Ann: Half Year Report and Accounts, page-7

I used to hold ONT from 2009 to 2011 and have been monitoring it ever since.

The characteristics such as frankness, consistency and predictability, that Madamswer & Marsc like are the same ones that attracted me in the beginning.

However, over the years, I felt that the CEO is trying too hard to portray himself as this shareholder-friendly CEO that is unique in the ASX. Put it simply, I sometimes find his commentary a little bit over the top.

Back in Half Year Report 2011, there was a very brief mention about ONT granting a licence to a marketing & management company allowing it to market, manage and operate four practices in southeast QLD region. The revenue from this arrangement was around $1m and it was briefly covered in Note. 9 of that report.

I always thought that ONT is the one who specialises in marketing and managing dental practices. Suddenly, it's giving away the management & marketing of four of its practices while still maintaining the ownership. I remember feeling a little bit baffled at the time.

By the time the Full Year Report 2011 came out, there was no mention of this at all. And as far as I know, this arrangement had never been mentioned again ever since.

In other words, the CEO tends to focus on things that will make ONT looks good in the report and conveniently forgets to mention the metrics that are not too flashy.

The other thing that bothered me a lot right from the very beginning is the inability of the CEO to develop a second in charge who can step into the CEO role if the need suddenly arises.

Here is the list of people who came to ONT, stayed briefly and ultimately left:

1. Duncan Cornish came as CFO, started on 01/05/2005, resigned on 25/01/2007

2. Bradley Hardham came as Company Secretary, started on 04/07/2007, resigned on 01/11/2007

3. Greg Kentish came as COO, started on 11/11/2007, resigned on 08/12/2008

4. Deborah Bowling came as Financial Controller, promoted on 15/08/2008, resigned on 02/01/2010

5. Debra Burden came as General Manager, started on 18/01/2010 (participated on Share Loan program, was alloted 100,000 shares @ $2.70), resigned on 28/02/2012

6. Eric van Niekerk came as Group Operations Manager, started on 21/11/2011, resigned on 30/06/2013

7. Basil Ahyick came as General Manager - Operations and Finance, started on 10/02/2014, resigned on 12/06/2015

These are my observations from looking at the above list:
- None of these people stayed more than 2 years, with one staying only for 4 months.
- The titles keep changing every time a new person comes on board.
- If over the years only one or two people left, then we can argue that they might be the ones who can not fit into ONT. But if since listing in 2005, 7 people came and go, then I would argue the person causing this succession of manager leaving is the CEO himself. Maybe his personality is too strong, maybe he can't let go and delegate to others, who knows?

Back in 2005, when ONT market cap was still less than $20m, it was still OK for the CEO to run it as a big family business. But now, ONT market cap is $163m. He needs to develop and nurture his direct reports better. This way, if he is suddenly unable to fulfill his CEO duties, someone can take over immediately and keep the company running.



A more professionally run ONT would probably need to expense an extra $750k in salary (maybe $500k for the CEO and $250k for the second in charge). The current low salary of the CEO (which is excellent, as long as he is around) is not possible to continue indefinitely.

Having said all of these, I have to admit that ONT had been an excellent performer over the years.

My decision to sell back in 2011 had cost me an opportunity to more than double my exit price.

I hope the above points are useful to highlight the "negative" aspects of ONT.