Welshpool-based solar water and power solutions provider Solco Ltd is scouting for its next strategic growth opportunity, and aims to raise $2.6 million through a rights issue to provide working capital and fund strategic acquisitions.
Welshpool-based solar water and power solutions provider Solco Ltd is scouting for its next strategic growth opportunity, and aims to raise $2.6 million through a rights issue to provide working capital and fund strategic acquisitions.
The management team is confident the remedial work undertaken by managing director and former WorleyParsons metals and minerals division head David Richardson, since his arrival in August 2006, has put Solco in a strong position to capitalise on significant growth in the sector.
Director and company secretary, John Beech, said that, after a challenging few years, the company had gone through significant improvements during the past 12 months, undertaking a major rationalisation of the business and a complete management and board overhaul.
Solco’s problems came to a head during the 2005-06 financial year, when a combination of production problems, poor strategic execution, and inadequate management controls resulted in a net loss of $5.89 million.
Upon his arrival, Mr Richardson took a 43.5 per cent stake in the company in return for $1.5 million of loan funds, which essentially valued the company at just less than three cents per share.
Key strategies implemented by the incoming managing director included the rationalisation of a number of underperforming business divisions, wholesale changes to the management structure, and action to address quality and warranty issues associated with its water systems.
The number of staff was reduced significantly, from 30 to eight, with a greater number of technical staff appointed to the company.
Manufacturing was stalled for a period of time, before being outsourced.
The appointment of former Allens Arthur Robinson senior partner Steven Cole as chairman of the board signalled a complete changing of the guard, after the departure of long-serving chairman Robin Forbes.
“The situation was very serious. We had independent people come in and have a look at the business. The problems were deeper that we were led to believe,” Mr Beech told WA Business News.
“The main issue was that business systems were not being applied. The quality was not where it should have been.”
With a more disciplined and effective management system and strengthened corporate governance, the board also worked towards instilling a more business-focused culture within the company.
“Now we’ve got good systems in place, the focus on making a profit, rather than just going through the motions,” Mr Beech said.
The company was also helped along by the federal government’s $150 million solar initiative in the May budget, which led to a 50 per cent spike in its share price to 12 cents.
Mr Beech said the company was currently in discussions with a number of companies with a view to establishing a strong national presence for the company through further acquisitions, targeting the growth-driven sustainable energy and water sectors.
With Mr Richardson’s term drawing to an end, Mr Beech said he had demonstrated his value to the company.
While Mr Richardson will be staying on in a more strategic role, the company is currently looking both internally and externally for a new managing director.
