Status Update
- While trading has shown some improvement, the key recent development has been the appointment in January of an experienced specialist software sales consultancy for the core Fissara product. They are pursuing a more aggressive approach designed to address the lengthy sales cycles that have slowed progress.
- The new approach involves more customer research, both to identify and pre-qualify prospects and decision makers, and to address resistance issues in advance of face to face meetings. Initial learnings from this approach have also led to a significant rewrite of marketing and sales promotional material.
- Over 500 new prospects have so far been researched and engaged. 14 have progressed to first appointment and 7 to second. One significant new contract has been signed, Peel Holdings, and other quotes await decision. Once the sales process and documentation are fully proven it may also be possible to sell via resellers.
- The new Care product is already being sold via a specialist reseller, Standex. V2 of the product has made significant improvements in both usability and functionality. Its launch is timely as Care home providers are struggling with increased CQC regulatory requirements. 25 Care homes are using the system, with a further 70 quoted.
- The Core and the Care products will now be organised divisionally. Future recruitment is to be focussed on roles specific to each business. Jon Holttum will be dedicated to Fissara but Nick Lawford will continue to split his time for now. To oversee the process Nick Lawford has been appointed Executive Chairman.
Trading Performance
| 2017/18
(£’000s) |
6 Months to
Sep ‘17 |
6 Months to
Mar ‘18 |
Year to
Mar ‘18 |
| Turnover |
135.2 |
152.2 |
287.4 |
| Costs |
(250.8) |
(244.5) |
(475.3) |
| EBIT |
(115.6) |
(92.3) |
(187.9) |
Cash Update
It was reported in the last update that Growthdeck had introduced two Chinese Investor Visa applicants to Fissara. Both have now completed their application process and have made their loans, thus securing the Company’s cash position with no dilution to existing shareholders. This has given the Company the confidence to invest in the new sales process. The Company currently has £290k in cash, which, even under the most conservative of revenue projections, is sufficient to fund current activity levels for the remainder of this year.
Exit Planning
The Board believes that splitting the Company into the two divisions will increase exit options, as the Care product may well be attractive to a specialist sector buyer, whilst the belief is still that the workflow product will still be attractive to a software or IT player.
With increased sales activity, awareness of the products and their capabilities will be increasing. The main alternative is still spreadsheet based. Whilst in-house automation, and products which replicate elements of the Fissara product set are seen, the directors believe it is still the most comprehensive offering. As the need for this product set grows (particularly as H&S regulation increases), larger players will face a buy or build decision.
Whist the delay in moving to rapid sales growth may mean that the initial 2019/20 timeframe for exit will prove ambitious, it has not yet been ruled out.
Summary
- As we have previously reported, performance since investment has been variable. Good cost control has conserved cash and kept losses in check.
- Management have recognised the impact of slow sales delivery, shifting to an external, more experienced, sales force. While this is expected to accelerate market penetration, it is probably to judge success.
- The different requirements of the two products have also been recognised. Divisionalisation within such a small company might appear overly sophisticated (and not without its stresses) but should enable each to develop in ways appropriate to its differing offering and markets.