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Havelock Europa (LSE:HVE) is in the last chance saloon – if it continues trading at a loss of a million or three it will run out money within two years.
It has to get going again as a company that serves its customers so well that it can charge prices that allow a good margin to be earned.
The executives are up against it because the cock ups of the last few year have meant disaffection by (a) customers, and (b) staff.
Why might there be hope?
Its balance sheet is in fairly good shape.
It is debt free having repaid £4m of bank loans in the past year. Net cash is £2m with an unused overdraft facility of £4.75m. It has a small pension deficit. Thus it can survive long enough to implement the turnaround plan.
Competent new Chief Executive and Finance Director.
The largest shareholder, the entrepreneur Andrew Burgess, with 18.95% has worked with both David Ritchie, CEO, and Ciaran Kennedy, FD (he was a NED last year). This is what he has to say about them:
“David R is listening to the customer….Ciaran has a good understanding of the numbers and what has to be done”
“I have worked with both David and Ciaran and believe they are absolutely right in what they are doing.”
Posted after the shock November announcement and Andrew Burgess’ visit to the factory: “impressed by what is happening….everyone focused ….impressed by actions and the strategy.”
“Ciaran really impressed me…… a star – exceptionally competent…..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 CEO’s out there.”
“I am…100% behind the actions of David R and Ciaran K in what they are trying to do.”
Non-executive directors are on their way out.
An interesting story: Last year a highly respected businessman was invited to join the board as a NED. Peter Dillon, 72, was FD of Hargreaves services where, amongst other things, he helped the MBO in 2003 and the IPO in 2005. He owns 1.76% of HVE.
He was appointed to HVE’s BoD in October but, shockingly, resigned in December.
We have not heard from him why this was. However, we have some clues.
Andrew Burgess posted “To say the non-execs were opposed to Peter’s appointment is an understatement….I had to threaten a GM to get him on board. Peter leaving the board is a red line crossed….I have significant support behind me to make the necessary changes…..I guarantee you there will be changes.”
And in March 2016 Andrew wrote: “There are changes……….To read the rest of this article, and more like it, subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1
