The 2021 financial year results produced, yet another, operating loss at Ignite in a year that the Australian recruitment industry roared back into profit riding the unprecedented wave of jobs growth.
Gross profit declined from the previous year, as it predictably does every year under the eight-year leadership of the current Chairman, Garry Sladden. Gross profit has declined from $37.1 million in 2014 to $13.5 million in the 2021 financial year. Over those eight years losses have topped $35 million.
Ignite’s gross profit margin (GPM) was 20.96% in 2016. Five years later GPM has slumped by nearly half with the 2021 result of 11.84% a new low for the company. This relentless decline of the GPM indicates ineffective pricing and low consultant productivity that the Chairman has not been able to arrest.
Earlier this year a new CEO commenced, more than two years after the previous CEO’s resignation was announced.
The CEO’s report, on pages 2 and 3 of the 2021 Ignite Annual report contained the obligatory “strategic plan”, specifically;
Our three-year strategic plan is underpinned by our staged plan to “invest, transform and grow”. This plan focuses on developing the foundations for Ignite to embark upon a path to consistent growth and improved profitability.
I wonder if the Ignite Chairman apprised his new CEO, Tim Moran, of the previous Ignite “strategic plan”, the laughable 2020 Back in Black strategy.
As I reported in a 2019 blog:
The progress with respect to the 2020 Back in Black strategy merited 291 words in the 2018 Annual Report but failed to gain any mention whatsoever in the 2019 Annual report. We can draw the obvious conclusion about how effective this project has been.
Moran details the key planks of his three-year strategy as follows:
- Balance the portfolio contribution between our Specialist Recruitment and Managed Services businesses;
- Refine our service offering within the On Demand IT Services and People Services businesses;
- Create a national resourcing function to service all business units and allow Ignite to create best in class talent pooling;
- Implement a vertical market structure within the technology segment of Specialist Recruitment;
- Build out our successful NSW engineering business to offer greater capability in the STEM (“science, technology, engineering and mathematics”) sector; and
- Develop a national structure for Federal Government customers, building on our core ACT business
Although I don’t doubt these are all things would be somewhat helpful in improving Ignite’s performance the most critical task is rebuilding consultant morale and performance, no doubt at a very low ebb, given the revolving door of CEOs and general managers over the most recent past and the interminable wait for the Chairman to recruit a new CEO.
The recent appointments of Nikki Grech (ex-Manpower) and Bernt Schindler (7 different agency employers across 19 years) to the respective positions of Executive General Manager – Talent Solutions and Operational Excellence, and General Manager – Vic, NSW, and WA, take on particular importance given the Chairman’s woeful track record in either selecting or retaining, the GMs with the necessary credibility and skills to reverse the ongoing decline in consultant performance.
Moran’s assertion, contained in the Annual report that, “We strongly believe that our brand and our strategy will now attract the talent to deliver on our objective”, seems wildly optimistic at best and naïve and deluded at worst.
I can assure the new CEO that no decent recruiter or leader will be attracted by Ignite’s brand or strategy. Moran’s going to have to rely on his personal credibility to do all the heaving lifting in attracting the necessary talent to reverse the eight-year talent drain at Ignite.
The Ignite 2013 Annual Report noted 290 staff across 12 offices. The comparable metric in the most recent annual report is 75 staff across five offices.
Chairman Sladden is the equivalent of a Premier League manager who has presided over his club’s repeated relegation, from the Premier League to the fourth division, yet continues to insist that it’s the players, not him, who are to blame for the club’s slide into oblivion.
The most recent annual report lists Sladden’s total income from his Ignite duties over the past two financial years as $937,504. This seems an extraordinary amount of money for a company that has fewer than 100 staff and continues to post year-on-year operating losses.
The only bright spot for shareholders has been the rise in the share price from 2 cents last June to 15 cents earlier this week, a level not seen since August 2016. Other than the strength of the broader employment market there seems little tangible reason for the price rise.
Why don’t the shareholders replace the failed Chairman, I hear you ask?
Ignite’s largest shareholder, with 25.67% of the listed capital, is Gold Tiger Management, which is an investment vehicle owned by the Plummer family. The Plummers have been one of the most astute and successful investors in the Australian recruitment industry in the past 60 years, hence it’s a complete mystery to me why John Plummer, Gold Tiger’s Chairman and Executive Director, continues to support Garry Sladden as Chairman of Ignite.
Is there any hope for Ignite’s other shareholders?
This time last year Ignite’s second-largest shareholder, Octavium Capital (holding 22.5% of the issued capital), challenged for two places on the existing board and lost the vote by just under 8 per cent.
This year Octavium Capital, led by Executive Director Daniel Altiok-Brown, is back for another tilt at the board offering up South Australian recruitment industry veteran Phil Speakman, former Forstaff CEO, Trevor Robertson and former Randstad COO and current MitchelLake Group MD, Michael Solomon as their three choices.
The upcoming Ignite AGM will be held on the 23rd of November.
Let’s hope enough shareholders are motivated to cast their vote for change as the current Ignite board has presided over mediocrity for far too long.