Skip to content

For people, like me, who aren’t public company directors the position of ‘board member’ appears to be one of the least accountable positions available in the modern corporate world.

The banking royal commission has laid bare the incredibly poor board oversight of some of Australia’s largest public companies. I suspect that many Australians would, rightly, conclude that it’s not just the financial services sector that suffers from incompetence and dubious ethical behaviour at board level. The recent debacle at the ABC, which saw the sacking of the Managing Director, Michelle Guthrie and then, a few days later, the resignation of the Chairman, Justin Milne, provided another high profile example of dysfunctional behavior at board level.

Of course, the recruitment industry has its fair share of board incompetence. Last month I detailed the litany of appalling results, delusional statements and self-serving behavior from the Rubicor board during the three years of the current board’s tenure.

The board of one of our industry’s few remaining publicly-listed companies, Ignite Services (formerly Clarius Ltd, formerly Candle Ltd) came under scrutiny this week at the company’s Annual General Meeting.

As industry news service ShortList reported (subscriber access):

ASX-listed Clarius Group (trading as Ignite) has recorded a ‘first strike’ against its remuneration report, which was passed by a majority after 29.54% of shareholder votes were cast against it at today’s AGM.

For shareholders to demonstrate their displeasure in such a way is an uncommon occurrence and points to an undercurrent of shareholder dissatisfaction with the board’s stewardship of their company.

The only surprise is that it took this long for shareholder unrest to be formalised as Ignite/Clarius has chronically underperformed for many years.

Two months earlier ShortList reported (subscriber access): the release of the Clarius 2018 results:

Chair Garry Sladden notes that despite the decline in revenue there were “several stand-out performances”, including:

  • profit before corporate overheads and tax improved 14.7%;
  • the ACT business delivered a profit before corporate overheads and tax up 26% YOY; and

How can an office’s financial performance be reported as any sort of profit unless all the relevant costs are included? Corporate overheads are a relevant cost and should be included. Excluding a legitimate cost for the sake of reporting ‘good news’ is an admission of how little positive objective data about the company’s financial performance exists.

The current Chairman of the Board, Garry Sladden, has been a board member since September 2013 and Chairman since November 2013.

Until this month when he resigned one of his roles Mr Sladden was Chairman of four other companies (car wash, ready-made meals, coffin manufacturer and a real estate funds manger and developer). Before becoming a full time director and consultant Mr Sladden was General Manager, Operations at Consolidated Press Holdings (the former holding company for the Packer family assets).

Here are a handful of the key metrics across the five financial years of Mr Sladden’s tenure (he commenced as Chairman five months into the 2014 financial year).

2014 2018 Change
Revenue: $179.4 million $142.2 m -20.6%
Gross profit $37.1 m $32.2 m -13.2%
Net Assets $35.4 m $14.1 m -60%
November share price (peak) 25 cents 5 cents -80%
Accumulated after-tax losses -$22.8 million
Number of CEOs: 3
Number of CFOs: 4


Given that the company share price was actually 29 cents when Mr Sladden was elected Chairman he has presided over a reduction in shareholder wealth of 82.8%. In plain terms, if you held Ignite/Clarius shares worth $10,000 in November 2013 those same shares would now be worth just $1,720.

In that five year period Ignite/Clarius has never reported a profit.

That’s an unacceptable performance regardless of economic conditions but even more so in the context of the golden run the Australian recruitment industry has experienced in the past three years. Driving home this point was the Workpac 2018 financial year results reported in ShortList on the same day as the Ignite/Clarius shareholder ‘first strike’ action.

Workpac delivered outstanding results in all key financial areas: Revenue up 46% to $1.326 billion, gross profit up 30% to $115.9 million and net profit before tax up 122% to $18.5 million.

Is there anything objectively positive to report at Ignite/Clarius?

I found a handful of reasons to be optimistic that better days might be ahead:

1) Next month the CEO, Julian Sallabank and CFO, Mahendra Tharmarajah will both celebrate their two year anniversaries in their respective roles. After the instability in these two roles across the three prior years I would hope this continuity of role and tenure indicates a productive partnership where Sallabank’s and Tharmarajah’s knowledge of both Ignite/Clarius and the recruitment industry is now up to speed and starting to bear fruit.

2) The hiring of regional leaders in Victoria (Jayson Eichstadt), NSW (Stephen Hockey) and Queensland (Bruce Moss) during the past twelve months.

3) The directors have not increased their directors’ fees over the past four years.

4) The directors did not draw any consulting fees for services above those they provide as a board director.

5) All three directors and the CFO purchased Ignite/Clarius shares during the year (Sladden 65,000, Elliott 50,000, Saphin 100,600 and Tharmarajah 200,000).

6) The CEO did not receive a year-on-year salary increase nor was he paid any form of bonus.

5) Gross profit margin has shown small but steady growth (2016; 21%, 2017; 21.3% and 2018; 22.6%).

6) Better cash flow management has reduced debtor financing costs from $3.25 million in 2017 to $628k in 2018.

7) A nearly $1 million improvement in the cash position ($1.79 m in 2017 to $2.78 m in 2018).

8) This year’s Annual Report makes no mention of the company’s cringe-worthy Mission and Vision (hopefully David Brent has taken back possession of said Mission and Vision and they will never be spoken of again).

Ignite/Clarius has two other directors; Jennifer Elliott (elected May 2014) and Craig Saphin (elected March 2017).

Ms Elliott, although a highly-credentialed and accomplished executive, has no prior experience, at any level, within the recruitment sector. Mr Saphin, by contrast with Mr Sladden and Ms Elliott, has excellent experience in the recruitment sector, having worked for en world group, a Japanese recruitment and talent management company, for nearly nine years, culminating in the role of CEO for over four years, .”….where he led the growth strategy of the recruitment company from 100 members in Japan to 800 members across 7 countries across Asia and Australia in 5 years.”  

I am optimistic that Mr Saphin’s specialised knowledge, not possessed by Mr Sladden or Ms Elliott, is starting to have an impact.

Given the warning shot fired in this week’s AGM by the agitated Ignite/Clarius shareholders it’s clear that the existing board and CEO need to deliver substantial financial improvements in the current financial year.

The consequences for non-delivery will undoubtedly be sweeping changes at board level come this time next year.

0 0 votes
Article Rating
Notify of

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Inline Feedbacks
View all comments
Would love your thoughts, please comment.x
Scroll To Top