Ann: Trading Update , page-33

Hi All

Believe the market has completely misunderstood this announcement (although owners of 13 million shares is a significant vote against this reasoning). The main item people have concetrated on is the - are you paying dividends question?

Listen to the following link, it is the trading update with John Douglas and Uers Meyer:
http://www.coffey.com.au/Uploads/Webcast/trading_update_130513.mp3
Notes:
1. Delayed & cancelled projects are essentially the same, they will not proceed in their current form. Delayed projects will need to be re-bid for $14 million worth of projects, likely to be reduced.
2. Up to $10 million in restructuring fees will contribute $10 million in fixed savings (property consolidation, less lease liabilities, etc) and will contribute to $12 million in HR costs that generate revenues earned (net effect will be to reduce EBITDA by up to $4 million - assuming a 50% profit margin before costs)
3. Flexible work arrangements will contribute further savings. This has not been specified.
4. No impairment issues as at today, not willing to forecast over the next three months.
5. Earnings recovery not in the next 12 months (they are looking to save money to
6. There will be no improvement in working capital for the full year, compared with the first half.
7. For the full H2 revenue result don't simply double the current revenue level, Q3 is traditionally the weakest period of the year and Q4 will be stronger. Q4 is traditionally the strongest period of the financial year. Revenue is down only 4%. If it remains 4% down then revenue for the period is expected to be around $132 million (total year revenue of $269 milion).
8. Pushing HR costs to off-shore and regional projects (John Douglas specifically said it has been very hard to do this recently and will contruibute to retaining the most talented and valued of COF's staff).
9. Business confidence and political outlook not likely to change until after the election (If Coalition government scraps Resources Tax and lifts business confidence there may be some future improvement?)

The rest was in the news release.

Financial Points of interest:
- Today's price puts market capitalisation at $25,583,316.50.
- EBITDA before restructuring charges is forecast to be $27m - $29m.
- After restructuring charges EBITDA is forecast to be $18m - $19m.
- Last financial years amortisation and depreciation charges were $9 million.
- Last financial year interest paid was $12 million.

Currently estimating a loss of $2 - $3 million (COF forecast EBITDA, minus Depn & Amort, minus interest cost). Next financial year this will improve by adding back the restructuring charges of $9 million and then add the $10 million in savings. Profit before tax of about $16m - $17m in 2014, assuming no further deterioration in economy or improvement.

Best of Luck
Lost