A strong board requires a mix of expertise from different industries. Much to its detriment over the past few years, the Hughes Drilling board is exclusively comprised of veterans from the drill and blast industry.
Unlike most listed companies, there are no lawyers, bankers or accountants on the Hughes board. And with Queensland rugby league legend, Gary Belcher, retiring from the board in April, the sole pillar of diversity fell.
Yesterday, the company announced the retirement of two directors, including founder Bob Hughes, and the appointment of a new executive director, Douglas Grewar. Grewar has an “unbridled passion” for open cut mining and the company’s announcement spent four paragraphs attesting to this. However, we were pleased by the last sentence of his four paragraph bio. It appears he has more than one string in his bow.
Being named Doug is a fine qualification for anybody involved in mining
@Ben G – Brilliant!
Ben G – I second absolute gold. I will point out by having a bachelor of business, Doug probably should have gotten some or all credits for those MBA subjects.
I hope this guys got HD’s on his accounting and finance subjects – looks like they have a tough road ahead
Had a closer look at this. Board has been asleep at the wheel – matters at hand didn’t arise overnight. Scrambling to avoid ASIC and ASX scrutiny seems to be the order of the day.
Hughes has gone (pushed) and never had any Board experience or quals for a listed company. Still has 30% which could be a problem for the Board in the future. Belcher has gone and was given a guernsey by Hughes through the football connection – also no Board experience or quals. A job for the boys.
JSW related directors remain. Although there is board experience, there is also a well documented history of their businesses going south a couple of times already. Branson is MD of at least one other company and tied up with a couple more as well as COO of HDX. Branson and Silverthorne are tied up in North West Quarries, sharing directors duties with GM of HDX’s main competitor. Silverthorne is still a director of lots of other entities and has some significant issues arising from past business ventures (ATO woes). Grewar looks new but isn’t – was CEO of Viento that collapsed last year and is a director of Viento Contracting Services with Silverthorne. Disturbing that some directors’ previous public profiles are being removed from related company websites.
No independence here. Too many close tie ups and competing interests and other executive director responsibilities with other companies. Lack of accountability and DD? Certainly looks like it.
Board needs a complete clean-out.
Well done Bruce.
You’ve provided enough here to at least warrant a peek by ASIC and/or the ASX.
I have a more nuanced opinion. Having the board they had is probably part of the reason they are one of the more efficient and effective drilling providers in Australia (if not the most efficient one). So every bad probably has its good side.
Are there any plans for Forager Funds to push for board representation?
The fact that very few directors remain and Forager funds owning 15% of this company (effectively being the second largest shareholder).
While you do not have any history of activist investing, having voted down the remuneration package at the last AGM is a step on a path in that direction I assume?
There is tremendous value in this company but that value is obscured by debt and clumsy moves/communication.
I have no idea whether Hughes Drilling are the most ” efficient and effective drilling providers in Australia”- that would be nice but I think the main focus perhaps should be on its financial management rather than its prowess in site operations.
I agree this is a company that (potentially) has value but it can only be crystalised through solid financial management stewardship which has so far been lacking.
Debt when used appropriately can have a brilliant multiplier effect on the future worth of a company provided it can service that debt & either grow the business &/or streamline operations with efficiencies; conversely it can destroy value to the same degree or indeed become an existential threat.
The company has solid cash generation that should be used to pay down debt rather than chase further contract awards that require new investment in plant & equipment (which has been the case). If it can’t utilise current internal surplus capacity to win new work then it should be content to let further debt funded growth go- at least for now. The nonchalant attitude to debt could see this business easily undone unless things change. I’m not sure the departure of Bob Hughes and the other Director is enough to keep that from happening.
Since this goose is now officially cooked can we get your thoughts on how it came to this?