Entu Shares Fall Through The Floor

As many of you will know, if you have been following DGB for the past couple of weeks, national home improvement group Entu have enlisted the services of KPMG in a bid to turn around the group and save the company.

At the start of this week I reported that shares in the company had fallen below 10p. You can catch up on that post here.

Well, today it got a whole lot worse. Entu issued a trading update, and what was left of the share value fell through the floor, plummeting an eye watering 70%. What hope is there for this embattled home improvement group?

Entu decline in 3 charts

Although the most recent drops have been dramatic, signs of problems for the business can be traced back in their share value a number of years ago. This is their downward trend shown in three charts:

Click charts to expand

Whichever way you look at it, those charts make for some very bad reading. But you could see a clear start to the decline during mid-2015. Something happened around that time and whatever it was, investors didn’t like it and started to pull their money out in a rather dramatic way.

But, as you can see on the third chart, the share price stabilised for the rest of 2015 and well into 2016. Stability is one thing investors like, so whatever it was that managed to stop the slide in share price value, it worked for a while. However it wasn’t long until the sell-off began again. A steady fall in the second half of 2016, and then the well documented crashes we have seen in 2017.

If you take a look at their trading updates in the past couple of years, you will see a company trying to cut their costs, reduce overheads, streamline the business and attempt to update their model for a modern fenestration era. It hasn’t worked. And if you take a look at the latest trading update published today, the outlook looks grim.

Latest trading update

This is what was published on Wednesday afternoon:

Entu (UK) plc, (“Entu” or the “Company” or the “Group”), the home improvement group providing energy efficiency products and services to homeowners and businesses in the UK, announces an update on its strategic review which commenced on 6 July 2017.

Following receipt of several approaches, the Group is proceeding, with the support of its existing lenders, with a small number of interested parties in relation to a potential refinancing of the Group.  If one of the currently preferred proposals is successful, the Board expects the Group to see a further increase in its level of indebtedness as creditors are brought back into line with normal payment terms. The Board notes that all of the proposals received attribute little value to the equity in the Company. There is no certainty that any of these proposals, or any alternatives, will be ultimately successful.

The Board expects to provide a further update later in August.

As stated at the time of the half year results, the Group still expects the full-year loss before interest, tax, depreciation and amortisation on continuing operations, before exceptional items, to be in the range of £1.2m-£2.2m.

See the full trading update here

It’s the last couple of sentences of that main paragraph that read the most grim, and smacks of the company already laying the groundwork for a negative outcome. Nothing of this trading updates reads well. They say that they have had a small number of parties interested. Not great wording for investors. They say that there is no certainty that any proposals, or even any alternatives will be successful. That perhaps is the most damaging sentence for me, and is probably what sent the share price value diving 70% today.

This for me reads as a statement telling people to prepare for the worst. As sad as that is. We have to remember that a lot of companies and brands make up the Entu group, and lots of people are employed by this company. If this group goes to the wall, lots of people are going to lose their jobs. There is never a good time for that to happen. What I hope is that those working there are being proactive enough to explore their options, and the company is being open and honest enough to explain the situation to their staff.

Unfortunately, the outlook looks very grim now, especially after this latest update. Naturally, for the sake of people’s jobs I hope that a buyer can be found and the company can be transformed into something profitable, leaner and fit for 2017. But given the wording of this newest update, I don’t think the signs are there.

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