Why did Octavium Capital Investment vote against CEOJudson buying 8 million shares in Ignite at 5c per share at the Feb 2024 EGMand continues to believe the existing board needs a reset?
Octavium Capital Investments vote AGAINST was a protest vote against what in OCI’s opinion is the continued underperformance of the board and management for Ignite shareholders, specifically over the last 12-24 months.
Cameron Judson has been an Ignite director since Mar 2022 some two years ago and Ignites CEO since Mar 2023 approx 12 months ago.
Cameron Judson is currently paid approx $350-$400,000 pa by Ignite.
When Cameron Judson became a director in Mar 2022 the Ignite share price was circa 20c per share / $18m market cap leading up to the EGM in April 2022. Ignite has at end Feb 2024 a share price of 5-6c per share, a current market capitalisation of approx $9m and Ignite lost $1.549m last full financial year. Pre the Nov 2023 shareholder diluting entitlement offer, Ignite had an equivalent market cap of only circa $6m.
Since taking over as Ignite CEO coming up to 12 months ago, Cameron Judson has undertaken to:
- under promise and outperform.
- return Ignite to material& sustainableNET profitability.
- be a disciplinedallocator of Ignite’s capital.
Ignites 1st half 2024 net shareholder profit figure was $213,000 on revenue of $50,000,000+. What can we say, underwhelming at best? especially after the various comments by CEO Judson at the Nov 21 , 2023 AGM. What will the full 2024 FY profitability actually be , another loss with further excuses from Ignite ? ( Note - historically Ignites 1st half year results have been higher than the second half, they lose a significant portion of revenue in Jan alone).
If anybody thinks this is a good financial result then they are part of the problem, acceptance of a very low hurdle rate for measuring success & we would suggest the reasons why Ignite has for over 10 years underperformed for its shareholders.
The Ignite board and CEO Judson in late 2023 instigated a flurry of corporate initiatives within an approx 2 month period,that almost doubles the potential amount of shares on issue, all at the bargainbasement price when compared to intrinsic value of 5c per share.
The current shareprice is at a level significantly below Ignites intrinsic value (based on thetax losses and franking credits of $26m alone). The Ignite share price webelieve with material net profitability paying a franked dividend with notax to be paid for the foreseeable future is many multiples north of where itis currently.
IN OCI’s opinion the share dilution has been at theexpense of the long suffering current shareholders under the tenure of thecurrent Ignite board/leadership, with no change in the Board that oversaw the10 years of financial underperformance and before any real material improvementin net profitability. We assume Ignite has been meeting its disclosure obligations , since CEO Judson took up the role, the liquidity of the company was no worse than previous years and was actually improving qtr on qtr. The funding facility did not need to be rolled over until Jan 2025. What Ignite M&A activity is going to be affected positively for Ignite shareholders with only $1.8m in the bank and a share price we believe is for the time being artificially anchored at 5-6c per share? Why would Ignite structure it this way, at this time, at this haste and at this price? The debt position has now improved but before actually showing you can execute on your business plan and before actually achieving material net profitability & at what cost to loyal Ignite shareholders. Why would you implement the entitlement offer at this stage, to what effect?
In summary, OCI questions the timing , the structure, theextremely low exercise price, the counter intuitiveness, and the effectiveness inthe detail of these corporate initiatives.
In OCI’s opinion the flawed nature of these corporateinitiatives only further goes to the continued underperformance of the Ignite Board/leadership.
Ignite under the current Board leadership tenure of Garry Sladden has 10 years straight of statutory and operational losses of $34+mon $1.3Billion rev’s, shrinking revenue and GP margin. Directors and Boards normally take responsibility for a company’s poor financial performance. 5+ CEOs at last count and external factors always seemingly the cause.
The same board structure and leadership that still remains, fundamentally because they are supported by Gold Tiger Equities and Sandon Capital.
Why does Gold Tiger Equities and Sandon Capital continue to directly support the 10 year old Ignite board leadership and the current structure & seemingly resist a needed reset of an obviously underperforming Board?
Why hasn’t Sandon Capital an ASX listed specialist activist fund or Gold Tiger Equities proposed any, not one public initiative for Ignite shareholders to consider?
Why do they seemingly settle for a financially underperforming company that has seen revenue drop from $185m to $100m per annum and GP% margins of 17% down to a current level of 11.5% and more specifically for shareholders the ten straight years of operational and statutory losses?
OCI believes that the yet to be proven CEO Judson ( bearin mind his recent past patchy ASX CEO record ) , has promised a lot & despitesome improvement ( lets see what the real full year result is ) , has not yet beenable to return Ignite to sustained &material net profitability. The corporate strategies, whilst sounding good as aheadline, in the detail are in OCIs opinion flawed at best, with limited scopefor improvement of Ignite’s long suffering Ignite shareholders.
For these reasons Octavium Capital Investment votedagainst CEO Judson buying 8 million shares in Ignite at 5c per share at the Feb2024 EGM.
As previously stated for several years now OctaviumCapital Investment as a significant Ignite shareholder will be supportive of anIgnite board and management, future capital raisings and corporate initiatives whenthey are able to realise the unrealised intrinsic value that resides in Ignite,many multiples above the current Ignite share price, where :
1. There is a properly functioning reset Board w broader shareholder representation.
2. Management has proven an effective business plan based on actual sustained & material net profitability that can release theunrealised intrinsic value in Ignite that resides in the tax losses and thefranking credits alone. Not one based on big future promises, generalised motherhood statements and shareholder value depressing initiatives. See Talent & Hitech Ltd ASX:HIT as the benchmarks.
3. There is disciplined capital allocation.
4. There are Incentive programs that heavily reward out performance and real results when they are achieved not before.
5. Corporate strategies aligned with real shareholder value creation for all Ignite shareholders.
The above is the opinion of Octavium Capital Investment Pty Ltd only. It does not warrant as investment, financial or any other advice. Each individual should seek their own specific advise and verify all information stated.
