Group said it would reinvest the $1 million of cost savings back into the company’s sales strategy.  How are those new sales initiatives progressing?
 
Damian Kay: Really well, we’re really looking to make sure that we really up the ante, in all of our locations. We’re in every major capital city across Australia and putting in really strong and solid State sales managers, and the right sales people under that. It’s a big investment, it’s important that we continue that path. In the past, Anittel really hasn’t had a great sales function per se and so this is really about driving, putting the right people in the right seats to drive that sales result.
 
Lelde Smits: Could you detail how the cross selling of Anittel Services is going?
 
Damian Kay: That’s been a really big project for all of the teams internally. We launched, we officially launched within the business, the Anittel Telco Anittel Communications. On the 1stof April, we presented it to all of the teams, all of the States and we’ve now built up quite a large pipeline of opportunities. And now they’re starting to deliver on those. So by the time we get to the 1st of July, we’ll be really hitting the ground running.
 
Lelde Smits: Inabox Group does also have a new director, Garry Wayling joining the Board this week. What will he bring to the table?
 
Damian Kay: Garry Wayling brings a lot to the table. Unfortunately for health reasons, Garry Dinnie had to resign from the Board. It was very sad, Garry’s been there since the IPO and it’s been a real – he’s really been there from the beginning with us. And really given us, for me personally, that person that I could talk to about the right way to go, about some of these acquisitions. And making sure we manage the risk that’s associated with these things.
 
But Garry Wayling comes with an equal level of experience, an ex-audit partner of Ernst & Young. And is also involved in a number of listed and non-listed companies, and lots of experience in the merger and acquisitions space. So for us, he fits really well and we really look forward to him coming on board.
 
Lelde Smits: With the ongoing bidding war for iiNet Limited (ASX:IIN), what is your view on the telecommunications market consolidation, and what does this mean for Inabox Group?
 
Damian Kay: Wow, what a hot space at the moment, people blocking other people’s acquisition plans and buying each other. The spotlight is well and truly on telecommunications at the moment. The good news is it really doesn’t affect us; all of this activity is really around the consumer space, the consumer retail space. 
 
We play predominantly in the wholesale space and enablement space, and so it really isnot in that area. But in our own sort of part of the market, there is still a lot of opportunity there for M&A. And hopefully, we can start to add to the stories in the near future.
 
Lelde Smits: Damian Kay, thank you for the update from Inabox Group.
 
Damian Kay: Thank you very much.
 
 
Ends