Half of the board of Southern Cross Electrical Engineering has walked off the job, including chairman John Cooper, after it flagged a change in direction, a number of redundancies and cost-saving initiatives in response to the tough climate for local contractors.
Half of the board of Southern Cross Electrical Engineering, including its chairman John Cooper, has quit citing a difference in opinion over strategic direction as the company announced a number of redundancies and cost-saving initiatives in response to the tough climate for local contractors.
Three of the company’s six board members, Mr Cooper, Jack Hamilton and Peter Forbes, resigned, citing a difference of opinion regarding the company’s future direction. The remaining directors believe the current strategy to target growth opportunities both organically and through acquisition is the right course of action.
Its previous chief operating officer, Simon Buchhorn, has been appointed as a non-executive director, while Derek Parkin has been appointed as chairman.
Mr Cooper will join Frank Tomasi on SCEE’s list of former chairmen.
Mr Tomasi, who is the founder of the company, has retained his position on the board as a director, and is the company’s largest shareholder with a 39 per cent stake.
SCEE said it would save between $3 million and $4 million from the redundancies, while the termination of the lease on its Brisbane office to move to a smaller premises would save a further $400,000.
“The company’s plant, equipment and systems have been reviewed and the sale of assets that are surplus to forecast activity requirements has commenced,” it said.
“It is anticipated that the disposal of assets and write-down to recoverable values will result in a pre-tax loss in the current year of $3.5 million.”
SCEE also said a substantial amount of its $17 million in goodwill would need to be written off, and also flagged the possibility of moving into alternative markets.
“With the volume of available work in the domestic resources construction sector expected to remain low in the near to medium term, management has been evaluating the entry into other potential revenue streams,” it said.
SCEE said its current board size was now more suitable to current market conditions, but it would look to address the need for a greater proportion of independent representation in the future.
“The board is not in a position to quantify the full financial impact of the restructuring at this point, and as such, cannot provide definitive full-year earnings guidance,” the company said.
“The company is forecasting that it will return to trading profitability in the final quarter of FY15 although it still does not expect to be trading profitably over the whole H2 FY15.”
In terms of strategy, the company said: "The board reaffirms the company’s previously stated strategy of targeting growth opportunities both organically and through acquisition."
"Increasing revenue from operational maintenance and sustaining capital programs remains a core strategic target.
"With the volume of available work in the domestic resources construction sector expected to remain low in the near to medium term, management has been evaluating the entry into other potential revenue streams, both geographical and in other adjacent or complementary sectors.
"This evaluation activity is expected to continue over the coming months.
"Management continues to monitor and evaluate merger and acquisition opportunities that are consistent with the strategy."
Shares in SCEE were 7.1 per cent lower to 26 cents a share at 9:50am.
