One of the issues I have, is that the board of EGO kept saying, and keep saying, that their objective is to see EGO as the " Empire’s strategy is to be the Perth Basin operator of choice, ...."
But how can that be achieved when the SP was only $0.006. How can you have a pre-eminent Perth Basin Operator of choice with a SP of a fraction of one cent???
So
how to get a SP high enough to reflect a company touting itself as "the Perth Basin operator of choice"?
Well, by
artificially creating the SP to higher levels by doing a Consolidation.
I really think part of the thinking here relates to "ego". IMHO They did not want to be on a board of a "penny-dreadful".
So the problem we all have, is that EGO board has tried to create a higher SP by artificial means, NOT by creating greater wealth/value in the company.
So the post-consolidation SP of artificially moving the SP from $0.006 to $0.60 is a mirage, because the company is still viewed the same.
AND, when investors see EGO on the ASX, they still think of EGO as a "penny-dreadful". So when they are asked to pay 60c, they baulk, because they still view EGO as a "penny-dreadful".
The other issue, is that the board justified the consolidation as reducing the volatility of the SP, and increasing the appeal of increasing the appeal of EGO to a wider range of investors.
But clearly they got bum advice.
Did the Board do proper due diligence on the share trading of EGO stock, and the composition of its shareholders???
Because it is clear that the low "penny-dreadful" status of the EGO SP was one of the main factors which held the EGP SP where it was.
It was the small s/h and day traders who were buying our stock.
What has now happened is that those day traders are not prepared to punt of a 60c stock, when they previously only had to punt on a 0.006c stock.
ie IT WAS THAT VERY "VOLATILITY" WHICH KEPT THE SP AT THE LEVEL OF 0.006C
there were no bigger investors sweating on buying once the consolidation occurred. What actual evidence did the Board have to make that statement?
A bit of due diligence would have alerted our board to that factor.
There is no denying that the M/C of our company, and hence our investment, has virtually halved since the Consolidation was put to shareholders. A 50% loss in a few months.
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AGM - 25 Nov 2015
Benefits of a share consolidation for shareholders
Minimise transaction costs by reducing the bid/ask
spread
Reduce the volatility of the Empire share price
Increase appeal to a wider range of investors
Increase the Company’s funding flexibility to
help minimise dilution for existing shareholders
