Investment Matters

Company News: HT&E, CML Group and Emeco

This week the potential takeover of Here, There & Everywhere’s (HTE) Adshell business, started to get real, with Firstly oOh!Media disclosing a potential offer price of $475m only to be bested by APN at $500m.  At this price it is a real possibility that HTE will sell Adshell and be left only with its Radio assets.  Should this occur the chance of a takeover of the Radio business also is high, given the implied price of its existing assets sits at least 20% below current traded market prices (and 30-40% below prior corporate transactions). Continue to watch this space.

CML Group announced that it had repaid the $40m FIG corporate bond using the recently approved new $120m ANZ facility. This will have the effect of lowering interest costs by $2.5m on an annualised (go forward) basis.  Further, the company noted that the recent Thorn acquisition is trading ahead of expectations and is now expected to make a positive contribution to FY18 profit (from a negative expected previously).  First Samuel, on behalf of its clients, is delighted to see CML go from strength to strength.  Having aided the growth of this business, we still see many years of good growth ahead of it, provided it sticks to its knitting and stays focused.

Emeco this week successfully completed its retail entitlement offer used to fund the recent acquisition of Matilda, and has had its debt upgraded to “B” by Fitch. With First Samuel's help, on behalf of its clients, Emeco has fundamentally changed from the low returning business it was in the early 2000’s to what it is today.  As it rolls over its contracts, clients will see a substantial pick up in earnings and cashflow, and a business that generates a strong return on capital (and then dividends).  Today it has almost its highest ever EBITDA margins, and yet the price and utilisation of its equipment remains below average (as the pick-up in the cycle takes time to flow through the business).  We still see more ahead for Emeco than behind it.