The O'Brien Column: Blis chief is a breath of fresh air in jaded corporate-speak world

By Peter V O'Brien

Friday 9th August 2002

The usual July-August lull in profit announcements increased the attention given to companies' comments about their general operations.

A mixture of bizarre, the straightforward and the superfluously obvious have appeared in the past two weeks.

Company directors and/or executives should pass proposed announcements to disinterested people for vetting before publication.

Technology investment company IT Capital was in the bizarre category when it announced the results of a capital raising exercise.

"IT Capital Ltd has announced today July 31 that it has been successful in securing commitments of $2.1 million in capital by way of share placements approved at last week's annual general meeting.

"This is $1.6 million less than originally expected, the reduction due to loss of investor confidence following negative press coverage of the transaction."

There was some "negative press coverage" but it is a chicken and egg argument to relate loss of investor confidence to the press coverage.

The press coverage could equally have reflected a loss of investor confidence, which was based on the nature of the transactions and the company's admission that the restructuring proposal was effectively a last throw.

A week earlier IT Capital made an announcement headed "Overwhelming support for ITC strategy" when advising that shareholders passed all the annual meeting resolutions by a large majority.

Shareholders apparently had not lost confidence but within seven days a failure to raise the full $3.7 million was the result of negative press coverage.

Apparently some of the people approached to participate in the share placements were so unsophisticated in financial and company affairs that press coverage of the proposed transactions affected their decisions. Pull the other one.

The people at IT Capital would get more appreciation of their efforts if they dropped the pompous prose always attached to company announcements.

"IT Capital focuses on investing in innovative technology companies in New Zealand and Australia with the intention of assisting them grow and move into larger overseas markets.

"Addressing the funding gap that inhibits most innovative Australasian firms, IT Capital provides both early stage funding and management expertise that are not readily available in local markets" and so on, concluding: "IT Capital's international network of venture partners and technology companies accelerate [sic] the global transfer of technology."

Some evidence about those matters would be nice.

Computer technology group Renaissance Corporation reported recently for the six months ended June 30. It announced an operating surplus before tax and non-recurring costs of $662,000, compared with a loss of $1.48 million on a similar basis in the corresponding period of the pervious year.

Non-recurring costs (previous year profits) distorted the final profit figure which was $67,000 in the period to June as against $1.72 million last year, the latter including $2.7 million of unusual gains.

The result was a good turnaround and showed the benefits of dealing appropriately with problems.

Renaissance's explanation of what it was doing to maintain profitability was simplistic, bordering on the naive - but hardly unique to that company.

"Our go-forward strategy is built on three important pillars:

focus on quality business;
partner with vendors in market segments that offer better growth opportunities; and
offer services to our suppliers and customers with which normal distribution companies cannot compete."

The three "pillars" should be standard operating procedure in any company that has an aversion to failure.

They all should be focusing on high-quality business, taking partners in market segments that offer better growth opportunities and trying to out perform competitors.

IT Capital and Renaissance Corporation were only examples of the silliness that regularly creeps into company announcements as people extol perceived corporate quality.

Few companies like having their silly rhetoric examined critically, so they put their PR distorters on the case or executives indulge in private, chatty chiding of critics.

The last occurred a few weeks ago when I criticised a chief executive's over-the-top remarks about his company's approach to "human resources" ("people" to those who refrain from corporate jargon).

A first-name-basis letter arrived from said executive offering to change my mind on some issues at a private meeting.

A reply was not sent to that missive. Any reply would say too many offers of private "explanatory" meetings (read attempts to brainwash) have been received over the years from those who should have explained in the same way to their shareholders, potential shareholders and other interested people.

The Owens Group and Blis Technologies annual meetings heard relatively straightforward addresses from company officers. Recently appointed Owens chief executive David Ritchie strayed a little into oratorical paths when he said the company was using innovation and fresh thinking to "take us towards our vision."

The stated vision was to make Owens the provider of first choice for global logistics solutions" (more jargon) and industrial hire equipment for its customers.

What else would it be for a group operating in Owens' sector?

Mr Ritchie also said: "We recognise that we work in a service industry and that providing service is the key to our success."

That may have been road-to-Damascus revelation stuff inside the company. It was obvious to outsiders.

Blis Technologies chairman Murray Doyle eschewed the flowery talk, telling his shareholders what happened last year, what could and should happen this year and of prospects further ahead.

What a novel approach to corporate publicity.

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