Havelock Europa Share Discussion Threads

[greengiant] 18/12/2015 11:58

5 mins before my next call.

If the market values Havelock at £3m now with a EBT of £500k - a 6x multiple
If you delist and the market halves the valuation £1.5m (3x multiple) - what has fundamentally changed?
Nothing other than the EBT could be £700k without the additional costs.
I prefer valuation rather than market reaction.

A

[neverforget] 18/12/2015 10:27

thanks for the honest post. 20g on pr? what for? more lack of reality from the company! now I know why you left the board. well done. hope the sale comes off. but even you must admit that the share price will go down on a delist.

[greengiant] 18/12/2015 08:10

Part 2 - The issues raised by Gargoyle

Section 83 of the company's Articles of Association states that the company should have a minimum of 4 and maximum of 12 Directors (Exec & Non Exec). That doesn't meant that you can't Have one strong Chairman and appoint another Exec (or have 2 strong Non Exec's). There is guidance on best practice but we do remember that this is now a sub £3m company with 3 Non Exec's.

Personally I have no issues with the non exec's - they are all extremely nice people. However you now have to look at whether they are the RIGHT people. Look at the non execs and you see nobody with relevant industry experience. Also, if I had to compare Peter with the current Non Exec's unfortunately it isn't even close. You can remove directors through a GM without any issue as long as you follow the process. It is easy to do.

Delisting - For me, this is a very difficult one. You are correct delisting saves significant costs - AIM Fee's, NOMAD fee's, there is no need for PR (believe it or not the company pay approx. £20k pa on PR - anyone seen any?) and Non exec fee's. So there is a fairly significant saving - especially when you compare with this years expected profit (approx. another 40% uplift in profit).

As you say there are significant downsides - the biggest being market reaction initially followed by the "How the hell do I sell my shares?" I have exactly the same issue as everyone else. If I was taking this private and didn't have the same issue I could understand the concern

I have spent my entire working life building up private companies and selling them - I am in the process of doing that now. We have a company that was valued at £6m in 2012 and is now in the process of being sold for close to £40m.

The question should instead be phased - if I had to wait 3 years, would I make more money with Havelock as a listed company or as a private company with a view of ewxiting after 3 years. A strong management team with a coherent strategy and an urgency is a strong force.

A far as dilution - The EBT and the issue of shares for failure should all ready have answered that one. There are safeguards that can be put into place, non more so than my voting against the resolution last year to stop the company issuing another £1m shares at 10p to fill up the EBT.

That said, the management team needs to be incentivised and this is something that has been lacking. Directors should be significant shareholders, then their interests are aligned with shareholders. So whether listed or private this should happen anyway and in my view it should be significant - so significant that it hurts if it is not achieved.

gg

[goliard] 18/12/2015 07:45

Well at least it is a decent reply Andrew. ;-)

I do appreciate how difficult boards can be and sometimes tough action is required.

Good luck!

[greengiant] 18/12/2015 07:40

Goliard - It is not as simple as that :-)

Okay this is going to address 2 points in 2 long postings.

#So here we go, when I joined the Board it was (from my perspective) to assess the quality of the FD (my role - so I know a good one from a not so good one). Grant was technically excellent, but the moment I got the Mgt Accounts I knew that he wasn't right. The information was poor (and in some cases incomplete) there was never any doubt in my mind that a change had to be made in that role. Hence the appointment of Ciaran, during my time on the Board, Ciaran really impressed me (I might even say he is nearly as good as me - Chuckle). On a serious note, he is a star - and exceptionally competent.

In December 2012 - I had a meeting with the Chairman stating that in my view Eric was not the person to run the company. Not that Eric did not do some very good work in reversing a culture that was on its knees but he was certainly in my opinion not the person to drive the business forward. I was told that the Board could not change the FD and CEO in the same period. This was (with hindsight) an error.

During my time on the Board I had contact with David Ritchie - and here through all this mess we find our second superstar. David listens, really listens and is getting to grips with changing the Havelock culture to understand that at the centre of everything is the customer. David has the potential (with the right guidance) to be one of the best, not just for Havelock, but one of the best CEO's out there. I have met a few and he is very good.

I had no hesitation in removing Eric. I have been close to Peter Dillon for many years, and he called Eric (and the decline of value) at Havelock down to a tee. He knows exactly what needed to be done at Havelock and had just started the process to help to fix this company. This is a person that I trust and the person who I wanted to take my place on the Board - I felt comfortable (in fact more confident) with Peter on board.

To say that the non-execs were opposed to Peter's appointment is an understatement (maybe they felt threatened) and I had to threaten a GM to get him on board. He was finally appointed - in my opinion very reluctantly.

Peter leaving the Bard is a red line crossed.

So - 50% of the job has been done, now the remaining 50% of the job WILL be done. That is enough for me, I have significant support behind me to make the necessary changes and these changes can be made by the relevant parties themselves or they can be made through a fight. But I guarantee you there will be changes.

gg

[gargoyle2] 18/12/2015 05:24

Thinking aloud a bit here.

1) NEDs: why does this company have three NEDs? Unless it's an AIM requirement, one strong chairman should be enough. MacLellan is clearly not the right guy. He might be a nice chap and well-connected (at least in Scotland), but he clearly doesn't have the balls to question the executive management and take tough decisions. He should never have allowed Prescott to ruin the company. Where's the accountability? I've no idea what Kerr and Sweetman do there -- all part of the old boys gravy train, I suspect. As far as I know, it takes only a 50% vote to get rid of a director. With AB, Clayhill, Hargreave Hale and others (including Prescott with his 3%), why can't that be done?

2) Delisting: Whilst a delisting would allow the company to cut down on costs and allow the management to focus fully on the business, it does have disadvantages for a minority shareholder. These include:
- Exit: there is no real market for the shares, so an exit is almost impossible
- Information: the company is under no obligation to make trading statements or keep the shareholders informed as to how the business is running, other than through the publication of accounts in accordance with the Companies Act
- Dilution: the shareholders have no protection from dilution of their shareholdings. Arguably that's the case anyway here, but it's probably more of an issue in an unlisted company because of the lack of visibility
- Retention of management: Assuming AB's confidence in Ritchie and Kennedy is well-founded, would they be happy running an unlisted company? They would need an incentive package, with incentives both for performance and staying with the company, but that sounds appropriate to me.

As far as the business is concerned, my impression is that Ritchie and Kennedy are tackling some of the issues that horridharry and others have talked about. If not, then the company is going down whether listed or not.

[my retirement fund] 17/12/2015 21:49

I would be able to manage this company and achieve a pbt of at least 5p within 3 years.

[goliard] 17/12/2015 21:13

Greengiant - you sound like a journalist writing an article on the company. You have been here for years and built a large stake and you're now wondering if NEDs think they are the right people to be on the board!? You've been on the board and then left and now wonder outloud about what is right. It seems to me that you are in denial about this investment. I respect what you have done elsewhere, but you really need to either do something or sell up. I may be wrong but it feels like you accomplished 50% of what you hoped for on the board and then quit when it got really tough. Sorry, but that's how it looks from the perspective of someone who follows with interest, but hasn't ever been to a HVE board meeting. Maybe I'm wrong. Maybe you are.

Serious question. What are you going to do about it? Please don't tell me that things aren't that simple.

[red army] 17/12/2015 19:32

I might be interested at the right price.

[horridharry] 17/12/2015 19:12

Not for me if you see this company is very easy to fix unfortunately they couldn't see the obvious staring them straight in the face. I believe that the fundamental problem, is the attitude. The entire burning platform scenario well Havelock the platform is burning, you are stood on the last plank. dont sleepwalk into oblivion this is a great and proud company get a little respect and start to question. The nonexecs are useless. The factory floor believe they are useless and unless you are in accounts you dont Know Mr Sweetman. Kerr? Doesn't speak to anyone. Mclellan has spoken to people but is about as motivating as Jose Mourhino at the moment. Sad. The 2 chaps are trying the best and Dillan was the right person. Dont know what happened but that is a big hole to fill. The future was better with him on board. Just out of interest gg there is another option and it is still on the table but this company can still be sold and there are still one company at least interested. Nowhere near what you could have got last year though.
Lemmings is the image that comes to mind and you know what it is super sad in a place with such high unemployment. Be fearful. Very fearful

[neverforget] 17/12/2015 12:01

Horridharry would be an obvious choice owns successful company in the supplying into shop fitting companies. I would not be having a very settled Christmas if I was the non execs. More blood in the streets to flow based on this performance. Maybe they will do the honourable thing and announce they are retiring and seeking their replacements It will be very embarrassing for them to have their city reputations tarnished through a public fight if AB goes that way. Ho Ho Ho

[profdoc] 17/12/2015 10:21

Apart from Andrew, are there other shareholders here with the requisite knowledge who we could nominate as NED? A fresh pair of eyes might be useful.

[neverforget] 17/12/2015 09:16

Comedian "have they succeeded or failed". There is a picture it is called a share graph and it gives you your answer. When will people realise that these are the leeches who sit happily sucking the blood from the company whilst giving. Itching back? Their financial risk is limited to about 2% of the money they have all reDy taken from the company. What have they added for that.

[greengiant] 17/12/2015 09:00

For me. I think the non execs need to ask themselves whether they have succeeded or failed and whether they are the appropriate people to help Ciaran and David move the business forward. I do believe in the work being undertaken by David & Ciaran, but it has been 5 long years the non execs have been there and the share price is where it was 5 years ago.
Anyway, I have always been a true believer in the people who have a financial interest ( shareholders) determining the fate of a company and its Board. That is still my position- maybe the board will reflect on that.
Anyway - lots of other stuff to do so going back to driving that rather than this until the moment is right.

Andrew

[timnet] 17/12/2015 08:10

AB
When you say "personally a step too far" - do you mean for you, or for Peter Dillon?
Thanks

[neverforget] 16/12/2015 20:51

at 72 would you really have the drive and energy to buy this neither does he? face it this company was run awfully by Prescott and the current profit warnings are a result of mismanagement which you still have 3 members of the board who have overseen that. whyare they still there? that is the question you have to ask yourself.
interesting statistic: 5 years : 9 directors gone not to mention the sales director and old commercial director a rate of over 2 per year.
nice stability.

[red army] 16/12/2015 19:41

If I was him I would be putting in a bid for the company - its a no brainer and could be achieved at <£5m . Great buying opportunity and if you know the customer base then why not???
I am wondering whether the bank cut them out because of bad service or cut backs???

[greengiant] 16/12/2015 19:21

Killieboy

Not at all. Any strategy to enhance shareholder value has to be considered including delist and sale. Let's be honest this hasn't exactly been the most dynamic set of non execs has it. Anyway, Peters departure is unfortunate the company has a long way to come back from this. Personally it's one step too far.

Andrew

[killieboy] 16/12/2015 19:06

greengiant: "....delist should not scare anyone.....". And you were on the Board; the mind boggles!

[roastedpeppers] 16/12/2015 19:04

Yee gads what is happening here? Another one gone just after buying shares and 2 months after being appointed. What next in this soap opera. This is better than Coranation Stret. Maybe Eric will come back from the dead. Stranger things have happened. Seriously tho it is a disgrace.

[mesquida] 16/12/2015 15:16

So is Dillon coming off the Board in advance of making a bid for the company?

[my retirement fund] 16/12/2015 14:42

.....thats what your there for!

[neverforget] 16/12/2015 14:38

And not willing to buy shares. The greatest vote of confidence they could give the market would be hands in pockets. Obviously forgotten where their pockets are. Happy to take and sit around acting all important but not happy to risk idiot shareholders will do that.