The lady has sung. Its over., page-14

• May 15 2017 at 8:56 AM
  
• Updated May 15 2017 at 9:23 AM

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Shareholders the victim in ugly 1-Page battle as landmark vote approaches


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1-Page founder and former chief executive Joanna Riley appears to have lost the support of shareholders. Dominic Lorrimer
by Yolanda Redrup
On Monday, May 15, shareholders in online recruitment start-up 1-Page will assemble in Sydney to have the final say in a six-month long feud that has fractured the company, and become a case-in-point example of the risks of going public as an early stage business.

Most of the votes have already been counted and, unless co-founder Joanna Riley has managed to win every single vote that came in during the past week, it is highly likely that the board, led in particular by Merchant Funds Management's Andrew Chapman and chairman John Fennelly, will have won the right to shut down the business and turn it into a shell.

But regardless of the outcome, the one thing that has become overwhelmingly clear during this arduous battle is that shareholders have been let down. They were let down before Mr Chapman entered the pictured, and they have been let down again since.

Accusations have flown of false information being provided to the ASX and inappropriate use of shareholder money. Both sides have attempted to twist the truth to strengthen their case. A prime example was when sources from both parties claimed Ms Riley's father Patrick had opted to vote with them.

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Merchant Funds Management's Andrew Chapman has yet to articulate what kind of company 1-Page investors will own if they vote to close down the current operation.
But neither team has done what its shareholders actually need and outlined a strong, clear vision of the future of the business.


First to Ms Riley and former chief executive Peter Kent.

Throughout the storm the pair were almost always on the backfoot, forced to respond to attacks from the board, rather than go on the offensive themselves.

Seemingly, this also followed through into the strategy for the business.

Cost-cutting too late
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Sacked CEO Peter Kent can justifiably feel like he was never given a chance by a hostile board.
The company did succeed in cutting its monthly costs by 40 per cent in February, but the move to do this came too late.

This obviously needed to have been done well before Mr Chapman ever attempted a corporate raid, in order to win back shareholder confidence and indicate that there was any acceptance that things weren't going to plan.

In their letter to shareholders the pair outlined their plans for the next 12 months for the company, in a document that involved all the right words – growth, strategic vision, alignment, cost optimisation – but which was little more than a big picture talk that did nothing to articulate how it was going to increase its customer retention numbers.

It's one thing to win new customers, but you also need to keep them so that you can book their revenue on your books. 1-Page's preliminary first quarter company results released this month showed monthly recurring revenue has dropped to just $US16,170 a month.


Despite this, Mr Kent can feel justifiably sore that he has never been given a chance to try to turn around the business. We will never know whether he could have rejuvenated the company's lost mojo if the board had given him a few more months to prove himself as anything other than a frontman for Ms Riley.

Onto the board. Like Ms Riley and Mr Kent, the board has also failed to present shareholders with sufficient information about its future plans for the business.

While the overarching plan of closing 1-Page and filling its ASX shell with another company for a backdoor listing has been well communicated, the crucial detail of what type of company it would pursue has never been addressed.

Most backdoor listed stocks are inherently risky thanks to their immaturity, and many come to market with significantly less revenue than 1-Page has amassed.


Familiar with risks
Mr Chapman himself is very familiar with the risks of small cap stocks, having been a director of ASX-listed explorers Sprint Energy, which then became Voyager Group and now CYCLIQ Group, which makes cycling safety and action cameras.

Mr Chapman resigned from the board of Voyager in February 2016.

Ultimately, the fate of 1-Page was sealed on the fateful day of December 15 when Mr Chapman had managed to accrue a significant shareholding and was able to lodge a motion to have shareholders vote to remove most of the 1-Page board members.


While that vote never eventuated, the damage was done. Shareholders were already unhappy at the cash burn rate without any substantial revenue growth and many were sick about how much the value of their stock has eroded.

After reaching a price high of $5.69, with a market capitalisation of $726.2 million (an insane valuation for a company that was producing less than $1 million a year in revenue), the stock has been suspended since March at 16.5¢ – below its October 2014 issue price of 20¢.

Time will tell what ends up happening to the fleeting tech darling of the ASX, but one thing is for sure – on December 15 a shark attacked, and the seal was not adequately prepared to fight back.



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