The past week or so has seen the previously successful and competent
image of HWE shattered with an earning’s downgrade and the revelation
of a $16 million black hole.
It’s not only Leighton Holdings that’s had a stumble or two among our many construction and civil engineering groups.

Darwin-Sydney based Henry Walker Eltin
(HWE) seems to be staggering from one disaster to another, so
much so that I hear the Australian Stock Exchange has been giving them
a bit of a touch up.

Legal people in the Sydney head office on Friday were hard at
photocopying and preparing reams of information that the ASX had
requested by the close of business that day.

No one was speaking inside the company, but a guess might be the ASX
checking to see just how long the company has known about the losses
and other problems in some parts of its business revealed in a trading
update on October 28.

But perhaps the ASX might like to read this article and then query HWE further.

The past week or so has seen the previously successful and competent
image of HWE shattered with an earning’s downgrade and the revelation
of a $16 million black hole. See the trading update revealed last month

That was accompanied by the departure of the CEO, Bruce James and the
appointment of a temporary replacement in Bob Cleary, on $65,000 a
month (or more than a quarter of a million dollars annually).

Here’s the announcement of the new CEO

The share price went south, plunging from $1.14 on October 22 six days
before the announcement of the update, to 68c on Friday, a fall of 40%.

Since then a number of other things have surfaced. The company and one
of its main subsidiaries, Simon Engineering were planning to centralise
offices and corporate activities in the one building in North Ryde in

That is now off, despite a ten year lease having been sign and designs for the fit-out of the new offices commenced.

This move was called in the past couple of weeks as the black hole emerged.

This was after the long time CEO of Simon Engineer, Barry Fitzgerald
was removed by the parent. He was replaced by the CEO of HWE, Bruce
James, who of course has departed for other challenges.

Simon Engineering, with more than $150 million a year in revenues, has
encountered problems on several major jobs, including the $50 million
Telfer contract for Newcrest in Western Australia.

That happened several months ago and since then there’s been a steady
move of executives out of the company, in Sydney and in Perth. This has
accelerated with the emergence of the profit drop and losses on some

But last week a further worry emerged, one that HWE has not yet revealed to the market.

The position at Simon Engineering made vacant, has not been filled. But
last week it was with the senior executive from the group’s LSM subsidiary, its founder, Claudio Di Berardino was put in charge of Simon.

This is what the announcement to Simon and HWE staff said:

“The position of Executive General Manager – Simon
Engineering Services was most recently held by Bruce James. Since
Bruce’s departure this position has been vacant, and as I come up to
speed on understanding and managing the priority issues of the Company,
I don’t consider it appropriate that I take on that responsibility.

“For those reasons I have decided to appoint Claudio Di Berardino to
temporarily handle the responsibility of Executive General Manager of
Simon Engineering Services, along with his responsibility of HWE/Simon
Engineering Projects. This interim arrangement for Simon Engineering
Services will give me time to evaluate the best structure for an
enhanced business performance going forward.”

Last year Di Beradino was named Chief Operating Office of HWE Civil, reporting to the former CEO.

With Bob Cleary unwilling to come on board at the moment, Mr Di
Berardino is the senior line manager left standing at Simon and will
have a difficult task. Staff are realising that he is there to
effectively shut down, consolidate, trim and rationalise.

He was previously an experienced manager with Transfield (that where
Bruce James is returning to) and is known around HWE as “Mr Transfield”.

Insiders say the next step, assuming there’s no problems with the ASX,
is to shut the Sydney corporate offices, leave a small management team
to handle projects in the Sydney area, and relocate back to Darwin,
from where the company, or rather the Henry & Walker part started.
(It grew by merging with Eltin Mining of Perth in 1999).

That’s where the chairman, Neville Walker and fellow founder and director, Fraser Henry both live.

It is also closer to the company’s single biggest contract, a $1.2 million mining deal in Indonesia.