CLH mid term, page-7

After reading the AR I felt pretty good...things are/were happening...but then it hit me!

I'd been sedated by a healthy dose of Kumbaya and motivational hype. Sure, you can hold focus sessions to redefine and refresh the "strategic foundaton" and you can introduce  warm and fuzzy titles such as "Chief People & Culture Officer"  and you can have the entire office doing high-fives and cooking up a batch of 'happiness muffins' in the purpose-built staff canteen but dammit, this is essentially a grubby business where one tries to extract cash from the wallet of someone who hasn't got it or doesn't intend to easily part with it.

Yes, we can dress it up with platitudes and socially acceptable expressions such as "Our purpose is to strengthen clients', customers'  and shareholders' financial situation" and isn't it wonderful that we have the lowest complaint rates in the country. No wonder bureaucrats, looking to protect their posteriors, give us work...they know we won't go in boots and all. We won't rock the boat or cause the government any embarrassment. We are too nice!

Maybe too nice when compared to our competitors, and because CLH are too nice, we shareholders are suffering. Yes, I refute that CLH are purposely trying to strengthen shareholders financial position and here's proof:

The CEO of our major competitor - CCP - had this to say in the recent AR:
"We have determined that an acceptable return for a business operating in our sector represents an annual Return on Equity in the range of 16 to 18 percent at a modest level of gearing."

Now that is where we should be...in fact CCP are doing much better than this presently (FY16 of 21.45%).

We could only muster a pathetic 11.93% down from 13.17% in FY15.

CCP and PNC have us shot on just about every metric you want to look at.

Net Margin? Yep CCP @ 20.45% CLH @ 16.78%! Geez that extra 5% would make a difference. Meanwhile back at CLH HQ we are high-fiving whilst CCP are steadily bringing in the extra dollars. They know that sometimes you need to be a mongrel in order to achieve a result and Kumbayas aren't conducive to getting someone to part with something in short supply. As I said this isn't a pretty business.

Return on assets? CCP can achieve 12.22% in FY16 whereas we only get 7.89% That to me says we are soft and inefficient.

Until Anthony Rivas looks at this issue seriously (and I didn't see any specific mention in the AR) I will avoid the 'happiness muffins' and the cookies made from some exotic plant starting with the letter M!



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