Cellestis and Forex

Many people have contacted us to comment upon the Forex (Currency Foreign Exchange) impact on Cellestis and this proposed Scheme.

It is worthwile, therefore, making some comments.

We all know without too much thought that the spectacular rise of the $A over the last two years has dramatically impacted the bottom line of Cellestis, where profits are reported in $A. We also know that, even with this phenomenal headwind, Cellestis has been able to report both substantial profits and impressive profit growth. 

Had Cellestis been a European or USA Company then this forex impact would have been minimised and Cellestis would have been reporting profits and profit growth that would make anybody sit up and pay attention.

But we aren't (European or American)(yet!). 

The Forex is what it is - there is really nothing that we can do about it. We do, though, need to consider the Forex impact in two different ways.

Firstly, as touched on above, the actual level of Forex at any point in time will impact the bottom line in A$. At the moment the $A is at US$1.07. I don't know where it will go next. From my reading it seems that even the experts are divided (read nfi). If, ultimately, the A$ was to go back down then the profits that CST reports would be much higher.

None of the above is an excuse for anything. We must be aware, however, that Qiagen are making an opportunistic bid in "the worst of times". Many of us have been with this investment for many years. We have been through many peaks and troughs of every factor impacting Cellestis. Selling at "the worst of times" is just plain silly - but that is what they want us to do.

Now, to another aspect of Forex that is not quite so obvious and often overlooked.

Cellestis is a GROWTH Company. We buy and hold our shares because we believe in growth (we could get a better raw return by putting our money in the bank). By definition that means that we are always watching the growth figures of the company. That is the most important metric that we have in monitoring and managing our investment in Cellestis.

From 2009 to 2010, Cellestis was able to report a growth in NPBT of 26%. Based on best estimates, the growth from 2010 to 2011 will be at the very least the same again. (I have used NPBT here because during the periods mentioned, CST has consumed its tax credits. Subsequent years can use NPBT or NPAT to report the same growth percentages).

Again, these very impressive growth figures were achieved despite the impact of Forex. However, in this case, it is not the level of the Forex that has impacted the figures but the movement in the Forex. A movement upwards in the Forex dampens the reported growth in profits. Both of the years mentioned have sustained continual movement upwards in the $A.

This means that if the movement of the Forex were to stop (even staying at the current high level) then the impressive growth that Cellestis is experiencing in native (foreign) currencies would be translated directly into profit growth in $A.

So, we don't need the $A to come down at all for Cellestis to begin to report even more spectacular profit growth figures. Of course, if the $A does move downwards, then .....

Vic Bula

Spokesperson

CSAG

Some Easter Reading

When you get tired of eating and drinking this weekend. When you can't bear to watch the kiddies smear more chocolate into your furniture. May I suggest that you retire to a quiet corner for a good read.


THIS may be just the ticket.

32,853,318 say NO!

Today, the Cellestis Shareholders Action Group (CSAG) is enormously pleased to announce that support for a NO vote in regard to the proposed takeover of Cellestis by Qiagen NV has been overwhelming.

To date, the number of shares that have indicated their intention to vote NO has reached 32,853,318. This represents 34.2% of the issued share capital of Cellestis.

Given that a NO vote of 25% assures that the takeover will not proceed, we can now reject this Scheme.

We caution, however, that to ensure our victory we need every single vote that we can muster. In addition to defeating this Scheme, it is important that we send the message that we are loyal, long term investors in OUR Company and we will NOT be pushed out of our chosen investment for a pittance.

Those of you with a calculator to hand will correctly realize that there are still many shareholders out there that we have not yet been able to reach out to. It is our aim to do so over the coming days and weeks. No doubt the NO vote will continue to climb.

We must all work together and stay the course to achieve a better outcome for all shareholders.

At this time, on behalf of everybody that is working on this matter, allow me to thank all shareholders for their amazing and overwhelming support. 

The CSAG Team will remain dedicated to this task through to its' conclusion, no matter how long it takes.

Vic Bula

Spokesman 

CSAG (Cellestis Shareholders Action Group)

VALUE Vs PRICE

We all know the old saying "Price is what you pay, Value is what you receive".


Cellestis is the absolute demonstration of this.


We have been offered the justification for this lowball offer that the price is 24% above the one month Volume Weighted Average Price.


That is simply a failure of logic.


As investors, we want a recognition of the Value of our investment, not a comparison price to a market price. We all know that the market rarely prices value correctly. A mere few weeks ago Cellestis was trading at $2.40. Immediately before the takeover the shares were trading at $3. Had the value of Cellestis shares really changed by 25% in those few short weeks? Of course not.


So many things that have nothing whatsoever to do with Company value can impact the price of a share. We are all familiar with Companies that are adept at driving their share price to spectacular levels with aggresive announcements. (I certainly do not criticise our Directors for not having gone down this path).


It is, however, worth considering how the share price might have been affected had the Company paid a larger dividend in the half year from cash profits earned in that half year for which (it is now clear) they had no purpose.


Price does not equate to value.


I might value my ride-on mower at $5,000. If I was offered a price of $1000 for it last week then the fact that somebody offers me $1240 this week is not going to make me sell on the basis that the offer is 24% more than last weeks "price". This is all particularly true if I had no plans to sell the mower in the first place.


In our situation it is particularly galling when the Scheme calls for an Independant Expert to decide what is best for us. I have managed my investment in Cellestis for ten years now - I don't need somebody else to tell me that I am to be forced to sell my shares at a particular price.


But, guess what? The Independent Expert, The Cellestis Directors, other shareholders, Qiagen ... nobody ... can tell us to sell our shares at $3.55 if, together, we vote this Scheme down.


If we demand that the value that we see in Cellestis be retrieved for us then it will be so.

Knowledge.

Dear Shareholders


It is only natural, in the light of our Directors seeming haste to sell out the Company, for investors to be asking the question "Do they know something [bad] that we don't"


Frankly, that is extremely unlikely for a number of reasons.


Even though Cellestis is currently subject to a proposed takeover via a Scheme of Arrangement, it is important to understand that Cellestis is still a listed Company on the ASX. The Shares in the Company are still trading on the ASX. This means that the Company must continue to abide by the ASX listing rules.


The Company must continue to meet the requirements of ASX Listing Rule 3.1 (Continuous Disclosure) to keep the market informed of material events as they occur.


At the 2010 AGM in November 2010 CST advised

"Revenue growth of between 30% and 40% is expected for full fiscal year 2011.. ..our goal in financial year 2012 is to achieve similar revenue growth as this fiscal year."

They also provided the following Growth Outlook

"Sales of ~1.9 Million tests in FY2010. Estimated sales of between 2.6 Million and 2.9 Million in FY2011"

As Shareholders, we are entitled to use these statements to make decisions about our investment in Cellestis and the Directors of Cellestis would be aware that we would have done so.


If any of these statements are now materially incorrect then the Company, under ASX listing rules, must inform us of that.


They have not done so and unless they were to do so we are entitled to believe that those statements still stand.


It is self evident that Qiagen propose to purchase Cellestis in the belief that Sales of QuantiFERON will continue to grow. In fact, in their own PRESENTATION to their shareholders, they point to "double digit growth" of QuantiFERON sales in 2011 and "substantial double digit growth" in 2012.


Qiagen, of course, are privvy to much information about our Company that we are not. It seems clear that, with access to that information, they agree with us that the sales of QuantiFERON are growing rapidly and will continue to do so.


Given all of this, we can be confident that there is no reason not to believe that the future of QuantiFERON (and Cellestis) has all of the potential that we have long believed in. There are no facts to contradict this.


Vic Bula


Spokesperson


Cellestis Shareholders Action Group

SHAREHOLDINGS

We have noted "around the traps" that some people are a little confused about the ownership of shares in Cellestis. In the interests of every shareholder knowing the correct facts we provide the shareholder details here.

Total Shares.

There are a touch over 96 million shares on issue (let's call it an even 96 million).

Shares Held or Controlled by the Directors of Cellestis.

Ron Pitcher                                  160,000                     0.16%
Tony Radford                           11,449,690                   11.93%
Jim Rothel                                11,449,689                   11.93%
Prof. Antonio Catanzaro             175,000                     0.18%
John Bennets                            2,298,607                     2.39%

Total                                     25,532,986                  26.60% 
____________________________________


Shares Held or controlled by Qiagen.

Qiagen hold exactly zero (that's nil) shares.

Note carefully that if they were to own any shares they are explicitly excluded from voting those shares.

What they do have is a highly conditional option to purchase 19.9% of the shares in the Company that belong to Tony Radford and Jim Rothel.

As part of that options agreement, TR and JR have agreed to vote that 19.9% in favor of the Scheme. Had Qiagen purchased the shares outright then they would have been prevented from voting those shares. It seems that this option arrangement avoids that exclusion. 

It seems that this option agreement has been limited to be over only the 19.9% holding to avoid triggering the provisions of the takeover act. We would presume that the same consideration prevents Qiagen from buying any shares on or off market.

We will be covering the options agreement, the voting requirements and the Qiagen position post the Scheme in following emails. However, at this point it is important to understand that if this deal is voted down then Qiagen will hold NO shares in Cellestis.

Disclaimer. Nothing in this email should be construed as personal financial or legal advice. All information is provided on the understanding that you will take whatever steps are necessary to ensure that any actions that you take are the most approriate for your own personal circumstances. The author accepts no responsibility for the impact of any consequent outcomes.  

In the Beginning..

Dear Cellestis Shareholders,

Thank you for registering your interest in achieving a better outcome for shareholders than a takeover via Scheme of Arrangement by Qiagen at $3.55.

Before proceeding, I would like to draw to your attention the disclaimer at the end of this email.

Through this and subsequent emails it is our intention to keep you fully informed about this takeover and the actions that are available to ensure a better outcome for every Shareholder.