Simble gears up for a big 2020
Simble Solutions Limited (ASX:SIS) has updated the market on several initiatives it has taken as 2019 comes to a close, with 2020 now looming as a year of rapid growth.
Simble is an Australian software company focused on energy management and Internet of Things solutions.
The Simble Energy Platform or ‘SimbleSense’ is an integrated hardware and real-time software solution that enables businesses to visualise, control and monetise their energy systems.
The initiatives outlined by the company were well received with the company’s shares surging in early morning trading under the fourth highest daily trading volumes recorded in the last 12 months.
While the record shows that the group’s shares rose to 4.4 cents and retraced to close at 4.1 cents, this isn’t an accurate record of trading on the day.
Based on the number and value of shares traded, the average price was 4.4 cents, highlighting the fact that it was only minimal selling in the afternoon that led to the lower closing price.
As a result of the initiatives we will outline below, Simble will enter 2020 as a more financially robust group after raising $1.1 million through a placement of 22 million ordinary shares at 5 cents per share to raise $1.1 million.
The placement price represented a 22% premium to the 3-day volume weighted average price (VWAP) and 13.6% premium to the 10-day VWAP.
This is a particularly strong show of faith in the company given that placements are usually priced at a discount to the prevailing share price prior to placement.
This further underlines the potential for the company to trade well above yesterday’s closing price of 4.1 cents per share.
The placement was made to sophisticated and wholesale investors, including an existing substantial shareholder.
The funds will be utilised to strengthen the company’s balance sheet, support growth in revenue in the UK market and for general working capital.
New CEO to strengthen financial capabilities
Following a detailed strategic review by the Board, Simble has made changes to its executive leadership team to broaden leadership roles and capabilities as the company increases its focus on efficient financial and capital management controls and targeted revenue generation.
The Board has determined that current chief executive Fadi Geha will hand over the CEO role to Ronen Ghosh, currently chief financial officer.
Ronen Ghosh is a finance executive with more than 25 years of experience in blue chip organisations operating globally in the fields of intellectual property, entertainment & media rights management, and investment management.
The company is looking for Ghosh to utilise his depth of experience and appropriate skill set to focus on resetting the company’s financial footing.
This will involve the implementation of strong financial and capital management controls and restructuring initiatives to ensure Simble is well positioned to exploit its growth potential in a unique space.
Simble also expects Ghosh to instigate sustainable cost controls, and with the anticipation of increased revenues, lower costs and higher margins, 2020 is shaping up as a transformational year for the group.
The Board and Ghosh have implemented a range of aggressive cost-cutting initiatives that will deliver in excess of $700,000 in annualised cost savings for calendar year 2020.
This would have a material impact on underlying earnings when you consider that it represents about 70% of the group’s $1 million in operating revenue for the last six month period.
While administration costs for the six months to 30 June, 2019 reduced from $4.1 million to $2.4 million, management’s recognition that there is still too much fat relative to underlying revenues demonstrates that they have a realistic grasp on what is required to transition the business from a ‘fast growing’ entity to a ‘profitable fast growing’ company that can consistently deliver robust shareholder returns.
Simble well positioned to rapidly grow revenues
As Finfeed outlined only a fortnight ago, top line growth should not be a problem for Simble, particularly following the negotiation of a collaborative agreement between it and digital energy group Wattwatchers.
In a multi-pronged approach, Simble and Wattwatchers will target business, residential and utility metering in Australia and internationally, with a significant position already established in UK.
Approximately 53 million utility smart meters are scheduled to be rolled out in the UK by the end of 2024.
Simble Solutions has partnered with leading energy service provider Utiligroup to access all energy data via the government-owned Data Communications Company (DCC) to develop the Virtual Analytics App, a consumer-facing energy management application that can be white-labelled for electricity and gas retailers.