ZURICH, Switzerland – 2 November 2018: Myriad Group AG announces today an Extraordinary General Meeting (EGM) to be held on 22 November 2018 to approve a reduction of the nominal value of its Ordinary Share Capital from CHF 0.10 to CHF 0.01 as part of a corporate restructuring plan.
Over the last year we have been working hard to operationally restructure the company to produce the most efficient operating model that will provide the optimal support for our two new business propositions: Connect Hub (part of the Myriad Connect business unit) initially focussing on authentication services to enterprise; and Thingstream, providing a global connectivity service for the Internet-of-Things. We announced a key element of this earlier this year at our Annual General Meeting, including the appointments of Philipp Bolliger and Fabien Delanaud to lead the Thingstream and Myriad Connect business units respectively.
Today we announce the next step in this corporate restructuring program, with the planned legal separation of these 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. Further information in respect of this is included in the corporate restructuring section below.
The group of companies currently headed by Myriad Group AG, includes two main geographical locations of operations, in France (Myriad Connect) and the United Kingdom (Thingstream). The Thingstream business will be transferred by Myriad Group AG to Thingstream AG, a newly incorporated subsidiary entity in Switzerland. Initial working capital for Thingstream will be contributed by Myriad Group AG, 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 13,474,734.48 from CHF 14,971,927.20 to CHF 1,497,192.72. Shares in
Thingstream AG will then be issued to shareholders as a partial repayment of the nominal capital reduction to their shares in Myriad Group AG. The final values attributable to both the Thingstream shares and initial working capital for Thingstream AG will be presented to shareholders as part of the capital reduction resolution for approval at the forthcoming Extraordinary General Meeting (EGM) on 22 November 2018. The nominal capital reduction requires an audit report, which is being completed by our auditors PricewaterhouseCoopers and will be presented at the EGM.
Following the transaction, existing shareholders will then have both a share in Myriad Group AG and a share in Thingstream AG. The detailed resolution is included in the enclosed formal invitation to the EGM on 22 November 2018.
Expected Timeline for process
22 November 2018 EGM to approve capital reduction
31 December 2018 Sale of Thingstream business by Myriad Group AG to Thingstream AG completes
5 February 2019 Application to Commercial Register following notice period to creditors.
18 February 2019 Approximate date for registration of the capital reduction with Commercial Register.
28 February 2019 Approximate closing of transaction and delivery of Thingstream AG shares to Myriad Group AG Shareholders.
Thingstream update and future capital requirements
2018 has seen steady progress with commercial customers, with limited revenues earned to-date, mostly from pilot customers and the sale of developer kits for our service. Early feedback regarding the solution from pilot customers is encouraging, but with better understanding of the customer process it is clear that project lead-times are longer than previously anticipated. As we communicated at our AGM earlier this year, our continued focus in 2018 has been on building an ecosystem of enabling relationships through our Thingstream Ready program for hardware manufacturers and our Thingstream Solutions Partner program for IoT solutions providers and software platforms. This will help us to continue to build a strong opportunity pipeline to convert into recurring revenue in the future.
Thingstream is in the early stages of development and based on current business plans it is realistic to break-even in 2021. The Management team therefore believe that Thingstream will require additional capital beyond the initial funds provided by Myriad Group AG. It is currently planned that a significant additional capital increase will be proposed sometime in the first-half of 2019.
Myriad Connect update and outlook for FY 2019
The 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. As we have previously communicated the USSD Core business is impacted by year-on-year pricing pressure, which will lead to a corresponding deterioration in FY2018 of USSD Core revenues as was seen during FY 2017.
The company is working hard to develop market opportunities for Connect Hub, leveraging the focus that we have been able to bring on sim-swap fraud in our launch market of Kenya. We now have connectivity coverage agreements with major network operator partners in three countries in Africa, enabling us to actively sell our authentication service to commercial customers. With these network agreements in place 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 2018 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 we are seeing in our opportunity pipeline.
Other Information for Shareholders
Following the delisting from SIX Swiss Exchange in April 2018, we communicated that our shareholders would have a limited level of liquidity. We would like to take this opportunity to remind our shareholders that they are able to buy and sell shares in Myriad Group AG via the over-the-counter service provided by Lienhardt & Partner Privatbank Zürich AG: https://www.lienhardt.ch/private-banking/ausserboerslicher-handel/.
It is currently envisaged that once shares in Thingstream AG are delivered to shareholders, that these shares will also be tradeable, albeit with a similar, limited, level of liquidity.
Business Update and EGM registration
Prior to the formal meeting, we will again be holding a business update session at which we will present further information about Thingstream AG, and the future plans for both Myriad Connect and Thingstream.
The Business update, which is open to all interested parties, will begin at 09:45am CET. Please register your attendance by email to investor relations.
The EGM, for registered shareholders only, will begin at 11:30am CET. The full EGM agenda can be found here.
We are pleased to invite you to attend this meeting and we look forward to welcoming you on the day.