Super cloud gathers as McAleese presses on with reform

Date: 03.06.2014

Shortfall being investigated as savings and stabilisation plans are seen aiding the bottom line longer term

Super cloud gathers as McAleese presses on with reform

McAleese: Cootes issues refuse to die but boss eyes progress

The market seems to have taken the latest troubling news about Cootes Transport in its stride, with shares in parent firm McAleese bouncing higher after yesterday’s update.

The revelation that tanker arm Cootes may have underpaid super by perhaps $5-$10 million over "a number of years" saw the share price sink three cents yesterday and today before rising four cents to 53 cents around midday.

The movement came against a steady rise over the past four days from 45 cents as the price recovers ground is a period of volatility this year.

"The ATO [Australian Tax Office] has been advised of this matter and an accounting firm has been engaged to confirm and quantify the possible underpayment," the company says.

"The issue dates back to years prior to McAleese Group’s ownership of Cootes Transport and a large portion of any underpayment will form a claim on warranty insurance."

The latest Cootes issue came with other details concerning the Oil & Gas arm, including a new in-principle national agreement with Origin Energy for LPG transport worth $7 million a year for five years, a prime mover and tanker fleet reduction from 960 to 460 units and a hefty fall in the Cootes workforce from 1,150 to 470.

More generally, McAleese forecast its short full-year gross earnings, given its listing in October, at $82-$86 million on revenue of $765 million, with gross earnings for the June quarter seen at 50 per cent above that for the March quarter.

The company aims to raise that to $90-95 million in earnings before interest, tax, depreciation and amortisation (EBITDA) once stabilisation plans work through and after redundancies are paid out.

If realised, this will still be lower than two previous forecasts.

That includes two months of earnings from WA Freight Group, which is the basis for its Specialised Freight division.

Some of that will be attributable to $20 million in equipment divestments in a Heavy Haulage & Lifting arm that will see its workforce fall from 530 to 465.

The Bulk Haulage business has seen truck utilisation rise from 75 per cent to 87 per cent and is gearing up for Atlas Iron’s 50 per cent expansion of the Mt Webber mine that is expected to earn the trucking company an extra $50 million a year from next year.

"We are pleased with the traction being gained on stabilising business performance through targeted initiatives in each of the businesses," CEO Mark Rowsthorn says.

"The ramp up of tonnage for bulk haulage is now being consistently achieved, sale of non-core assets is progressing, cost reductions in Heavy Haulage & Lifting are being implemented and we have largely 0065xited unprofitable oil and segments.

"We are meeting our timetable to achieve stable business performance during the first quarter of FY15."

ATN was awaiting comment from a company representative at deadline today.