Leading an IPO in Uncertain Times > Nick Fiori, CFO | Source Certain

Western Australia’s much-vaunted Mark McGowan is on a course toward economic transformation. He’s changing gears and shifting the State’s reliance away from the resources sector to becoming a State of innovation.

McGowan knows WA can’t sustain being a one-trick pony – where mining and petroleum has charged the economy for over a century. In 2019-20 resources accounted for 94% of the State’s income and 46% of Australia’s.

And while McGowan looks to turn his vision into reality, 30 kilometres north of Perth, hidden amongst established industry, is the type of company where R&D thrives, and the ideas of the future are created.

Source Certain is the epitome of McGowan’s hopes and dreams of what WA harbours to attract, develop, and embrace.

Its business is provenance science, and its TSW Trace solution can verify the origins of almost anything naturally derived.

Anything and everything has a unique chemical fingerprint that links to a specific geographic location, making the company’s ability to trace origins of products a global hit. 

Several years ago, Source Certain was responsible for thwarting a global multimillion dollar gold fraud and theft racket that spanned across four continents and led to the arrest of more than 100 people – from bikies to members of the mafia.

It has tracked blood diamonds and is protecting Australia’s prawn industry from fraud risks and millions in lost revenue.

And Source Certain’s technology prevented Vietnamese prawns disguised as Australian prawns from appearing on supermarket shelves and being sold to unsuspecting Aussies.

Three weeks ago, the company won at the National Seafood Industry Awards, for its contribution to the prawn industry’s provenance program.

The award reinforced how critical the company is to secure the sovereign interests of Australia’s export industries.

Billions of dollars in export and trade rely on the authenticity of market products and their sourcing, which makes Source Certain a national asset.

Demand for the company’s expertise doesn’t stop at Australia’s border. Source Certain’s technology is in global demand, and it is fast becoming one of the most important companies of the 21st Century.

Its TSW Trace solution forms the basis of the company’s new commercialisation strategy and is used to increase transparency in seafood, mining, diamonds, cannabis, textiles, and agricultural supply chains at a time when customers and businesses are demanding clarity on ESG merit.

Earlier this year, Source Certain won a $2.6m deal with the UK government to ascertain if Russian forces were stealing and exporting Ukrainian grain, allegedly seized during its occupation of Ukrainian territory.

The project has Source Certain analysing the chemical composition of Ukrainian grain samples to determine where they were grown and harvested.

Last year, it signed a deal with SCS Global to become the-go-to technology in the new international standard to bring transparency into the lab-grown and natural diamond supply chain.

Global uncertainty, corruption and conflict make what Source Certain has to offer invaluable. And that’s where the company’s overwhelming appeal lies.

Listing for any company is always a challenge. Getting it right and selling the sausage and the sizzle to win over the hearts and minds of investors is a gamble. Knowing when to go is always a game of chance.  

Which makes Source Certain’s decision to IPO during a period of global economic uncertainty fascinating.

It’s a gamble that many believe is a great risk.

But the reticence of the hesitant may be better explained to their not understanding Source Certain’s business or the importance of provenance.

Source Certain is a company uniquely built to weather challenging economic circumstances. What the company does, can’t be replicated. Some claim they can, but the forty years of technical development that underpins their services means they can’t – which adds to its appeal and what investors should know.

Nick Fiori, Source Certain’s CFO, and key strategist driving the IPO, says, the business community might perceive it’s rolling the dice in heady times, as dubious, but it isn’t.

Conditions like global uncertainty create environments where crime and corruption flourish – it’s an inevitability of the circumstances presented, which Source Certain is asked to deal with, and that makes the likelihood of its IPO being a hit rather than not.

The company’s plan is to list, with the offer currently open, and issue shares at 20¢. It aims to bank at least $5m, with the right to take on another $2m should there be enough investor demand.

If the IPO is a success, its value will range between $21m and $23.8m, according to its prospectus.

Regardless of the uncertainty or volatility of the markets, Fiori says, the decision to IPO wasn’t made overnight.

“What’s worth considering is that volatility brings our services into even greater demand, and that’s not a bad position to be in when you’re able to prosper in all types of environments,” he says.

“Our decision to list was made over a year ago, so changing markets, volatility, and uncertainty were factors we considered. We planned for all events and how they could unfold.”

“But in the end, our key objective was to position ourselves regardless of the state of the market.

We’re a business of long-term growth, hiring new talent, implementing new technology, moving into new facilities, and winning major contracts. That’s been happening consistently, so we’re doing something right.”

“As a business”, Fiori says, “We need to continue to perform regardless of whether we’re undertaking an IPO. That means focussing on growth while understanding how we’re getting there and what we’re doing.”

“We aren’t listing for short-term gain, but rather for long-term growth. We’re building a business, and our objective is to construct a balance sheet that attracts investors and new business and delivers returns for our shareholders,” Fiori says.

Fiori’s strategy is to build a market and empower staff to make decisions that are right for the business while giving them the support to do so.

He says the strategy is also about letting the world know Source Certain exists and how it operates as a business, and what it’s doing to grow its future.

“As a company, we are investing in growth, and the market is now coming into the lifecycle of the business. Speculation has been removed around the technology, it’s been tested, contracts are being won, the business is scaling up and we’ve received market validation,” Fiori says.

“We aren’t coming in pre-revenue. We are coming in post-revenue. We have contracts and clients willing to pay for our services.”

The current global circumstances reinforce the need for what Source Certain offers, and why its listing is a good thing because it’s exactly the type of company that WA needs to become a State of Innovation.