A letter from the Chairman
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Dear All,
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It is a pleasure and a privilege to join the SRJ team as Chairman. Since my appointment in November 2019, I have spent time understanding SRJ’s business, culture, people and processes. I have worked with the management team to refine and clarify strategy and identify the roadmap of activities that will drive implementation.
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A company should be prepared for all eventualities, but the pace of recent events is unprecedented. However, I have been hugely impressed with the SRJ management team’s proactivity and speed of response. The significant reduction of economic output across industry has seen a marked change in the profile of opportunities but the SRJ team has been highly adaptive, positioning the firm to meet immediate industry needs. We have approached prospective clients with business continuity planning proposals and launched a supply chain disruption solution to ensure facilities can manage containment solutions in such circumstances. The team is responsible, reactive and resourceful in responding to client needs, securing new revenues and managing cost.
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The Board met on 18 March and agreed to take immediate and decisive action to protect the business. The goal is to increase our cash runway for as long as possible given the likely prospect of the proposed IPO being delayed until markets recover. SRJ has a small, talented team with proven capability and it is critical we harness these capabilities for the benefit of customers and partners. The Board has targeted four key areas in its response:
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1. Reassess target clients
We are shaping our customer proposition to prioritise short-term revenues and cash flow.
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2. Minimise cash burn
We have undertaken a review of all overheads and taken immediate steps to minimise/defer these wherever possible in order to increase the cash runway. We have requested all staff to agree to reduce salaries to 75% of contractual terms, for a temporary period commencing April 2020, while I have indefinitely deferred 100% of my Directors’ fees.
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3. Continue IPO preparation
We are in the depths of due diligence with various legal and accounting parties in preparation for the IPO and until recent events were on target for a May/June listing. We intend continuing with the process to ensure we are ready for an immediate listing when markets reopen. Being first to the market in such circumstances could prove very beneficial to the capital raise.
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4. Continue pre-IPO fundraising:
We have requested regulatory approval to expand pre-IPO fundraising activities to a wider audience in order to increase the cash runway. The terms of the convertible loan note allowed for an additional A$2m raise above the proposed A$5m.
These are undoubtedly challenging times but we are fortunate to be an agile and adaptable business, debt free (with exception of the convertible notes) and with low fixed costs. We know how to run a lean business and be efficient in our practices. While some firms will not survive this crisis, I’m confident that SRJ will emerge from it as a stronger, more formidable enterprise.
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Yours faithfully
Robin Pinchbeck
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Chairman, SRJ Technologies Limited