Inabox talks FY15 results


Transcription of Finance News Network Interview with Inabox Group Limited (ASX:IAB) CEO and Managing Director, Damian Kay
Carolyn Herbert: Hello I’m Carolyn Herbert for the Finance News Network and joining me from Inabox Group Limited (ASX:IAB), to discuss its FY2015 results is CEO and Managing Director, Damian Kay. Damian, welcome back.
Damian Kay: Thank you.
Carolyn Herbert: You’ve just reported your full year results for FY2015. What were the highlights?
Damian Kay: It’s been a transformational year for us. Revenues were up 37 per cent to $64 million, based on six months of Anittel revenues, which we settled on and acquired on the 1st of January. Our underlying EBITDA was up five per cent, $2.5 million and that number actually reflects our losses from the Anittel acquisition, in the first four months. But the key highlights for the business, really was turning Anittel around in a period of four months into profit. That was a really big task by the teams. And the other big highlight for us was adding 30,000 services, in our fast growing enablement channel. And they’re the key highlights for me anyway.
Carolyn Herbert: How is the Company tracking at each of the channels enablement, indirect and direct?
Damian Kay: Enablement as I mentioned just before, added 30,000 services to revenues of $2 million. It’s very high margin business for us, it’s tracking really well, it’s trending up, its growing month on month - a record month for us. So enablement’s doing really well. We’ve got a number in the pipeline, but these are long, it’s a long sales cycle in the enablement channel. But we are confident of bringing more on over the next 12 months.
The wholesale channel or the indirect channel for us, that’s always been quite a challenging part of the segment for us, but we’ve done really well. We’re finding that there’s a lot of smaller players are not around anymore. Especially during the year, there’s been some consolidation and we’ve been able to take advantage of that.

We’re seeing a lot more approaches to us, from potential retail service providers that we’ve been able to bring on. And we’re looking for strong results in FY16 around that.
And direct channel, which I talked about, the acquisition of Anittel, turning the business around into profit after four months. But also very much for me is HCS, we’ve increased the number of end points to the Tasmanian Government contract. And that’s been a really good result. But that’s important that we get that to 15,000 services, because that’s our breakeven point.
Carolyn Herbert: It’s a big year of acquisitions for the Company. Have you set your sights on more for 2016?
Damian Kay: It has been a big year, we acquired Neural Networks, which was very much a cloud play for us, and then the Anittel channel or the Anittel business came on. We are looking at others; we’ve always said that it’s very much a balanced acquisitive and organic growth strategy. We’ve got a number that we’re currently talking to. We’ve recently announced we’d bought a couple of small wholesale providers, very recently after the financial year and we are talking to more. But yes, the acquisition trail won’t stop.
Carolyn Herbert: There are rumours that ACCC are looking at NBN and competition to possibly reduce the points of interconnect, from 121 to eight. What are your thoughts on this?
Damian Kay: We were never in favour of going to 121 points of interconnect. NBN was about levelling the playing field, providing technology, a greater technology in Australia for ubiquitous broadband and available in a greater spectrum, across the country. But going to 121 really left the power in the hands of the builders, the tier one carriers that were able to build into that. And really it didn’t assist the competition at all. Mid sized telcos like ours, just weren’t able to build into 121 points of interconnect. It wasn’t commercially viable.
Going to eight really supports a competitive marketplace, because it means that organisations of our size are able to build into that, and actually be able to add to competition. If they don’t go to eight and they stay at 121, it means that IAB still has to buy from one of the large tier one aggregators, and that is not good for competition. So we fully support the ACCC position on that.
Carolyn Herbert: Finally Damian, what is your outlook and growth plans for FY2016?
Damian Kay: FY15 was very much a year of setting ourselves up for FY16 and we’ve done that. We’ve really transformed the business to what it looks like today, and these results are testament to that. FY16, we came out and we’ve said that we would do $5 million, or at least $5 million in EBITDA. We’re well on track to do that and we’re tracking very well against that. We also said that we would deliver $2 million, we would turn Anittel around and we would deliver $2 million of EBITDA in FY16. And we’re absolutely on track to do that as well.
We’ll continue to get the HCS or the Hosted Collaboration Service, or the Cisco platform in Tasmania to 15,000 services and breakeven, over this year. So it won’t drag on our results. And in the wholesale channel, the indirect channel, we will definitely focus on continuing to acquire the smaller customers, but also bringing on a large number of retail service providers. And that’ll set ourselves up well for a great result.
Carolyn Herbert: Damian Kay, thanks very much for the update.
Damian Kay: Pleasure, thank you.