Hi All
Coffey are due to announce full year results on the 10th of August. The guidance from last financial update is as follows:
The company’s underlying EBITDA is expected to be in the range of $18-$20 million for the full year. Following restructuring costs and non-cash goodwill impairments, the company expects to report a net loss after tax of $16-18 million for FY2015.
As a result, a final dividend will not be paid for FY2015.
Does anyone believe they will report better than expected earnings?
Believe the management team have a lot riding on increasing EPS by 2016 ($'hundreds of thousands of incentive bonuses are at stake). This year has seen them write off a number of items in preparation for next financial year. Every skeleton in the closet needs to be wiped off the books to minimise risk of not receiving incentive payments. Note: I don't believe management are as shallow as to only focus on this, however it will be in their sights as a benchmark of performance for shareholders and themselves.
The benchmarks are as follows:
EPS Target - $0.0527 and $0.081 per share.
Section 5.4.3 in Coffey's 2014 Financial Report, Remuneration Report Section - Performance Requirements states that one of the Long Term Reward (LTR) vesting requirements is as follows:
The vesting of this tranche of shares will be dependent on the EPS growth performance. The shares in this tranche will start to
vest on a pro-rata basis if EPS compound annual growth exceeds 30% over the period, and fully vest at 50% compound annual
EPS growth. Shares will vest on a pro-rata basis for compound annual EPS growth between 30% and 50%.
The above is based on underlying EPS of $0.024. For me, combined with the above, this would mean the EPS target for next financial year will be $0.0527 and $0.081 per share.
Total Shareholder Return Performance - Target share price to exceed between $0.20 and $0.22
Another condition is the Total Shareholder Return (TSR) performance needs to be greater than 15% above the S&P 300 Accumulation Index (ASX Code: XKO) from June 2013. The XKO has increased roughly 15% over this period, COF has pretty much stayed the same as it was $0.15 at the time.
So management will be looking for a price target above $0.20, assuming the XKO doesn't go up anymore in the next year.
What are others thoughts out there?
Best of Luck
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