ferret's stock to watch: coates hire limited

Ferret's Stock to Watch: COATES HIRE LIMITED
07:56, Tuesday, 1 March 2005

EQUIPMENT HIRER SUCCESSFULLY SPREADS ACROSS THE WORLD


Sydney -Tuesday - March 1
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OVERVIEW
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Long time chairman of Coates Hire Ltd, Mr Bill Cutbush produced a
terse comment about the company's great profit half year result which
said it all.

He told the Ferret, "The company is heading the right way."

The shares were also pointing upwards which must have frustrated
shareholders who sold out on Friday when the shares fell 14c to $14.32.

Yesterday the stock rose 27c to $4.62 after the company reported
to the Australian Stock Exchange that profit rose 42 per cent to $30.48
million for the December half year.

It seemed to catch the market by surprise because today is the
last day for interim results and the longer they leave them until the
cutoff line, the worse story there is to tell.

Today all the dogs will be barking as many companies try and
escape media attention.

But Coates Hire Ltd certainly had nothing to hide as revenues
rose 21 per cent to $277.06 million from $228.84
million.

Earnings per share were 14.8c, up from 10.6c.

Interim dividend has been increased from 6c to 7c, fully
franked, payable on April 20 to shareholders registered March 24.

The DRP will continue, but with no discount.

Directors said Coates Hire had been able to improve on a record
performance in the previous fiscal year.

"Importantly, this improvement does not only come in the form
of higher revenue and better margins, but also through the creation of a
more efficient business, with a growing range of quality revenue
streams and a greater ability to manage the influence of its client
industry's activity levels," the directors noted.

"During the period, we continued our profitable expansion
strategy, which is based around continued reinvestment in the existing
fleet to promote organic growth, and sweep-and-plug acquisitions where
there is a strong strategic rationale and the opportunity exists to
generate secure and immediate revenue streams.

"As part of our approach to proactively control and manage the
major influences on our activity levels, we have also introduced
Project Extension, a deliberate effort to expand our capability and
capacity within the existing core business, from a geographical, market
and product perspective," they said.

SHARE PRICE MOVEMENTS
*********************

As mentioned earlier Coates shares finished 27c ahead at $4.62.
Rolling high for the year has been $4.93 and low $3.06. Dividend is 13c
to yield 2.81 per cent. Debt funding raised through US institutional
investors completed mid-December 2004 raised $US160 million in very
favourable terms. This was in tranches of 7, 10 & 12 years and 10 times
oversubscribed

The directors said the outlook for Coates remains "extremely
positive".

"The company will continue to translate a strong market
position into immediate gains from what continues to be a robust,
growing and lengthening construction cycle in Australia.

"Although independent data and forecasts suggest this
stabilising pattern is set to continue, Coates is continuing its
strategy of creating additional revenue streams through its
sweep-and-plug acquisitions and Project Extension.

"The recent addition of a more robust outlook for the overseas
businesses puts Coates in good stead for a continued strong
performance," they said.

Project outcomes are starting to positively impact business
performance.

"The Coates Way" has been embedded throughout the organization
with successful upgrade of back-office systems and processes, including
the financial, payroll, procurement, human resources & data warehouse
systems utilizing Oracle.

Technology infrastructure has been upgraded to be more efficient,
secure and capable of supporting future growth while the
blueprint for driving best practices and adopting common processes and
systems has been implemented.

A national price list (NPL) has been implemented while the
sales force Automation pilot is underway.

Directors say financial benefits for the first stage of the
project are being realized.


BACKGROUND
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Coates Hire Limited is Australia's largest equipment hire company with
119 years experience in industry, supplying to a wide variety of markets
including Engineering and Building Construction & Maintenance, Mining &
Resources, Manufacturing, Government, and Events.

With over 130 branch and satellite locations across the country,
our own maintenance and transport capability, Coates is well positioned
to satisfy the equipment hire needs of an ever increasing customer base.

Coates overseas operations include Coates Offshore in the UK
providing specialised equipment to offshore oil and gas operations, and
Coates Hire Indonesia supporting the mining and resource sector.

Today Coates Hire Limited incorporates the following businesses:

* Coates Hire provides a range of compaction, access, generator,
compressor, welding and general equipment.

* Coates Shorco Sykes is our specialist supplier in the hire of
pumps, shoring, dewatering systems, traffic management, confined space
and laser equipment.

* Coates Prestige is a large provider of Portable Buildings,
Commercial Buildings, Portable Toilets, Temporary Fencing, and Containers
to a wide variety of markets for both short and long term hire.

* Coates Conrent is Australia's leading supplier of Man &
Materials Hoists hired to the construction and resources market.

Coates Indonesia is a response to the strong demand for power generation
and a range of other equipment in the mining, oil, gas and civil
construction markets in Indonesia.

* Coates Offshore serves the needs of the global offshore
industry via its operations in Europe and the Asia Pacific, specialising
in providing compressed air, power, welding & lighting equipment.

The wide variety of businesses and markets in which Coates
participates provides a sound platform for continued growth both in
product range and geographic coverage , thus enabling us to further
enhance our service to customers.

ENDS

Copyright © 2005 RWE Australian Business News. All rights reserved.