The Getswift Ltd (ASX:GSW) share price fell 10% to $0.61 following the release of the company's half year results. Getswift, which formerly had a fully diluted market capitalisation (including escrowed shares) of up to $700 million, released what I thought was an ugly report:
- Revenue grew 188% to $0.3 million
- Loss after tax grew 964% to $5.5 million
- Net tangible assets per share of 52c
- Management voted themselves a pay rise
- Outlook for continuing investment in R&D and expansion
- Outlook for strengthening governance, compliance, legal, and investor relations functions
So what?
Probably the thing that stood out most to me was the self-enriching approach from management. Around half of Getswift's loss after tax was due to share based payments of $3.3 million, which reflected the issue of 1.9 million performance rights and 1.4 million options issued during the half.
On top of that, the Remuneration Committee decided that Bane Hunter (executive chairman) and Joel MacDonald (managing director) deserved a 50% pay rise. Both will now receive $370,000 per year, compared with $250,000 (MacDonald) and $240,000 (Hunter) in 2017. According to the 2017 Getswift annual report, "the functions performed by a Remuneration Committee can be adequately handled by the full Board."
After accounting for director resignations, the only board members are Bane Hunter, Joel MacDonald, Brett Eagle, and Nevash Pillay (who had only been there for 3 weeks and resigned just over a month later).
So, after a period that included contract losses that were only revealed to the market by a media investigation, a month-long suspension, and the parachuting in of PriceWaterhouseCoopers to oversee its compliance, it appears that Getswift management has effectively voted themselves the pay rise.
To be fair, those things were subsequent to the end of the half year, but this came after management launched a special options issue for themselves in April 2017 too.
Hunter and MacDonald each now get paid more than Getswift earned in revenue during the half. Getswift also didn't provide any guidance or forecasts of whether revenue might continue to grow – but they did say costs were going to go way up.
Now what?
The other big news was that Getswift announced that ASIC made a request for documents this morning. There was no further information provided and Getswift stated that this should not be construed that a breach of the law has occurred. I am speculating here, but I would guess that ASIC may be looking into whether Getswift may have made false representations when it raised capital from investors.
There is also the ongoing class action to contend with, and potentially further lawsuits if investors who committed to the capital raisings last year decide they want their money back.
With so much cash in the bank, assuming it is not reclaimed by class actions, Getswift can live for years and years, paying management's salaries and consulting fees. Given the apparently self-interested approach from management on this one so far, and the lack of obvious progress, I think Getswift is completely uninvestable.
