Ann: Chair's Address to Shareholders, page-4

I agree with all you say, stayer, except that I do feel strongly we have to stick with Darren. He’s such a key part of SRH that it might equally be named “Darren Hotchkin Road Safety Services”. If he goes, the “heart” disappears from the “body”. In particular, I like that Darren’s own financial future is seemingly very much hitched to SafeRoads succeeding. I’d much rather have a CEO who is himself dependent on the success of the company than one who is not particularly impacted if it “goes under”, particularly in the current somewhat precarious circumstances.

David too strikes me as “doing his best”. I don’t think he’s had much control over the stuff that’s gone wrong…the fatal accident, orders not materializing, etc. He IS responsible for the overall strategy, a key component of which is an increased focus on Road Safety Rentals, which actually seems to be working. I think we have to give the current strategy more time to evolve before we start calling for heads.

But, yes, like you, I do feel a bit disappointed in how things are going operationally across the business. Especially the lack of US business (a lot of effort and quite a bit of money was invested in that) and the inability to gain repeat business from the local major barrier hirer. SRH really needs to be firing and growing on more than one front…not just Road Safety Rentals.

And yes, I too thought it a bit odd that they would in effect announce a capital raise in advance of the details and allow the shares to trade with that in the air. I guess the share price is kind of irrelevant at the moment…liquidity is almost zero, and no current holder had made a bit to sell at anything like the current price (the sell offer is 15 cents, and for a trivial amount). A couple of holders have responded to the 9 cent buy offer currently extant, that’s all. As I say, the current price perhaps isn’t too relevant.

I think one of two things will happen from here:

a) the company will get back on its feet again after the fatal accident claim is settled, start making decent profits and the share price will respond accordingly, going a bit north of its NTA (22 cents); or

b) it’s going to essentially fail and won’t have a future in its current form.

I still think a) is the more likely scenario, but the outcome won’t be clear for some time. In the meantime, I would prefer a CEO whose livelihood depends on achieving a) and avoiding a worst case form of b) to a new one without that incentive to succeed.