.....about the family's disinterest in the future of Clough....

.....about the family's disinterest in the future of Clough.
It's been rather evident for some time IMHO and was the reason for me bailing out quite some time ago.
Harold's use by date came and went long ago.
Good luck to any of you still holding.
Cheers,
Carl.


From The Australian
Dateline July 17th, 2004

Clough eyes big sell-off

Mark Drummond

The curtain is being drawn on one of WA's most enduring corporate dynasties, with Harold Clough considering selling out of the company founded by his father in 1919.

In an interview with WestBusiness, 77-year-old patriarch Mr Clough said most of his family members would prefer to have "a packet of cash" than their 53 per cent shareholding in the listed engineering contractor Clough Ltd and were sellers "at the right price".

Mr Clough said none of his two sons and four daughters felt passionate about the company, and that even son and Clough Ltd chairman Jock Clough "would just as soon be doing other things".

Mr Clough, who now devotes much of his time helping son Bill Clough on overseas mining ventures, also revealed he had discouraged his children from following in their father's footsteps into the company because they would be "on a hiding to nothing".

Even though at their last quote of 49.5¢ Clough Ltd shares are trading near their historic lows, the family shareholding is still worth about $110 million. That 53 per cent stake is housed in a private vehicle called McRae Investments, which shares the maiden name of Mr Clough's wife, Margaret.

Mr Clough said there had been several approaches from companies wanting to buy the stake as a means of securing control of Clough Ltd. But he was not interested in selling out, or accepting scrip from another company, while the Clough Ltd share price was in the doldrums

"We've looked at them and at the right price we'd sell - but surely not at the 40s (cents) and 50s," he said.

"I've got six kids and my wife and the six kids own the company equally, so it's a family decision whether we sell or not.

"Certainly half the kids would prefer to have the money than the company. Half of them would feel more emotionally attached to the company than the others, but I don't think any of them feel passionate about it.

"Apart from Jock, all the other kids are going their own way. They'd probably prefer to keep some shares so they have an interest in the company, but if they can get a packet of cash they'd like that too.

"I think it's more likely we could sell a majority interest and we'd still keep an interest just to keep our hand in it, nothing else.

"You would have to ask him, but I have a feeling Jock would just as soon be doing other things anyhow. If you want my view, I think if he got the right sort of price he'd probably recommend we sell."

Jock Clough, a former chairman of stockbroker Hartleys, told WestBusiness yesterday he had no influence over his siblings when it came to decisions relating to the McRae Investments shareholding.

Asked whether he favoured selling out of Clough Ltd, he said: "My personal view is that everything I own is for sale at the right price."

While the company has been controlled by the Clough family since it was founded as building firm J.O. Clough & Son by his grandfather after returning from the First World War in 1919, Jock Clough said he would be dispassionate about any decision to sell out.

"I think that the concept of an ongoing family dynasty running companies is fundamentally flawed," he said. "It sounds romantic, but in such a competitive world I don't think it stacks up."

He said the McRae Investments stake in Clough Ltd had in recent years attracted interest from Australian and overseas companies, though he would not confirm whether there were any active discussions regarding that controlling block of shares.

Harold Clough said he did not regret that none of his family shared his passion for the business and wanted to run it for the next generation.

"I always discouraged my kids to follow me. I reckon when a son follows a father into an established business they're on a hiding to nothing. If it continues to be a success, it's because their old man gave it to them. If they stuff it up, it's all their fault.

"When you look at the young Packers and the young Murdochs, I reckon they have a hell of a life."

Clough Ltd shares have been out of favour with investors since problematic contracts dragged the company from a $30 million profit to a $9.5 million loss in the 2003 financial year. That crisis brought about a shake-up which saw David Singleton recruited from Britain as the company's first ever external chief executive and a string of long-serving executives shown the door.

That revamp also saw Mr Clough relinquish his chairmanship, with son Bill leaving the board.

In recent weeks, sharemarket concerns about the company's low levels of work in hand, coupled with some aggressive pre-June 30 selling by a couple of institutional shareholders, have seen Clough Ltd shares scrape an historic low of 42¢.

Asked what he believed was the root of Clough Ltd's problems, Mr Clough said: "I think we got a bit arrogant and a bit complacent.

"We thought we were better than we really were. We grew a bit too quickly. We went from $700,000 or $800,000 a year (order book) to over a thousand million a year and you run out of A-teams. And when you start having to rely on B and C teams to do projects you stuff them up and we had a bit of that."

While Mr Clough said it was difficult to watch so many long-serving executives go, he accepted those changes were inevitable.

"It was a difficult time but I guess I reconciled myself to the fact that we had to change our culture because we certainly stuffed it up," he said.

And while he is confident the company's fortunes - and thus its share price - can be revived, Mr Clough believes there are serious fundamental issues facing the construction contracting industry worldwide.

"I think the industry's going through a tougher time than it's ever had, not only in Australia but worldwide." he said. "And I must say I guess I tend to blame it on the litigation lawyers. The industry's become a lot more litigious and clients are seduced by lawyers who tell them 'we can get rid of all the risk for you'.

"The risk is what the risk is, you don't get rid of it, all you do is sweep it under the carpet and then try and dump it on someone. And in the main the lawyers have written contracts that dumped all the responsibility on the contractors and I think the contractors have been too slow to realise what's happened."

Mr Clough said his attitudes towards his working career had changed after he spent 12 months out of the office for health reasons.

"The main things I do now is look after those clients that I've known for 20 years that want to talk to me," he said. "But they are also dropping off the perch as time goes on, so that's going to be a diminishing role.

"In a way I've decided I'm probably just as happy being a non-executive director that goes to a board meeting once a month and puts in my six pounds worth, but I sure as hell don't want to run the company again or even be chairman again."


July 17, 2004