Shareholder Updates

Message from the Chair

Dear Streamline Business Group shareholders,

Here we are in May 2022 already and overdue for a report to you all. The wheels are turning. Our most recent Board meeting was held on Thursday 28 April, and our next is scheduled for Thursday 28 July.

We have now entered our fourth year operating as Streamline since retiring the name Sublime back at the end of 2018.

1.4 Group Banking Arrangements

This is on hold till the marketing / web sites are all aligned and the story we are telling comes across correctly.

1.5 Shareholders

There are some external shareholders who are looking to sell their shares, and a number of staff who are keen to be involved at a Shareholder level.

Orchestra have said they can enable this for staff using their associated party function. Buyers and sellers will need to agree a price and we will need to provide a 2 week trading window so this

Minutes : Board Meeting – 28 Apr 2022

can occur. Ideally just after a shareholder update is released so all parties are trading based on the same information.

The expected cost for this is NZD1,000 per trading window.

The Intention is that employees have the opportunity to become shareholders, but without a formal Staff Share Scheme.

1.7 Staff Shareholding and facilitating that

Please see comments at 1.5

1.8 New CEO

Advert is ready to go.

Still contingent on marketing and story being correct on our web sites etc.

Craig has indicated he is probably ok to continue for another 18months.

Paul is happy to pause on this as we are in a busy time and having someone try to understand all we are doing will hinder the trajectory we are on.

Craig commented that nothing will be happening at pace as it needs to be a very carefully considered appointment.

1.9 Internal Communications

NZ town hall went well. Group is now over 100 people. Feedback is its good for the team to understand the size of the Group and the opportunities that will start for them as a result.

Random Coffee is also working well for team bonding in a WFH environment

3 weekly leadership team meeting, Yashu to organise. Like a standup so that everyone is across opportunities across the business

1.11 Acume – Set up as own entity or leave as Streamline Brand

Moved down the halfway street here. Acume and Ripple are now running on Xero, which de-risks the accounting side to some degree.

So all business units are now able to operate and function almost as stand alone entiies. This will give much more visiblity to the finanical performance of each revenue stream and better utilise investments in the likes of Pipe Drive, which integrates with Xero.

Bir has been overwhelmed by the volume of work and personal issues, which hasn’t helped and business was not aware of until recently.

Craigs recent trip to Fiji was focused on how we get this part of the business performing as it needs to.

1.12 2 Shakes

After much discussion it was still felt that the options presented did not work for Streamline. Craig will need to communicate this back to Mike and Ata.

1.13 ISO 270001

After much consideration Jeremy in his new role of CIO would like the business to move towards ISO 27001 accreditiation.

Accreditation would provide benefits to Group sales process – would tick some client decision making boxes early.

Provides for best practice structure across the Group, but with a clear emphasis on how we support our sales stratergies.

Jeremy has prepared a presentation for the leadership team.

Cost expected to be about $30,000 when the business is ready to apply for accreditation, which lasts for 3 years.

1.14 Dividend

Paying a dividend was a sensible way to reward shareholders who have been on a very long journey and was one way to represent that things had changed and we had reached a different part of our business life cycle.

As staff shareholding grows it will also be a way to give staff a “bonus” as they share in the businesses prosperity.

Craig also indicated that others like him over time will be looking to retire and would like to see a dividend policy in place rather than forcing people to sell their shares.

The directors agreed to pay a dividend in respect of the 2022 Financial Year.

That we issue a dividend of $0.005 per share in respect of the 2022 Financial Year That we issue a dividend of $0.005 per share for this FYE 2022.

Decision Date: 28 Apr 2022

Minutes : Board Meeting – 28 Apr 2022

Mover: Mr Craig Pellett

Seconder: Irene Bennetts

Outcome: Approved

2. Major Decisions and Discussions

2.1 UK Market Entry

Irene heading to UK in July. Is planning to talk to 10 bookkeepers and start a network while there to further future opportunity.

Irene is putting herself forward to be the president on ICNZB – which will assist in UK disucssions and meetings.

2.2 Group Structure

Hitting pause on this for now

2.3 Valuation

On hold. Will only progress once all Marketing and associated material is aligned.

2.4 Strategic Partnerships

These are starting to unlock in the Acume space

Systime, – have 7 PlusOne opportunities

Abel – Continue to feed PlusOne opportunities

Ozedi – Is opening some doors on the einvoicing front

Sharp is right relationally but the sales teams need different efforts from us to ensure they remain motivated around our products and solutions.

Irene is working on accountancy firms in terms of practice support and one sale = many

2.5 Shareholder Agreement

PWC has advised Craig that we should incorporate the following within the SH Agreement.

15% or more shareholding – you can have a seat on the board

Need to give consideration what are we comfortable with board decision making versus what decisions need to involve shareholders.

Feedback sort by the end of next week, the 6th May.

All to give feedback on Shareholder agreement draft

All to give feedback on shareholder agreement

Due Date: 6 May 2022

Owner: Mr Craig Pellett

Minutes : Board Meeting – 28 Apr 2022

3. Board Annual Work Plan

3.1 2023 Budgets

Revenue budgets are in place for the Group, for the 2023 financial year which will see total Group revenue rise to 6.8 million, an increase of 55% year on year.

Analysis of the budgets does not show any “blue sky” forecasting with most opportunities well down the track of either implementation or commitments gained.

Growth of this magnatude will be difficult to resource correctly, but that aspect is on everyones risk radar.

Reporting on stream performance should be easier in the new mostly Xero finance environment.

3.2 Review of the Revenue Stream Key Strategic initiatives.

Craig spoke to this item and the need to chase down each of the targets till money started to change hands! It should be an exciting year of growth.

5.2 Finance Report

Our Group Revenue budget for the 2022 Financial year was $4,709,418 and our actual revenue was $4,610,185 or 97.89% of budget. A pleasing effort given the protracted Auckland lockdown in late 2021.

The Secret Source acquistion contributed $356,070 to this number and was 111.04% of their expected revenue contribution.

Streamline Solutions, included Charities and Acume Revenue in 2022, was 102.39% of budget at $3,501,298 against a budget of $3,419,570.

Admin Army had a huge year growing 91% year on year to revenues of $752,817, which was 77.67% of their stretch budget of $969,202.

Total Group revenue growth was 32% year on year and we finally broke through the 4 Million barrier. It is expected that May 2022 will be our first 500,000 month.

5.3 Health & Safety Review

Reviewing a control map product to assist this part of our business. It is a necessary aspect of ISO 27001

5.5 Soft Reports – Business Directors

5.6 Marketing Update

Work on the Ripple4Charities wesbite should start this month.

6. Other Business

6.1 Off Shore travel.

Irene – UK India in July

Craig – Been to Fiji

Paul – Fiji July

Shane – Nothing Planned, but looks like Australia would be on the menu. Redmans, Ozedi, ATO,

6.2 Strategy Session to work on Opportunities

No further action as been taken on this item.

Your Streamline Business Group shareholder report for Q1 FY2022

Dear Streamline Business Group shareholders,

This report for the first quarter of financial year 2022 comes with a milestone: our first million dollar quarter.

Let’s take a look at the numbers:

	Q1 FY2022	Q1 FY2021
Revenue	$1,028,536	$783,514
Operating profit	$136,730	$180,685
EBITDA	$214,543	$272,313

You’ll see from the revenue line that we did indeed cross into seven-figure territory. That’s excellent news in and of itself and it suggests that our target of doubling revenues this year is attainable, but it’s also a sign that our growth strategy is working.

By way of example Admin Army, which joined the group in January 2020, grew its revenue contribution by 128% year-on-year. One of the reasons was Admin Army’s access to our offshore teams which allow it to scale cost-effectively.

I attended a recent bookkeeping conference with Irene Bennetts and her team and Admin Army was the only business experiencing this type of revenue growth and scale amongst the several hundred delegates present.

It’s a clear demonstration of the network effects that should come into play when the group expands with new brands and offerings.

The fact that both India and Fiji are struggling with Covid related impacts and we have continued this momentum, only fills me with more optimism about what will be possible in the future, in a post covid environment.

I should add here that teams in both countries are doing well and we are supporting them in any way that is identified by the respective country managers.

The NZ government’s wage subsidy did not apply this quarter and we have also now restored last year’s salary cuts, and in the case of India and Fiji given salary increases to those teams.

As a consequence operating profit shows a decline year-on-year.

Upward pressure on salaries seems to be a global trend and we are doing our best to stay ahead of that.

Salaries for the NZ team have been through a review and adjustments will take effect in October 2021 at a time when some long term leases for software and equipment terminate. This will limit the impact to our profit and loss.

We are yet to implement a price increase, but that is on our list of actions in the current quarter, to ensure we maintain margins.

EBITDA is likewise down year-on-year, influenced by a diminishing depreciation allowance for our maturing solution stack and the end of interest payments for the convertible notes that were converted to shares in March 2021.

Behind the numbers there is plenty of momentum. Our investment in developing relationships with ERP solution providers is producing a steady stream of referrals. It’s a similar story with our e-Invoicing solution, which has now successfully tested in a production setting with MBIE, the lead government agency for e-invoicing.

Much of the heavy lifting for this solutions development was done by our dev team in India, which gives us something we’ve always needed – the freedom to focus on developing our own solution set without constantly having to put it aside for revenue-earning projects that arise here in NZ.

Our growth strategy is also heading in the right direction.

Three separate acquisitions are in scope, the first of which is about to go to shareholders for approval and should be formalised in Q2. We’ll have more to say about all three acquisitions but for the time being, I personally am really excited about the potential they and others that follow will have in broadening our addressable market, expanding our expertise and our portfolio, and scaling the group into an increasingly meaningful player.

Your support in this transition is important to us and, as always, I’m up for a chat any time about anything in this report.

Regards,

Craig