For what it’s worth, here’s my opinion on the proposed resolutions for the upcoming AGM on 25 October 2018. It is only one month away. It is a very important AGM due to the way votes fell on Resolution 1 in 2017. Much has happened with the management of the company since then, although the positive effects of that change in management are obviously yet to be realised by the market.
I understand shareholders’ frustrations. I have been frustrated with the performance of the company for many years and, in particular, with certain decisions made by former management. I count myself as one of the disaffected who voted against Resolution 1 last year, which led to the first strike by a clear majority of shareholders. Only 25% was needed, but we got more than 50%. I voted that way because it is the only opportunity a shareholder has to formally express “no confidence” in the company’s performance and management, which may have an impact. The vote down of Resolution 1 clearly did have an impact. The circumstances that gave rise to the swell of disenchantment and resentment amongst shareholders this time last year have been adequately addressed. The has been a fundamental change in the composition of the Board, and a new style of management has just now started to take effect. It is difficult to look past the present share price. It’s crap. But I am confident that will change for the better. I am now more optimistic about the company’s immediate and long-term prospects than I have ever been, having now held OBJ shares for more than 8 years.
I will therefore be voting FOR Resolutions 1 to 5, and AGAINST Resolution 6 if the contingency giving rise to consideration of Resolution 6 arises. Here are my essential reasons why.
Company’s Core Technologies
The company's technologies have consistently been the biggest influence in my decisions to buy and to continue holding shares in the company. The technology of the company is ground-breaking. Very few people understand it as it involves an unconventional application of physics in conjunction with a knowledge of chemistry in relation to compounds found in everyday products. It has potentially infinite applications.
The technology has been validated by Procter & Gamble and they have commercialised it. Procter & Gamble is increasing its incorporation of OBJ’s technology into its skin care range of products and, consistent with its position as number 1 innovator amongst global FMCG’s, it is taking the lead in recognising and embracing OBJ’s core magnetic. They have work plans for future releases of OBJ tech products up to 5 years from now. They are well into clinical trials and commercial plans in relation to OBJ’s “second technology” (personalisation), although the precise terms of that agreement pertaining to royalties/licensing have yet to be worked out. I have the distinct impression that P&G won’t be turning their backs on this as it is so central to their long-term plans in relation to skin care and personalisation.
Other global corporations are also clearly interested and are varying stages of negotiation. One will materialise into a formal announcement sooner rather than later.
New Management
The appointment of Steve Schapera, the resignation of the former chairman, and the appointments of Tony Varano and Cameron Reynolds represent a fundamental change in management and significant re-direction of the company’s commercial affairs. There are now 5 directors. There were previously 3. This represents a restructure and re-skilling, a top-down approach aimed at repositioning the company strategically and more commercially focused. I consider their appointments, and effective taking control of the company, to be an entirely satisfactory response from a shareholder’s point of view to the first strike the company received at last year’s AGM. They have a completely different approach and recognise the commercial imperative to make money, and clearly do not assume that the technology will simply sell itself. The mistakes of past management cannot be attributed to them.
I have very high hopes for the commercialisation of bodyguard and I suspect that is what the next big material announcement will relate to – probably not before the AGM, but possibly by the end of the year. There were strong hints of that in the recent investor conference call. There is absolutely no bullsh*t about these three new directors, and their past achievements and credentials speak for themselves. They would not have got involved in OBJ if they did not see the opportunity to make lots of money – they have established reputations and global commercial experience that they will want to see enhanced by their contribution to OBJ, not tarnished. Shareholders need to trust them, and avoid tarring them with the brush of OBJ’s corporate history when the company was in the control of previous management. They know what they are doing, but have not had long enough to demonstrate that. They have effectively only had control of the company for the last 4-5 months. It takes a lot longer that 5 months to achieve what they are working on.
That said, it is clear that they have already cut costs. 2018 losses are down more than 40% from 2017. Consultants fees are down from $645k in 2017 to $129k in 2018. Directors and employees benefits have been reduced from $2.6m in 2017 to $1.7m in 2018. So it’s quite staggering to see a handful of posters complaining about proposed Resolution 5 which seeks to expand the pool of fees available to directors by an ever so modest amount of an extra $150k per annum. Seriously, what’s the issue? It should also be noted that the new Board has not sought performance shares this year. They only get one opportunity to do so each year. And isn’t it great that they haven’t been so greedy to do so now? I asked Steve Schapera about this directly, and he said that the new board hasn’t had long enough to formulate a complete strategy for the company and so it would be inappropriate for the Board to set new performance share targets. That's class.
It’s clearly a responsible new Board. And I endorse their proposed resolutions. I strongly encourage shareholders to vote accordingly.
J
Expand
(20min delay)