I agree Value. with your articulation of "state of play", however it also needs a good business plan and a sound marketing strategy. This is where they have fallen down more than a little. I always said that they were running a very high risk strategy with winding down to a defence only sub-sector focus. I guess that's also one of the pillars in reducing outgoings(focusing on one subsector requires less marketing people) through labour costs.
The flipside is that if you have a good product that fullfills a need then maybe they should have broadened their market for a multi-sector focus thus diversifying risk. We all know that Defence is subjugated to the Machinery of Government(MoG) that moves very slowly. We could be waiting a long time for Defence contracts to materialise - we could be in this same position next year and the year after.). Perhaps they should not have tried to rush for cash flow +ve so early by retrenching marketing staff and spent some money marketing harder into these other sectors(health, legal, research, mining). These could generate revenue while we wait for Defence cogs to turn.
It's easy to say that it will come good eventually, maybe 6 months, a year, 3 years etc. Investors still need to deal with cost of capital with a declining share price. I have no doubt they have a good product but sadly their strategy is myopic. To boot, handing out options to the CEO with 7- 8 cent conversion price with very soft performance bonuses is insulting to shareholders. When the Board was questioned about it, the response was "Oh, but that's they way we have always calculated it"! It will be interesting to see if it's any different in the next round.
AR9 Price at posting:
9.1¢ Sentiment: Hold Disclosure: Held
