Here is my bullet point summary of key events, in chronological order. I though I was going to give a brief outline, but it’s turned out more like War & Peace! I hope it still serves the purpose…
My attempt is to provide a plain record with no editorializing on my part.
The information here is either publicly available (via the ASX), or has been otherwise disseminated to all shareholders.
Calendar year 1987,Business founded:
Business co-founded by Richard Graham. Richard is MD.
Calendar year 2000, IPO:
Business listed on ASX.
FY2004, business growth:
By FY2004, business displays strong growth. Revenues grow from about $11M in FY99 to about $70M in FY2004 (46% CAGR). Normal earnings (after expensing all R&D, and adding back related amortization, and excluding currency hedging etc) grow from about $2.6M to about $22M, over the same period (54% CAGR).
FY 2004, customer dependence risk:
Over this period the business is highly dependent on two key, and powerful customers, Ford Europe and GM North America. By the end of the period, Ford Europe and GM North America are respectively responsible for approximately 35% and 8% of all product subscriptions.
Dec 2004, Graham retires to non-executive role:
Richard Graham becomes non-executive chairman. Mr Gary Martin is appointed CEO. Gary is an internal appointment with about 7 years of service.
FY2005 to FY2010, loss of major customers:
Period of falling revenues due to (a) loss of exclusivity to Ford Europe, and (b) GM NA's intention of developing its own in-house product. By FY2010, these two key customers essentially do not contribute to revenues. Nevertheless, total subscriptions have increased by about 70%, compared to FY2004.
FY2005 to FY2010, growth in subscriptions:
Despite broadening of its customer base I (and thus reducing customer risk) and substantial growth in new customers (with corresponding 70% growth in subscription numbers), business experiences declines in revenue and profitability. The two key factors are (a) lower product pricing for new customers, and (b) strengthening AUD. The currency effect I particularly damaging to profitability as the majority of revenue is sourced offshore, whilst the vast majority of costs are incurred in Australia.
FY2005 to FY2010, falling sales and earnings:
Over the period, sales revenues drop to $45M ($70M in FY2004) and normal earnings (after expensing all R&D, as previously discussed) drop to under $7M ($22M in FY2004).
Aug 2010, Graham Returns to executive role: Gary Martin resigns from CEO position and leaves company (after about 5 and a half years as CEO). Richard Graham returns to an executive role as executive chairman.
FY2010 to FY2014, revenue and earnings recovery:
With Graham at the helm (and Jonathan Pollard continuing as CFO) sales revenues grow to about $57M ($45M in FY2010) and normal earnings (once again, after expensing all R&D) grow to about $14M (about $5M in FY2010, roughly). On this basis we can say that CAGR, over these four years, was approximately 6% and 25%, in sales and earnings, respectively. Currency changes were not the primary driver of these results. My estimates indicate very similar constant currency growth, in both revenues and earnings, over the period. The primary driver of the earnings growth was a reduction in operating costs (before all R&D expenses, and removing R&D amortization). These dropped, over the period, from about 60% (run rate) of sales to about 46% of sales. Also, the growth in earnings (aka FCF) was achieved despite a growth in total R&D, over the period, from about 21% of sales to over 24% (in FY2013 and FY2014) of sales.
FY2013, well invested directors sell down shares:
The only two directors with substantial stakes, long serving non-executive director, Mr Myer Herzberg, and Richard Graham, sell the bulk of their shares to institutional investors. Richard, however, maintains a significant stake, with approximately 4 million shares at August 2014. Prior to their respective sell downs, Herzberg and Graham each had an interest in 23 million shares (nearly 8% of issued capital) and 103 million shares (over 30% of issued capital), respectively.
Sep 2013, Graham retires to non-exec role, again:
Andrew Pattinson, long serving employee, is promoted to CEO and becomes an executive director. Richard Graham becomes a non-executive director.
Feb 2014, Fran Hernon becomes chairman:
Long serving non-executive director, Fran Hernon, becomes chairman.
Oct 2014, CFO (Jonathan Pollard) replaced:
The AGM presentation reveals that the long serving CFO has been replaced with an outsider. The annual report presented only two months prior, indicated that Pollard was still CFO.
Dec 2014, Graham retires:
Graham relinquishes his directorship to pursue other interests.
Jan 2015, non renewal of JLR contract:
Infomedia announces that Jaguar Land-Rover shall not be renewing their contract, representing an annual revenue loss of about $2M and annual NPAT loss of about $1.6M.
Aug 2015: CEO resigns:
Andrew Pattinson resigns as an employee, after less than 2 years in role (and many years as an employee). The board says it will conduct an international search for a new CEO. Additionally, the new outside appointee to the CFO position, shall oversee day to day operations in the interim.
Aug 2015: Myer Herzberg retires:
Long serving non-executive director, Myer Herzberg, leaves the business.
Aug 2015: New composition of board:
With the resignations and/or retirements of Pattinson, Graham and Herzberg, the only remaining director with a long association with the business is chairman Fran Heron. The remaining directors, Clyde McConaghy (appointed Nov 2013), Anne O’Driscoll (appointed Dec 2014) are recent appointees and have no operational experience in the business, or the industry. Additionally, none of the remaining directors have a significant share ownership in the business.
Sep 2015: Graham and Pollard run for election:
The 2015 notice of AGM indicates that Richard Graham and Jonathan Pollard are nominating themselves as non-executive directors.
Sep 2015: The board opposes Graham & Pollard:
The board recommends that shareholders vote against Graham & Pollard. The board cites the company constitution, which stipulates a maximum of five board members. With the current 3 incumbents (Hernon, O’Driscoll and McConaghy) the board is recommending the election of another non‑ executive director, Mr Bart Vogell (to replace Myer Herzberg). Mr Vogell is another outsider with no operational experience in the business, and minimal, if any, relevant industry experience. Mr Vogell’s appointment will take the board to 5 non-executive directors. The board states that this will allow for a CEO board seat, once a new CEO is appointed.
Oct 2015: Graham & Pollard issue letter:
Graham and Pollard issue a letter to shareholders outlining their discontent with the direction that the current board is taking the business. Apart from other claims, they advise that the former CEO was marginalised and effectively forced to resign. They advise voting against all incumbents that are up for election or re-election (ie Hernon, O’Driscoll and Vogell). They indicate an intent to re-instate Pattinson to the CEO position, if they are successful. The letter can be seen at the link below.
Oct 2015: Chairman responds:
The chairman (Fran Hernon) issues a retort to the Graham & Pollard letter. The chairman’s letter can be seen at the link below.
IFM Price at posting:
78.5¢ Sentiment: Hold Disclosure: Held
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