AGM shareholder adddress - with context

The narrative presented to shareholders at the AGM continues to present a self interested view by deflecting attention away from the deficiency of management, so let me put some context around the vagueness (with my own touch of sarcasm)

Key points -

Once again absolutely no reference to future revenue growth or profit forecasts (other than to advise of an upcoming loss) because to do so, would give rise to increased accountability and scrutiny by shareholders,

MD should have read my earlier HC posts to inform himself about the competitive nature of the SE Asian markets, (or my prior Management reports from the early 2000’s) and he would quickly realise that there was no need to incur ongoing costs of employing someone in that region to reveal what was already known many years prior (or could be validated in no more than one or two field visits).

(Anyway, I am here to help – message direct to MD – AUD/USD needs to be in the 0.60 cent range to have any marginal hope of being competitive against locally based Asian manufacturers)

Stating that NZ sales are a success needs to be quantified given that Alex (MD) closed the Ezystrut NZ Branch in 2008 just prior to the imminent NZ construction boom.

Galvanising has for certain been losing market share to its competitors over the years because Korvest has failed to maintain its marketing leading position by not providing education and advice to the wider market regarding the benefits of hot dip galvanising.

(Education lesson to Korvest management and shareholders - Its competitors are not purely galvanising, rather all forms of surface protective coatings, ie think Dulux)

Head count cost reduction. My interpretation with context – we (management at Korvest) continue to devastate the lives and families of our most vulnerable blue collar workers, through our inability as executives to provide the necessary leadership and innovation that would ordinarily lead to future success for all stakeholders.

It should be noted that we have also eliminated some senior managers, yet we still see it as vitally important to maintain a larger number of senior roles across the Ezystrut business in spite of reduced revenue compared to prior years ago.

(by the way, we see absolutely no deficiency in our leadership or emerging pattern of underperformance at the executive level, its just the market in which we operate!!!)

New rollforming machine (which I actually proposed back in the mid 2000’s) could have already been implemented and delivering real returns many years ago if those that knew the business were left to ‘run the business’

The most interesting aspect of this announcement is that the MD fails to mention that this initiative makes redundant an investment that he made into robotics (post my time) to enhance manufacturing of the stated components.

Let me explain what this mean for shareholders, you already paid for the robotic equipment through reduced earnings, which will now be retired in favour of doing what should have been done in the first place. (again, this shows a lack of competency for the business or understanding of the required manufacturing techniques)

Clarification of MD statement ‘As a reminder we were the first with a fire rated product that enables us to be the eminent provider of cable support systems to tunnel projects’. Actually this statement is simply incorrect – Unistrut (a competitor) was the first with a fire rated product back in 1995!

By the way, another oversight of important shareholder information in relation to the potential Tunnel project opportunities, one is shaping up to be the biggest cable tray / ladder project in Australia’s history and will likely be worth in the order of up to 30% of Korvest’s current revenue. Given the potential it has to materially improve the overall business profitability, surely it is worthy to outline exactly what the company is planning to ensure success of this project, after all they are the market leaders!

To give credit where due, the safety achievement is commendable, but should not be a primary shareholder highlight, especially when bleeding shareholder wealth. I cannot imagine any shareholder finding solace in the future news headlines ‘Outstanding safety focused South Australian steel manufacturer goes bust’.

I am probably sounding like a broken record here, but its an important subject, Management are custodians of your (shareholder) wealth, not owners of it, they have a significant responsibility to ensure that we achieve reasonable returns on our investment, this remains my point of contention.