I'm sorry if I overstepped in articulating my annoyance, but it does drive me nuts when I read stuff that tells me that people, especially shareholders, are not understanding the company in which they are invested and ask way more than they are entitled to.
I am happy to keep it amicable. There are a LOT of things I disagree with - for good reason imo - in these two posts above:
caveat: I have been a shareholder since about May last year. What happened in the previous decade doesn't concern me, though I have an inkling of the company's history through reading the thousands of posts on the subject on HC.
1) WS: "First of all CCE should try not to be seen to overstating THEIR contract wins announcements (even though it sounds twice as good) because invariably they could be considered to be under delivering when half yearly results are announced."
- they claimed Mungari for their own, and they shared receipt of the Kalbarri project in their recent announcements (even if both might use LLC in the future). They can't possibly considered to be underdelivering by anyone who doesn't have direct access to CCE internal accounts, as the profit of an unknown percentage split of a contract can't be quantified by us mortal shareholders and thus be over or underwhelmed at half or full year reports. Fair's fair, we can't possibly know, so how can we be disappointed?
2) WS "For example , if the total JV contract wins is say $30mil and their portion of that is 50% then they should clearly state the value of the contract that belongs to them. "
- to be fair, in telling you all that they have in fact told you the value of their split. But the split is commercial in-confidence until both parties decide it doesn't need to be. Shareholders are not entitled to know everything just because they are shareholders. Shareholders have to either have faith in the company and its leadership, or close out and move on. Or, in extreme cases, do something about it via a GM.
3) WS: "However it is very common for listed public companies to announce guidance, for each half of their financial year, their expected turnover/sales and the expected EBIT or NPAT. This provides their shareholders and the greater market with guidance on how they are travelling and overall transparency. After all they are a public company and it is an ASX requirement to keep the market informed accurately."
- This is asking way, way too much of this company. Unless you believe management to be liars and misleading to the shareholder body, it takes up to (or beyond) 12 months to secure a contract, with no idea, literally no idea at times, whether or not they will be successful. How on earth are they supposed to incorporate a tender into their guidance for "expected turnover/sales" unless they only use last year's numbers (because they are the only ones that are real)? They
could use simple Σe(v) but that's only an expectation that could end up being wildly inaccurate. Not only that, but winning a contract or a grant doesn't necessarily tell you when they are going to get money from it. To me, earnings guidance for a company like CCE, which is in its relative infancy, doesn't exist, and would garner louder complaints for their wild inaccuracy than those calling for educated guesses. Down the track, sure, when they have steady (and large) revenue base and a history of predictability, but not so early in the life of the 'new' subsidiary.
4) WS: "Also , when a company announces their half yearly profit results etc . anyone worth his salt can pretty much work out margins etc."
- sorry, but I totally disagree with this. A company who sells x widgets at price y and makes earnings of z can be worked out pretty easily, but CCE's reports wouldn't help you determine their margin on a contract. No way. There are wayyyy to many different products going into the mix (and not all at once) that will not be separated out for us, ever. An exec for a similarly-styled company might give you a ballpark of the industry bandwidth of margin, and I think MO actually vaguely referred to a margin on something to Alan Kohler, but they wouldn't have a clue of the margin per report period. And you won't deduce it from the financials.
5) WS: "So its pointless trying to hide the bleeting obvious -- best to comply with proper disclosure and be transparent which would avoid market disappointment when the truth is overstated or hidden."
- see above on both it NOT being obvious and the lack of need to disclose commercial in-confidence material.
6) TRI: "There is also a benefit in CCE setting itself targets - through guidance - that it can be publicly accountable for meeting. Although I appreciate that issuing guidance exposes the company to adverse consequences for a miss, the companies that have the guts to do it properly gain the trust and enthusiasm of the market."
- I have no doubts whatsoever that they set themselves internal benchmarks, all (sound) boards do, but see above for the impossible landscape in which you are asking CCE to give you an idea of their revenue for the next 12 months (or their expected wins, or when grants will be drawn down, etc). I seem to recall the Board gave an expectation for EMC when they first bought it and got flayed alive over and over and over for missing their target (by a fair margin if Hot Copper posters are accurate!). Predicting a revenue base for a brand new subsidiary that was receiving a ground-up overhaul with an emerging and evolving product into an existent but unidentified emerging market, and they got smashed for getting it wrong.
Harsh markers.
7) TRI: "For me, 'bottom line' means the company's bottom line i.e. the profitability of the firm as a whole. I think many people might share my understanding of that term. I did not use it to mean the profit margin of each individual project."
- You may not have, but you were asking that updated guidances be given as they are won which necessarily provides a profit margin for each project. The only way to NOT telegraph our margins is to group them together in clumps of wins so that our margins are not easily determined, and they already do that, twice a year, and it's better than guidance, it's actuals. Small caps don't typically give guidance, it's more for large established companies with a proven predictable revenue base. Otherwise it's just potshot guesses which will invariably be anything but 'guiding'. And let's be honest here, what would any type of a 'guidance' from CCE do for you, other than disappoint you when it turns out to be inaccurate, one way or the other? Guidance is only useful if it's
reliable.
8) WS: "That's the way good/successful companies manage their affairs and creates confidence in Management to deliver on behalf of SH"
- but CCE are not successful, yet. Good, yes, but they're not yet successful, or they would be more than capable of providing guidance, because the guidance would be based on a period of predictability of revenue which would give the market confidence to believe what it was told.
Sorry about the length, but I do enjoy rattling on about this stuff, especially with
this company. Happy to keep talking about it, the tone of these threads has smoothed out markedly in the last couple of weeks
