Chairman’s Report

Chairman’s Report

“My first introduction to CTI Group was in 1997 at the old TMA exhibition in Brighton. I was manning the Network Alchemy stand and Adrian Burt came by to talk about call management. At the end of this meeting I had convinced Adrian that IP telephony was the future and the result for CTI Group was that we became the first supplier to produce call software for IP based PBX systems.

In 2001 I was approached by the CEO of the US parent company to join their board as a

non-executive director. They wanted an entrepreneur and technologist in the telecoms space on board. At the time I was transitioning out of Avaya having previously been a founding member of Network Alchemy which by acquisition eventually became the Avaya SMBS division known best for the IP Office.”

Post Avaya, Birbeck, who had always recognised that professional sales skills were the key to business development and a healthy company, had formed Seer Ltd., a business performance improvement company.

“If you look at CTI as a group then you will see that the US based business has a great product called SmartBill, a telecommunications analysis tool for the B2B communications provided by carriers. To put that in a UK context, SmartBill provides a ‘Proteus like’ view of the carrier provisioning and performance.

There are more than 2000 US carriers and often a business will have up to twenty different carriers servicing their telecoms needs. One for DSL, one because they have a great rate to Chicago, another has cheaper calls to New York etc.

Here in the UK we are focused, via Proteus, on the management and analysis of communications, whether voice, data or wireless from a CPE perspective.

Towards the end of 2004 however we moved towards a new technology area by offering both products on an ASP basis. This changed the business model for the group and the board decided that the future interests of the company would be best served by having a technologist as Chairman. I was asked to undertake that role.

We now have all the elements in place of a ‘start up’ company, albeit one with a successful 18 year history. Let me explain; both parts of our company have moved in to a new area of technology and new markets. This ASP model changes our approach and visibility in the market and means that we will move in to what I call the ‘self care’ arena where CTI Group will provide the tools for users to manage their own telecommunications costs and resources. Furthermore, our intelligent tools allow us to attack new markets where intelligent self-care is in its infancy or non-existant.

In the US there is a huge and growing market for TEM (Tele equipment management) vendors. There, a TEM consultant will look to reduce his client company’s communications bill in return for a commission of up to 50% of the first year savings plus an ongoing commission for subsequent years. Its big business and one company I know in this market turns over $100 million a year of which 70% comes from TEM consultancy.

Those of us that have been in the communications market for any length of time will know that it is likely that what is happening in the US today will probably happen here in the near future. In the US this TEM market took off following the proliferation of carriers and a working trend that veered towards home office or remote branch operations. I guess that sounds familiar and means that CTI Group is ideally placed to support the channel in TEM market.

CTI Group are channel-centric. We already have some of the best channels in the UK for Proteus and the potential addition of SmartBill will only serve to dramatically increase our resellers’ ability to increase revenues by providing demonstrable value to their customers.

The history part refers to the fact that CTI Group is a very solid company. We are profitable and cash rich having achieved expected growth last year and are on target to hit our 2005 goals. We have a blue chip client base where we supply 60% of the city financial institutions in the UK and 54% of the US Fortune 100 companies.

My objectives as chairman of the CTI Group are to grow the company and build shareholder value.

The most immediate and visible action the UK will have seen so far is the promotion of Adrian Burt to the position of Senior Vice President for Global Sales and Marketing. Adrian has an incredible track record of achieving growth in the UK, has a strong work ethic and is full of ideas and direction.

Another example has been the recent launch of Proteus in the US. There we have just signed a major carrier to sell Proteus alongside SmartBill. Here in the UK we have made several new key appointments including Alan Pearson as Sales and Marketing Director for EMEA, reporting to Adrian, and are looking to further expand our sales teams.

SmartBill is expected to be launched here early in 2006 and both Proteus and SmartBill will targeted at newly deregulated markets in EMEA. As you can see I am very excited about taking on the Chairman’s role.
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