WITH REVISIONS made on 14 February 2018.
Hills Limited, the public listed technology company which contains the remnants of Audio Telex Communications and Audio Products Group, faces a wind up application in the Supreme Court of Queensland, on February 28th. (Revised: The same week this story was written Hills unveiled their new consolidated warehouse at Seven Hills. Sources say it was full of stock, with plenty moving in and out too.)
A wind up application is a heavy weapon, and comes after demands for payment are not met. If uncontested an action like this always results in orders to wind up the company – extremely unlikely in the case of Hills, which has a market value of $58 million at todays share price. (Revised: worth $52 million at 14 Feb, a $6 million fall since this story was first published here and elsewhere).
“An application for the winding up of Hills Limited was commenced by the plaintiff Milestone Systems on 11/01/2018” according to an ASIC Publication Notice. Milestone Systems were using Hills as a distributor of video management solution software, and in 2014 named Hills as ‘Best Value Added Distributor of the Year’. Something soured since.
Juliusmedia approached Spenser Slasberg, a lawyer with Bennet & Philp who acts for Milestone. He declined to comment ‘at this time’. (Revised) A Hills spokeswoman said they would not comment as this is in the hands of their lawyers.
This is akin to a suicide note for Hills, who would not have let this happen if they could prevent it – since the publication of the action by ASIC has lit up every credit agency everywhere, which in turn affects credit facilities.
The lack of proactive messaging around this is strange, but then again, Juliusmedia has been asking questions of Hills for some time now, such as ‘what is the strategy for launching the L-Acoustics L-ISA?’, which was shaping up as the most significant potential profit centre Hills would have enjoyed. Had they had a strategy, and held on to the agency – which walked away.
We also asked why they were not announcing the loss of that agency when it was widely known they had lost it – and just after selling $2 million of product to NW Group. It would appear Hills did not think that was a material matter worthy of sharemarket notification – and they haven’t announced the Milestone Systems lawsuit either.
The rise and stall of Hills will be a case study in business school, as it was once valued at $1.4 billion (in 2007) and made a total hash of audio visual after buying the late and great Audio Telex Communications business. At peak there was $80 million worth of AV trade, led by Crestron and with a slew of great brands. For a while it was happy days at Hills SVL, as the division was thus named.
Then the board all drank the cool aid in 2012 and somehow hired Ted Pretty, a skivvy wearing plutocrat whose ideas revolved around firing and restructuring. Ted’s time at Telstra featured the largest single write-down in tech history, (along with some nutty stuff around Crazy John) that is easily knowable using Google.
His opening Hills salvo was to direct all the units in the business to cut costs across the business by 15%. Somehow the management in the AV division agreed, despite it being an island of profitability. The machete was wielded, and our tight boutique industry all sat up and took notice.
Every ‘change’, ‘redeployment’, ‘strategic realignment’ and Friday sacking of knowledgable respected veterans reverberated.
Then the master stroke was to make Ken Dwyer’s day by throwing $15 million at him for his excellent Audio Products Group business. Suddenly the AV team were two AV teams, each with competing products. The brands all asked the obvious question: ‘What is the strategy?’
The answer it appears is that there was no strategy. They ‘disappeared’ Ted one Wednesday in May 2015.
After Hills settle the Milestone Systems matter, they have to deal with a bunch of totally pissed off investors who hold 240 million shares in a business that is in decline.