What a shocker of a result!!!!!!!
COA board & mgmt have downgraded their forecasts not once but twice before and they still couldn't get close, sighting 'abnormals' resulting in a 7.7% decline which is outside their 5% variance on 'varied forecasts'
It's sought of like reading a FCL result and having to read betweeen the lines and work out just how well the company is travelling
Anyway its par for the course for this outfit, as once again COA have stumped up what can only really be described as another 'SHOCKER' of a result in a climate where really cyclical conditions in the equipment hire infrastructure sector just can't get that much better and all their other competitors are churning out much better results
Whats even worse, in light of this dissmal performance over the past 06/07 year they have chosen in their wisdom to knock back what can only be described as mkt value bids at this time, given the rerating of the credit mkts and ignore the wishes of any stakeholders (and thank christ i'm not one of them!) in order what seems be a deferring of the inevitable(a full takeover of COA) and hold onto their jobs in the short term(at least)
If COA really wanted to be keep the market fully informed and provide full and proper disclosureas they should and have too in accordance with listing rule 3.1(1) then i believe they should advise the market at what prices the bids came in at, and if the board and mgmt are fixated on a price above $6.00 then they need to revist that price in light of the global credit crunch which has occurred whilst the whole process of the data room was opened up to potential suitors/bidders
One suspects,this is not the end of any potential takeover of COA and its now looking more like a 08 story than a 07,however any further sharp declines in the credit mkts,cancellation or delays in infrastructure projects may see COA with no choice but to revist the bids it has now declined, but either way heads will role and at the end of the day everyones got justify their existence!
Knocking back a bid because in someones opinion it's too low might not be the right thing to do for the long term interests of all concerned.
Coates Hire rejects takeover proposals
29/08/2007 By: Alex King
www.egoli.com.au
Coates Hire Limited (COA) has recorded a 7.6% decline in net profit after tax to $92.4 million for the year ended 30 June 2007. The takeover target also reported that following a strategic review, it would not recommend any proposals because the offers were not of sufficient value.
Chairman Bill Cutbush said that the bids received did not reflect any appropriate synergy benefits, however, advised that any future credible offers received by the board would be given due and thorough consideration.
In the meantime, Mr Cutbush said the company would turn its full attention to value enhancing strategies and the pursuit of a number of strategic initiatives, building on the re-structuring of the business in FY07.
The equipment hire firm put itself up for sale in June after receiving several prior approaches on the back of weaker-than-expected half-year earnings in February. National Hire Group Limited (NHR) in partnership with private equity firm Carlyle Group was thought to be the main bidders.
Mr Cutbush advised that the strategic review had also reaffirmed the board’s positive outlook for the company given the macroeconomic outlook, Coates’ competitive position and opportunities identified to further enhance the business.
In a statement today, Coates advised that it expects to exceed the 2007 net profit after tax from continuing operations by 15% in FY08.
“This will be achieved through double digit revenue growth, improving margin performance and the acquisition of Prime,” the company said.
Following its strategic review, Coates confirmed operational efficiencies, balance sheet improvements and cash management initiatives in the order of $30 million per annum, which could be realized progressively over the next five years.
Commenting on the full year results, chief executive officer Malcolm Jackman said that Coates had achieved a very solid result in the 2007 fiscal year amid mixed trading conditions.
“Especially pleasing are the year-on-year improvements in key margin ratios, with EBITDA and EBIT up to record highs of 41.7% and 22.85% respectively, reflecting on-going efficiencies in the business and improving economies of scale,” he explained.
The company posted a 7.7% rise in revenues to $770.4 million while the group’s operating net profit before significant items was up 9.4% to $102.4 million, ahead of the consensus broker estimate of $101.57 million.
Coates advised that the significant items totalled $10 million after tax, including costs associated with the reorganisation of the business and the strategic review.
The company had previously downgraded its forecasted operating profit in June to be at the lower end of its guidance of $106 million.
The group reported that trading conditions together with overall demand had remained patchy and not met expectations, especially for its Allied Equipment and Coates North businesses.
The company announced a final fully franked dividend of 11c per share, bringing total dividends for the year to 21c per share, fully franked.
UPDATE 2-Australia's Coates Hire rejects offers, shares slide
Wednesday August 29, 2007, 1:57 pm
By Jane Williams
MELBOURNE, Aug 29 (Reuters) - Australia's biggest equipment hire firm, Coates Hire Ltd (ASX: COA.ax) , rejected takeover offers reportedly worth up to A$1.6 billion ($1.3 billion) as too low, sending its shares down as much as 10 percent on Wednesday.
Coates, which put itself up for sale in June, said it would now focus on growing sales and cutting costs, and aims to boost its operating profit by 15 percent next year.
The company, which hires out everything from portable toilets to generators to the building, mining and energy sectors, said it would consider any other offers at the right price.
A consortium including U.S. private equity firm Carlyle Group [CYL.UL] and Australia's National Hire Group Ltd (ASX: NHR.ax) , and a rival group of Pacific Equity Partners and Nikko Principal Investments Australia put in offers, sources familiar with the matter have told Reuters.
Coates' rebuff comes after shareholders in Australian airline Qantas QAL.AX rejected an A$11.1 billion private equity offer. Another private equity firm quit a group bid, headed by Wesfarmers Ltd (ASX: WES.ax) , for Australian retailer Coles Group Ltd CGJ.AX this summer.
The Australian Financial Review said on Wednesday that Carlyle offered A$6.25 a share, valuing Coates at A$1.6 billion, according to Reuters calculations, but the Coates board wanted A$6.50.
Coates shares hit a 2-week low of A$4.95 before recovering to trade down 7.4 percent at A$5.12 by 0344 GMT, valuing the company at around A$1.3 billion. The broader market .AXJO fell 1.9 percent.
"I think the board's decision was a bit premature," said Intersuisse analyst Peter Russell. "The market's obviously disappointed, whether the bid was too conditional or too uncertain we won't know."
"If it was A$6.25 a share, I'd have thought it was worth putting to people and saying we believe we're worth more because of this, this and this."
BIDS TOO LOW
Coates Chairman Bill Cutbush said the board unanimously agreed the offers were not high enough. He declined to name the bidders or the size of the offers.
Tolhurst Noall analyst George Galanopoulos said the unanimous decision signalled the offer was likely to have been well below A$6 a share.
"Today's share price fall has been excessive and probably driven by short-term traders betting the takeover would proceed, accentuated by the fall in the overall market," he said.
Coates' share price has been volatile over recent months, surging to a year-high in May after the company announced it had received a number of takeover approaches following poor half-year earnings in February. Since then the stock has fallen 18 percent.
Coates said annual net profit after tax fell 8 percent to A$92.38 million ($75.1 million) from A$100 million a year ago.
Operating net profit after tax, which excluded A$10 million related to its restructuring and strategic review, rose 9.4 percent to A$102.4 million.
The company's strategic review identified A$30 million in annual cost savings which would be realised over the next five years.
COA
coates hire limited
