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Entu – from bad (en)tu worse, issues “more complex and extend further” than expected

By Steve Moore | Wednesday 14 June 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

October 2014, 100p per share, IPO, Entu (ENTU) has issued a trading update commencing that its strengthened executive team is progressing with the implementation of a detailed action plan, as set out in the full-year results statement, to reduce costs, improve operational efficiency, leverage its supply chain, improve cash collection and strengthen controls. Good, good. But what? The shares currently more than 30% lower on the day at well below 20p. Uh oh.

This is with the energy efficient-home improvement group continuing that “it has become clear that the operational issues… are more complex and extend further into the supply chain than expected. As a result, it will take longer to resolve these issues” and that they “meant that fit capacity in late March and April could not be scaled up enough to meet seasonal demand”.

Er, why is this only being announced in mid-June then?!? The only mention of “capacity” in the 29th March results announcement being that transition to a single national sales and marketing function had resulted in “breathing space for our installation operations to bring the order book back into balance with our installation capacity and, by the end of the fourth quarter, we were back on track”!

Now though the company expects to report an adjusted EBITDA loss for its half year ended 30th April of “around £2.2-2.4m” and a pre-tax loss for the full-year “in the range £2.5-3.5m”.

With also “net debt at 30 April 2017 was £6.5m” and “to support and accelerate the group's action plan, and contribute to the wider strategy, the group has engaged a senior consultant with significant industry-relevant experience in business transformation and turnaround” (i.e. although purportedly “strengthened”, the executive team still don’t seemingly have the answers themselves), it’s bargepole ahoy here. Sell.

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