'Prove yourself' Burgess tells Havelock board

THE mystery private investor who has built a significant stake in Havelock Europa has said he will give the board "sufficient room" to prove itself following a meeting with the Dalgety Bay-based shopfitting group.

Andrew Burgess, who has a history of taking sizeable holdings in smaller stock market companies he believes are significantly undervalued, spoke to chief executive Eric Prescott in the wake of the company's full year results.

In a series of posts on an investor bulletin board in recent months, Burgess had raised concerns over a number of issues including the composition of the board and the group's progress in reducing its debt pile.

But following the meeting, Burgess commented that it had been a "very good conversation" and that he had been impressed with Prescott's focus on creating shareholder value.

"There is no doubt that there is still a lot of work to be done at Havelock. I think everyone can see that. It is my view that he is the right kind of person to lead it."

Burgess has gone into the market 11 times since February to increase his stake. Last week he bought a further 75,000 shares to take his holding past the 15 per cent mark in the company which has suffered a dramatic fall in its share price in recent years.

At the time of the results late last month Prescott had said that Havelock Europa didn't know why he had built a stake and that the board was "intrigued".

Burgess has described his intentions as "quite simple". "Capital growth with excellent shareholder communications and putting shareholders first. If that means a piecemeal disposal of the various parts of the business then so be it," he commented.

Although Burgess is understood to have been in contact with a number of other larger shareholders, it appears he has no current plans to try to force changes at the company.

"I will keep an eye on the company… and make comments where necessary, but I am happy with my conversation and happy my investment is in Havelock.

"I do not believe that the board as it is is the right mix, however, I have been wrong in the past and may be wrong now. This is for management to prove. I will give them sufficient room to prove, but insufficient if they wish to do something which will destroy shareholder value."

At the end of June the company reported that contracts in London and foreign markets had helped it "stabilise" last year after being hit hard by the recession and government cutbacks.

It returned to profit at an operating level in 2010, although exceptionals pushed it to a pre-tax loss of 4.6 million. Prescott said it had been a year of transition in which losses were substantially reduced.He said the firm was now experiencing the benefits of cost-cutting measures implemented over the past two years, including the merger of its retail interiors manufacturing operations and its educational interiors arm.

"Although we took some pain we're now reaping the benefits," he said at the time. "We've got the factory in one place, in Kirkcaldy, and it's absolutely flying. We're currently working overtime."