Phil Hutchings

This is clearly a new and still a developing company. How do you convince customers to get the product in to their network and try it?

We have got quite a sophisticated way that we do that, particularly when we deal with utilities that are notoriously bureaucratic and slow moving. As you would expect, as they have got to deal with reliability and safety, they don’t want anybody hooking into the network, so what we normally do is put two or three in for trials first of all, let them use them for some months then when they are satisfied then they will order 20 or 30. And then when that is ready to go they order more.

That process has worked well for the last 18 months. Now we are finding that some people are just buying site unseen, as we have enough of a reputation now that they don’t need to trial it.

Is that why the IPO is necessary? To help meet demand?

Pretty much. We are raising money basically to expand the factory. Our phase two factory was actually opened by the Queensland Treasurer August 10 this year and then we put that on a second shift about six weeks ago, and now we are on two 10-hour shifts. So it’s almost working around the clock now. We’ll keep it that way for a while and then we are currently planning our phase three expansion and that will be running by mid-next year so that will be a much, much bigger factory up here.

The actual capital costs of the expansion aren’t much, but the working capital – I mean just the inventory, the raw materials we need – soaks up a lot of money we need to finance.

Why a float? It’s sounds like you tapped into private investors a few times, so is the float recognition that you will need to continue to raise money over the next few years as you continue to ramp up?

No. What we’ve said is the money we’ll raise for now is enough to achieve what we need to do. So this should be the last raising we do.

The reason a float is a bit more nuanced is that when you’re dealing with the big utility companies, if you’re a little private company that doesn’t put out its accounts, they don’t trust you. I’m exaggerating a bit, but being public means you put out an annual report. We put out all our statements to the stock exchange, we’ve got visibility, we’ve got an independent board and it just elevates us and people can see that we’re much, much bigger. It gives us the kind of credibility we need quite apart from the money. We actually could have easily raised the money and stayed unlisted but being listed gives us the stability.

Fair enough. How have you found the process of going around and raising the capital?

We’ve had a huge amount of interest and mainly because the business is going so well. I think it’s been in the right space at the right time with a sound business, it’s been a smooth, simple and quite a fast process actually.

What sort of investors did you try and target? I mean, cleantech’s a big target area for investors right now, are those the sort of people that you’ve managed to attract?

No. My view of cleantech is that if you really look at it hard it sounds sexy but nobody’s really made any money out of it. We would never say we were a cleantech company. We certainly do help solar power work and we even talk about that, but we don’t position ourselves as a cleantech company. We’re simply an industrial business making industrial products for industrial companies. One of the applications happens to be a thing that actually does make the network cleaner and helps solar panels. So we’ve targeted both institutional and retail investors and we’ve got a nice mix of both of those.

Tell me about how the dynamic with the two founders, who remain heavily involved in the business but have been smart enough to bring in a CEO.

It’s actually a really interesting human case study here. The two founders are really smart engineers, Chris and Alex. Eighteen months ago they didn’t know me and I was introduced to them by a third party. I did some consulting to the company and then they got to know me and I got to know them. They knew they needed some professional management and basically once they agreed I should come in, I said to them I’ll only do it if you let me lead, you’ve got to give authority and they said yes, we respect that.

And I’ve got to tell you, it’s worked like a dream. They’ve accepted my authority, we’ve never had a cross word, I treasure their advice and they’re both very active in the business. So we’ve got a really strong working relationship and while they’re both different shareholders and both active, they clearly let me run the show and it actually is a text book case study on how to make the transition. I’m not saying it because of me, but because of those two guys have been willing to recognise that it’s time to hand over.

And what do you think all the parties got right? It sounds like everyone did a fair bit of due diligence at the start?

I think that’s right. I think that Chris and Alex are very smart people and they’re smart enough to know and I’ve got to say all the way along they’ve welcomed external advice, they’ve sorted the best advice where they can get it. They’re very tough, they don’t suffer fools but I think we have all gone into this as mature adults, knowing that we’ve all got to respect each other’s skills and work towards a common goal. From my perspective I try to be very consultative and inclusive and it’s worked well. And overlaying all that as well, we’ve actually got a better board, so that has been another cultural change that’s gone extremely well. It’s a different subject I suppose but it’s a classic case study and credit to Chris and Alex.

So do you have a firm date for listing?

No. It’s going to be I think in a window between December 10 and December 14. We should know the date in the next few days but it is our understanding that the ASX has actually been swamped with listing applications at the moment, everyone getting them done before Christmas. We just have to take our place in the queue to some extent.

So you list, and you go down to the Brisbane Stock Exchange and have a nice glass of champagne and hopefully watch the share price climb. When you get back to the office, will you be doing anything specifically different?

Working harder. I mean, the one thing is we’ve got quite a capital investment program now.

We’ve got a real expansion program to implement and manage, there’s about a six month program to do that, so that’s one thing. And the second thing is probably a bit more of a cultural change. I mean, in the last kind of three months we’ve gone from 40 staff to 55. We’re got another 10 situations vacant right now and if you look at the literature, it says many companies get to the stage where they go from 40 people to 100 is another big cultural leap, because you lose the intimacy in your workforce and you’ve got to put systems and procedures in place.

So that’s my challenge now – while we’ve got all this huge customer demand, I’ve got to put in place some systems and procedures and sort of complete this transition from this founder-owned company to one that’s got real systems. And that’s what we’re doing.

I mean this morning we had people running a course on workforce relationships and harassment and bullying and stuff. Now, we’ve got none of those issues at this place, but I just need to make sure we’re covering off on those things. So it’s just doing the little things right now.