Myriad Group will hold an extraordinary general meeting (EGM) on 22 November to approve a reduction of the nominal value of its ordinary share capital to CHF 0.01 from 0.10, as part of a corporate restructuring plan. The group plans to legally separate its business units Connect Hub and Thingstream.
Within the recent restructuring efforts, the company aims to produce a more efficient operating model that will provide optimal support for their two new business propositions: Connect Hub (part of the Myriad Connect business unit), to initially focusing on authentication services to enterprises; and Thingstream, providing a global connectivity service for the IoT.
Myriad Group announced a key element of this earlier this year at its annual general meeting, including the appointments of Philipp Bolliger and Fabien Delanaud to lead the Thingstream and Myriad Connect business units respectively.
The group said that the next step in this corporate restructuring programme will be the legal separation of the business units. There are no significant operational or financial synergies to be gained by keeping these business units together. As such, the board of directors and executive management believe it is in the best interest of the shareholders and the Thingstream and Connect businesses to have separate legal and financial structures. This will allow both new entities to develop their own separate brand identity and culture as they seek to build their new business propositions. The new structure will also enable shareholder and management interests in each new business to be more closely aligned and to assist in achieving the strategic goals of each unit.
The group of companies currently headed by Myriad Group includes two main geographical locations of operations, in France (Myriad Connect) and the UK (Thingstream). The Thingstream business will be transferred by Myriad Group to the joint stock company Thingstream, a newly incorporated subsidiary entity in Switzerland. Initial working capital for Thingstream will be contributed by Myriad Group, this is expected to be in the region of USD 3.0 million.
To achieve the legal separation, the company proposes to reduce the nominal value of its share capital by CHF 13.47 million from CHF 14.97 million to CHF 1.50 million. Shares in Thingstream will then be issued to shareholders as a partial repayment of the nominal capital reduction to their shares in Myriad Group. The final values attributable to both the Thingstream shares and initial working capital for Thingstream will be presented to shareholders as part of the capital reduction resolution for approval at the forthcoming EGM on 22 November. The nominal capital reduction requires an audit report, which is being completed by their auditors PricewaterhouseCoopers and will be presented at the EGM.
Following the transaction, existing shareholders will then have both a share in Myriad Group and a share in Thingstream.
Closing of the transaction and delivery of Thingstream shares to Myriad Group shareholders is expected by the end of February 2019.
This year, Thingstream said it has seen steady progress with commercial customers, with limited revenues earned to-date, mostly from pilot customers and the sale of developer kits for their service. The continued focus this year has been on building an ecosystem of enabling relationships through the Thingstream Ready programme for hardware manufacturers and the Thingstream Solutions Partner programme for IoT providers and software platforms.
Thingstream is in the early stages of development and based on current business plans, it believes it should reach break-even in 2021. The management team believes that Thingstream will require additional capital beyond the initial funds provided by Myriad Group. It is currently planned that a significant additional capital increase will be proposed sometime in the first-half of 2019.
The Myriad Connect Division, comprising USSD Core and Connect Hub, continues to rebalance its operations away from USSD Core services and towards the developing market opportunity for authentication services from its Connect Hub proposition. The USSD Core business will be impacted by year-on-year pricing pressure, which will lead to a corresponding deterioration in FY2018 of USSD Core revenues, as seen during FY 2017.
The company is working hard to develop market opportunities for Connect Hub, leveraging the focus that they have been able to bring on sim-swap fraud in their launch market of Kenya. It now has connectivity coverage agreements with major network operator partners in three countries in Africa, enabling it to actively sell its authentication service to commercial customers. Discussions are ongoing with potential pilot banking customers, with the aim of initial commercial traffic with a major financial service customer in the first quarter of FY 2019. The current level of commercial traffic on the platform already enables the business to refine operational processes and make technical improvements prior to securing much more material deals.
The focus for the rest of the year is on securing a major financial services customer and continuing to lay the groundwork for future business by achieving more widespread reach agreements with mobile-network operator partners and capitalising on the demand for authentication services.
Following the delisting from SIX Swiss Exchange, which took place in April, the group communicated that shareholders would have a limited level of liquidity. However shareholders are able to buy and sell shares in Myriad Group via the over-the-counter service provided by Lienhardt & Partner Privatbank Zurich.
It is currently envisaged that once shares in Thingstream are delivered to shareholders, that these shares will also be tradeable, albeit with a similar, limited, level of liquidity.