Thursday, December 27, 2007

Share Investor: Best and Worst of 2007

Its the time of the year where I look back on the good, the bad and the ugly in the business world during 2007, with the Inaugural Share Investor best and worst of 2007.

While there was very little good about it; finance companies going bust, management spinning stories till investors got sick with dizziness and a sharemarket that failed to catch afire, some ugliness: Helen Clark and her mates increasing taxes again and not returning them till election year 2008, and few bright sparks, Micheal Hill glittering with gold by returning healthy gains for investors.

Enough verbal diarrhea.

Lets kick it off then with the biggest prick of the year.

Wanker of the year

Little Timmy Saunders and Origin/Contact Energy win this award for steadfastly refusing to step down the aforementioned Tim Saunders and other board members on Contact Energy's board for pursuing Origin's objectives rather than the wishes of Contact Energy shareholders who wanted him gone.

Arrogance and failure were the hallmarks of Saunders reign and his failure at the head of Feltex Carpets seemed to be of benefit for his reelection to the Contact Board at the end of 2007.


IPO Disasters

While there were a number of notable failures in 2007, Xero and Carmel Fisher's Marlin, the IPO that made the biggest headlines this year was Burger Fuel.

Burger Fuel had the highest hit count on this blog on Google so while it is a favourite subject, that doesn't make it a favourite for investors when they decided where they were going to put their cold hard cash this year.

The IPO was shooting for NZ$15 million but got less than a third of that.

The shares were issued at $1.00 and never sold for that figure and have continued to slumber in the 50-60c range, where they finished today at 59c.

It doesn't look promising for 2008, given the global credit crunch so best we all shut our eyes and wish the coming year away.


Leaders of the year

It is for a company that I have a shareholding in but I cant avoid name dropping it again.

Don Braid and Bruce Plested from Mainfreight control a company that is growing profits and sales globally while at the same time having a no nonsense approach to managing his people and his company.

He put the boot in during 2007 into the Labour Government for increasing business costs and interfering with private and public companies. Clearly not afraid of any possible political backlash, New Zealand business needs more no nonsense straight talkers like this dynamic duo.


Cant wait to see the back of you award

Head and shoulders above anyone would have to be Telecom's Teresa Gattung.

Presiding over a company that failed to plan for the future and is now counting the financial cost Gattung left with a hefty payday and never looked back on her years of shareholder destruction at the helm.

Restaurant Brand's Victoria Salmon finally got pushed and her emphasis on marketing and flash over service and substance had a marked affect on sales and profit at the restaurant operator.

Its current decline was somewhat slowed latter on in 2007 but it had nothing to do with new management, it was just another small upwards cycle until the next inevitable downward spiral.


Most battered sharemarket sector

While most NZX sectors got a hammering this year, head and shoulders above the rest, without a doubt, were the retailing stocks.

Battered by high mortgage rates, gas and electricity prices and new taxes, shoppers held off spending and only did so when enticed by increasing sales by retailers.

Retailer's margins were affected and competition by the likes of Hallensteins, Postie Plus, Pumpkin Patch, The Warehouse and others meant that share prices of these retailers sank like their store sales sticker prices.

Pumpkin Patch finished the year at around half its $4.95 high and others had more than 30% come off their market caps.


Losers of 2007

Investors in the myriad of finance companies that folded this year, putting well over a billion dollars of investors money at risk.

Investors ignored the risk or were advised to take the risk by "financial advisors" and were not given the required return for risk taken.

A lesson in investing that hopefully some can learn from.


Woolpullers prize

The prize for keeping its investors and the investor public at large out of the picture would have to go to management at Sky City Entertainment.

Its ability to string out takeover proceedings and its nonsensical market statements and erroneous time frames for deadlines is a skill worthy of David Copperfield, not the manager of a New Zealand blue chip.

Hopefully the new head, Nigel Morrison
, might be able to stop the boardroom table and investors heads from spinning in 2008.

Red tape award

The red tape award has to go to the Commerce Commission for first deciding to put the kybosh on the Warehouse takeover by Foodstuffs and Woolworths and then appealing the decision by the High Court to overrule that decision.

The commission have stretched out the whole process by more than a year and it looks likely shareholders will be none the wiser until well into 2008.


Conflict of interest prize

To large shareholders in Auckland Airport, Lloyd Morrison's Infratil, Auckland and Manukau city councils and their representatives on the board.

The conflicted board members are not serving other shareholders well and put their own conflicted interests before smaller shareholders.


Fairy tale award

For those in the Green Global warming religion whose adherence to fairy tales and junk science has cost New Zealand millions already in 2007 and is set to cost us billions in 2008 and for the NZX and Mark Weldon to latch onto it by starting up a "Carbon Trading" platform in 2008.


Thank you for 2007

If it wasn't for those connected with Sharetrader getting my old share investor forum site removed from its host in July because they were afraid of a little healthy competition, this blog wouldn't have been the success it has been in the latter half of 2007.

The competition has pushed me to expand and enabled a much more immediate and larger audience than before and at this rate of growth it will easily surpass sharetrader's audience by mid 2008.

Blogging really is the way and I want to thank Philip Mac Callister for his help there!


Disclosure: I own shares in The Warehouse,Sky City,Postie Plus, Pumpkin Patch,Auckland Airport, Mainfreight and Micheal Hill

C Share Investor 2007

Monday, December 24, 2007

Merry Christmas and NZX holiday trading hours

I just want to thank all my readers for continuing to check out the Share Investor Blog during 2007 and I want to wish you all a very happy Christmas and a safe and very prosperous New Year.

I will be checking in momentarily over the summer break and will furnish the inaugural Share Investor best and worst of 2007 for the financial sector before years end.

Until then why not check out my companion site Political Animal best and worst of 2007 for my pick of the rogues and heroes in New Zealand politics for 2007.

Just a note for NZX market watchers. The NZX closes today early at 4.00pm and resumes for normal hours again on 27 December.

For more details of the coming NZX holiday hours please check here.

Cheers,

Darren Rickard


C Share Investor 2007

Saturday, December 22, 2007

Media Release (21.12.07, NZ time) Auckland Airport signs confidentiality deed

Important additional information regarding the Auckland Airport takeover:


21 December Media Release:

The directors of Auckland International Airport Limited (Auckland Airport) have signed a confidentiality deed with an international party which has expressed interest in the company.

Chairman of Auckland Airport, Tony Frankham, said the party had initially expressed an interest when the board asked its financial advisors to seek any other takeover offers in November.

Following the signing of the confidentiality deed, this party has been provided access to preliminary due diligence.

"This party is the one referred to in our Target Company Statement sent to shareholders. We are releasing this notice today to confirm the position to the market.

Auckland Airport will keep the market informed of any significant developments with this party or any other party should they come forward" he said.

Mr Frankham said that Auckland Airport has also received formal clearance from CPPIB to seek other proposals while the partial takeover offer is open to shareholders.

"A provision within the CPPIB takeover offer prevented this, however, CPPIB has advised that it will not apply this provision to any process we undertake to identify alternative proposals which need not necessarily be takeover offers.

Therefore we will begin a new process early in 2008 to seek a partner who better meets the criteria established by the board. However, the directors consider that the outcome of this process will not be known until well after the CPPIB takeover offer closes on 13 March" he said.

Earlier this week directors recommended that Auckland Airport shareholders reject the partial takeover offer being made by CPPIB for the 39.53% of the Auckland Airport shares not already held by CPPIB at $3.65 per share and hold their shares.

A copy of the Target Company Statement including the independent adviser's report is available on the Auckland Airport website www.auckland-airport.co.nz and has also been sent to all shareholders.


Essential Links:

Download Target Company Statement, 2.8MB PDF Released 21 Dec (NZ time)
Reuters (update 2, 9.30am 21 Dec EST)
Speed it up say Canadians NZ Herald (22nd Dec NZ Time)
Mystery Airport Suitor gets due dilligence Stuff Website
(22nd Dec NZ Time)


C Auckland Airport & Share Investor 2007

Thursday, December 20, 2007

Auckland Airport directors bribe brokers

The contempt that I feel over Auckland Airport management paying brokers to advise their clients who are thinking about selling not to vote for the Canada Pension Plan Investment Board buyout of a 40% stake in the port is only matched by my anger over who is doing it.

http://www.nztp.net.nz/auckland-airport.jpg
The Auckland Airport board is essentially
bribing brokers to advise clients not to sell.


Lloyd Morrison and company have allot of questions to answer.

I was hacked off by some of the directors that were voted onto a new board at the end of November and mentioned various agendas that might have been on the table and it looks like the current crop of board members will do just about anything to fulfill whatever their agendas are.

Forgetting all about their shareholders and basically treating them like mushrooms who are too thick to make up their own minds, they are bribing brokers with their own money in order to get their own way!

All the board should have done is present their retort to the CPPIB bid and then let shareholders sift through the information and then it is up to them to decide whether they will part with their own property.

It doesn't bode well for minority shareholders like myself, who's rights as Auckland Airport shareholders are being stomped on at every turn.

With this sort of single minded attempt to run a public company like a family dynasty, Auckland Airport directors need to take a good hard look at themselves and ask one salient question.

I'm I doing this job for my own benefit or for the benefit of shareholders, as I was elected to do?

Shareholders need to fight back and make it clear to their employees, the directors, that this sort of immoral practice is not acceptable.


Disclosure: I am a Auckland Airport shareholder


C Share Investor 2007

Commerce Commission impacts on The Warehouse' bottom line

The future of The Warehouse Group [WHS.NZ] is on hold, after the Commerce Commission announced earlier this week that they are going to appeal the High Court decision to the Court of Appeal to allow Foodstuffs and Woolworths Australia [WOW.ASX] bidding for the retailer.

Unless the Commission can argue new evidence in the higher court or argue on a technicality on a point of law then their appeal is not likely to be a positive one for them.

The Commission also face the distinct possibility that their appeal maybe thrown out before it begins at a preliminary hearing, due to sit on January 29 to decide whether leave to appeal will be granted.

Warehouse management have publicly backed the two bidders so it shows the direction the company wants to go.

The Commerce Commission clearly see the High Court decision to allow the two Warehouse suitors to bid as a watershed decision that must be fought with all their state backed muscle.

Personally, like most state apparatus and workers within those apparatus, there is a little bit of self preservation involved. In the Commission's decision to appeal we have a little job justification going on and any brakes on the growth of a business like The Warehouse, while they have to wait, and they have waited for over a year because of the CC dilly dallying, is purely incidental to those at the Commission.

It is outrageous that the state can take such a lengthy time to make such an important decision over the property rights of Warehouse shareholders. While it is understandable that there will be competition issues in business from time to time and these should be arbitrated, it is even more serious an issue when arbitration of these issues materially affects an important business because of unnecessary delays, not to mention the negative impacts to those individuals and groups who own that business.

The Commerce Commission should take the lay of the land and come to the conclusion that much wiser heads at the High Court did, that the Warehouse and its current owners need to be able to freely sell an asset that is theirs, to two willing buyers that want it.

The millions of dollars that it has cost The Warehouse so far since their business has been on hold is a serious issue and the strangle that the Commission has on its business at present must be let go so the losses don't continue to mount.



Disclosure: I own WHS shares



The Warehouse Group @ Share Investor

Long vs Short: The Warehouse Group
Warehouse bidders ready to lay money down
The Warehouse set to cut lose "extra" impediment
The Warehouse sale could hinge on "Extra" decision
The case for The Warehouse without a buyer
Foodstuffs take their foot off the gas
Woolworths seek leave to appeal to Supreme Court
Warehouse appeal decision imminent
Warehouse decision a loser for all
Warehouse Court of appeal decision in Commerce Commission's favour
MARKETWATCH: The Warehouse
The Warehouse takeover saga continues
Why did you buy that stock? [The Warehouse]
History of Warehouse takeover players suggest a long winding road
Court of Appeal delays Warehouse bid
The Warehouse set for turbulent 2008
The Warehouse Court of Appeal case lay in "Extras" hands
WHS Court of Appeal case could be dismissed next week
Commerce Commission impacts on the Warehouse bottom line
The Warehouse in play
Outcomes of Commerce Commission decision
The fight for control begins soon

Share Investor Forum-Discuss this topic


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The Warehouse Financial Data


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c Share Investor 2007 & 2009

Wednesday, December 19, 2007

New broom at Sky City set to sweep

A new boss at Sky City Entertainment Group Ltd [SKC.NZ] brings a whole new broom to the company closet, a CEO with a long history of casino experience.

The image “http://www.terrapinn.com/TRes/Customer/C364160.jpg” cannot be displayed, because it contains errors.
Nigel Morrison

Nigel Morrison has more than 18 years' experience in the casino business throughout Australia and in Asia and his tenure at the New Zealand entertainment company is a welcome relief from the current temporary head, Elmar Toime, with no gaming experience, and the previous one, Evan Davies, who got his casino experience on the job when he started with the company right at the beginning.

Morrison's pedigree, having just left the Macau-based Galaxy Entertainment Group, former chief executive of the Federal Group, Australia's largest private casino and gaming company and as chief operating officer at Crown Limited where Morrison played a big role in restructuring the business.

It is that experience, "restructuring" the likes of Crowns' massive riverside Melbourne gambling mecca, that will come in handy with his new role as the head of Sky City.

Sky City's business units all need a good sorting out, they are over-laden with middle management and there is plenty of fat to trim and Morrison's appointment looks to be one of managements best decisions in some time. Morrison's reputation for sorting out Crown can be seen as an indication of the direction that Sky City will be going over the short to medium term.

http://www.luxurydownunder.com.au/images/hotels/DRWSKY1_bg.jpg
Part of Sky City Darwin Casino, one of the better performing
casinos in the gaming group.


Adelaide Casino needs a close look and will be kept and "refocused", as does the Auckland flagship casino, Sky Citys' chief money spinner. Previously the company talked of selling the Adelaide Casino.

Sky City Cinemas are definitely for the chop and management have been remiss of late in informing shareholders as to a date when the cinemas will be sold, or if there is indeed a buyer.

The whole takeover process over the last 4 months has been complicated and disclosure to shareholders has been confusing, changeable and misleading at times.

It looks like the the promise of a takeover has come to an end and it is time to get down to the real business and Morrison must achieve the objective of rebuilding the company to its former glory.

Morrison's $NZ3.7 million remuneration package, with around a third made up of "bonus" shares and lets hope it is results based, is generous, and he should be given 12 months to see things materially start to change, if he makes the right decisions to begin with, and then we should judge his leadership.

For Sky City shareholders lets hope he does the business.

He takes up the reigns in March 2008.


Disclosure
: I own SKC shares in the Share Investor Portfolio


Sky City @ Share Investor

Share Investor discusses Convention Centre proposal with CEO Nigel Morrison
Share Investor Q & A: Sky City CEO, Nigel Morrison
Sky City Entertainment: CEO Nigel Morrison discusses 2010 HY
Sky City Convention Centre Expansion a Money Loser: Part Two
Sky City Convention Centre Expansion a Money loser
Sky City Entertainment Group Ltd: Download full Company analysis
Sky City 2010 full year profit looking good
Long Term View: Sky City Entertainment Group Ltd
Sky City Entertainment: CEO Nigel Morrison discusses 2010 Half Year
Sky City Entertainment Group 2010 Interim Profit Review
Sky City to focus on Gaming
Sky City debts levels now more manageable
Insider Trading on Sky City shares
Sky City Profit Upgrade: Always on the Cards
Sky City's Current Cinema "Boom" a Horror Story in Disguise
Stock of the Week: Sky City Entertainment Group
Are Insiders selling Sky City Stock?
Sky City Entertainment 2009 Interim Result Preamble
2008 Sky City profit analysis
Sky City share offer confusing and unfair for smaller shareholders
Sky City Entertainment 2008 Full Year profit results , NZX release, 2008 full year presentation, result briefing webcast, financial statements
Sky City 2008 profit preamble
Sky City outlines a clear future plan
As recession bites Sky City bites back
Sky City Assets: Buy, sell and hold
Why did you buy that stock? [Sky City Entertainment]
Sky City Share Volumes set tongues wagging
Sky City half year exceptional on cost cutting
NZX Press release: Sky City profit to HY end Dec 2007
Sky City Cinemas no Blockbuster
Sky City Entertainment share price drop
New Broom set to sweep
Sky City Management: Blind, deaf and numb
Sky City sale could be off
Opposition to takeover
Premium for control
Sky City receives takeover bid
Sky City Casino Full Year Profit to June 30 2007
Setting the record straight
Sky City CEO resigns
Sky City Casino: Under performing
Sky City Casino 2007 HY Profit(analysis)
Sky City Casino 2007 HY Profit

Discuss SKC @ Share Investor Forum

Download SKC Company Reports


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c Share Investor 2007



Tuesday, December 18, 2007

Leaders must come clean over losses to restore trust in credit markets

The current market turmoil seems more a reaction to uncertainty over the scope of the sub prime losses and the attendant credit crunch rather certainty over how bad it really is.

Those with the knowledge over just how much the losses are not telling the general investing public and may I be so bold to suggest that they are not telling our political masters either and if they have then our politicians are not telling all lest they panic the sheep and cause some sort of financial stampede.

To be fair the losses would have to be in the trillions to have material serious effects on financial markets and economies but the uncertainty over losses seems to have done more damage than the realities over an accurate amount.

The uncertainty has dented the all important credit sector of the economy. A sector that relies on trust, full disclosure and the knowledge that with all things known to the lender he can fork over the credit knowing he is more than likely to get his money back.

It is the essence of how business and economies run.

This trust simply doesn’t freely exist anymore and will take a complete clean out of the sub prime losses and then time to restore the much needed trust that this all important part of the business world needs.

Until then, business growth will slow, economies likewise and the mere fact that the trust isn’t there will apply the hand brakes to just about everything that needs credit applied to it. That is most of the worlds’ economy and that is why this “credit crunch” has been talked about so much.

Just a rider to the above though. If losses are in the multi trillions then the psychological trust issue that I have discussed over lending to others will be matched by hard facts that some real money has actually been lost.

The impact of that will be hard to measure but clearly it will be serious.

Related Share Investor Reading

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c Share Investor 2007

Monday, December 17, 2007

What is Auckland International Airport worth to you?

News today that the directors of Auckland International Airport Ltd [AIA.NZX] have advised AIA shareholders to reject the Canada Pension Plan Investment Board offer of NZ$3.66 per share as too low and that the share price doesn't take in to account future growth and potential for the port in this part of the world comes as no surprise.

The independent valuation by Grant Samuels though indicates that the offer price by CPPIB is above their valuation of $3.48 at the high side and recommends to AIA shareholders that the offer is a good one.

AIA management, in the event of the CPPIB bid crashing and burning, will actively seek "a cornerstone holder" with "airport experience" smacks of nepotism to me as one of the largest AIA shareholders with a seat on the board, is Lloyd Morrison, head of Intratil, a majority owner of Wellington Airport, with small airports in Europe and Britain.

It seems that with the certain failure of Morrison's company trying to develop a second Auckland Airport in West Auckland, he now seems intent on getting a foothold in what would have been his competition had his bid for a second port was successful.

So what is the Auckland International Airport worth?

It depends on your investment horizon. Are you invested short or long term?

If you are a short term investor who bought your shares last year for as low as $1.90, then you might be wise to accept the CCPIB offer and lock in an exceptional quick buck.

The inverse long term view of course is that within 5 years the value of a single AIA share is likely to be well in excess of the $3.65 offer from the canny Canadians. They can definitely see a good long term prospect, otherwise they wouldn't now be having a second go at the company.

Lets face it, the company is a near monopoly, with the worlds best profit margins for an airport and also a huge owner of undeveloped land and various other revenue streams or businesses outside its core reason for existence.

It is in effect also a mall operator, with a large retail presence and big foot traffic coming past on a 24 hr 7 day week basis and also operates a large car parking facility as part of the airport.

I am going to vote against the CPPIB offer.

Disclosure: I own AIA shares 

AIA @ Share Investor

Is Auckland International Airport set for M & A activity?
Share Investor Q & A: Auckland Airport's Simon Moutter
Auckland Council look set for a Auckland Airport Takeover
Auckland City Council new AIA Policy Doc
Make me an offer I cant refuse: Auckland International Airport Ltd
Long Term View: Auckland International Airport
VIDEO - Simon Moutter on Australian Airport Purchase
Auckland Airport Capital Raising a fair call
Auckland International Airport lands Australian Ports
What Infratil sale of Auckland Airport stake means
Is another Auckland Airport bid likely under a business friendly Government?
Latest Airport coverage
Cullen's move on Auckland Airport has far reaching effects
Cullen's move on AIA tax plan Anti-Business
AIA profit stays grounded
Softening opposition to CPPIB bid for AIA
Directors of AIA bribe brokers not to sell
What is Auckland Airport worth to you?
Second bite at AIA by CPPIB might just fly
AIA new directors must focus on shareholders
Auckland Airport merger deal nosedives
The Canadians have landed
AIA incentive scheme must fly out the window
Government market manipulation over AIA/DAE deal
DAE move on AIA: Will it fly?


Queenstown Airport Buyout @ Share Investor

Queenstown Airport: Queenstown Airport Update
Auckland Airport CEO on Queenstown Airport Fracas
Queenstown Airport: Court Case looks set to Drag
Queenstown Airport: Loud Voices & Loyalty
Queenstown Airport: Air New Zealand's Crocodile Tears
Queenstown Airport: AIA purchase good Long-Term but will cost shareholders Short-Term

Discuss this Stock @ Share Investor Forum - Register free
Download AIA Company Reports

Steve Jobs
Steve Jobs Biography - By Walter Isaacson



c Share Investor 2007



Sunday, December 16, 2007

Second bite at Auckland Airport by CPPIB could just fly

Well, I got the offer for my Auckland International Airport Ltd [AIA.NZX] shares from the Canucks', Canada Pension Plan Investment Board, in my mailbox yesterday.

This is the second bid from the Canadians.

Its pretty basic, you can either accept the offer partially or fully for your shares and vote accordingly for CPPIB to take just shy of a 40% stake in AIA and for a NZ$3.6555c cash consideration.

Seems allot lower value than some have put on the company but it is a reasonable advance on the current share price of $2.80.

Brook Asset Management and other broker institutions look likely to back the offer but the two large council owned parcels of shares and those of Lloyd Morrison's Infratil, which make up around a 30% shareholding are likely to sit on the other side of the fence.

There are also regulatory issues in the way in regard to Overseas Investment Office and IRD approval of tax related matters germain to the deal and political pressure from the usual numbskull's like Winston "Baubles" Peters.

This bid however is more likely to succeed than the bid from Dubai Aerospace International, which was shot down by the AIA board even before it could be put to shareholders earlier in the year because there isn't the Middle East/Muslim factor involved and the DAE bid involved more control with a bigger stake.

Obvious problems with a Muslim company owning AIA made a big influence on my decision then to back shareholders holding onto their shares although I wasn't opposed to another foreign owner making a bid.

Having seen the CPPIB offer it looks good compared to the alternative if one was to stay a shareholder.

CPPIB has changed the terms of its planned amalgamation with AIA (assuming it gets to approx 40 per cent). Stapled securities issued under the proposed amalgamation will now include a convertible note with a face value of $2.75 (previously $3.35) an ordinary share with a face value of $.0.7055 (previously $0.1055) and $0.20 cash (unchanged). The convertible notes will pay a 7 % coupon rate.

So there is more debt servicing for the new AIA model under the Canadian proposal and this is clearly going to drag on profit in the short to medium term until the various benefits they have mentioned under the new structure are bedded down and then realised.

The Canuck investment board sure are canny investors with a good track record,








CPP Fund
$121.3 Billion
At September 30, 2007

But it remains to be seen, if they are successful whether they can make their investment in AIA fly or if it is going to crash land.

There is going to be a AIA Board announcement and appraisal tomorrow(NZ Time) by Grant Samuel's, with valuation assessment and projections on passenger and aircraft demand.

Full CPPIB Offer


Queenstown Airport Buyout @ Share Investor

Queenstown Airport: Court Case looks set to Drag
Queenstown Airport: Loud Voices & Loyalty
Queenstown Airport: Air New Zealand's Crocodile Tears
Queenstown Airport: AIA purchase good Long-Term but will cost shareholders Short-Term


AIA @ Share Investor

Make me an offer I cant refuse: Auckland International Airport Ltd
Long Term View: Auckland International Airport
VIDEO - Simon Moutter on Australian Airport Purchase
Auckland Airport Capital Raising a fair call
Auckland International Airport lands Australian Ports
What Infratil sale of Auckland Airport stake means...
Is another Auckland Airport bid likely under a business friendly Government?
Latest Airport coverage
Cullen's move on Auckland Airport has far reaching effects
Cullen's move on AIA tax plan Anti-Business
AIA profit stays grounded
Softening opposition to CPPIB bid for AIA
Directors of AIA bribe brokers not to sell
What is Auckland Airport worth to you?
Second bite at AIA by CPPIB might just fly
AIA new directors must focus on shareholders
Auckland Airport merger deal nosedives
The Canadians have landed
AIA incentive scheme must fly out the window
Government market manipulation over AIA/DAE deal
DAE move on AIA: Will it fly?

Discuss this Stock @ Share Investor Forum - Register free

Download AIA Company Reports
Download Queenstown Airport Company Reports


From Fishpond.co.nz

A Perfect Gentleman: The Sir Wilson Whineray Story

A Perfect Gentleman: The Sir Wilson Whineray Story



c Share Investor 2007


Friday, December 14, 2007

Money Manager's first step gives investors the middle finger

Today's column time warps back to 2002 when I started a thread on the financial forum Sharetrader. The thread was titled "Are Money Managers Dodgy? I cant find it on the site now as I suspect the owner of Sharetrader, Tarawera Publishing, has removed it due to the slagging off of Doug Somers-Edgar, the owner of MM, through a family trust.

The finance biz is very small in New Zealand and people don't like to step on toes, even though they should, should they want to continue to do business with each other.

Flick back to today and we find the on-going saga of Money Managers and their "First Step" product seems to have finally come to a soggy mess after being closed down in 2006.

Money Managers have told over 7000 investors they are unlikely to get all of their money back after First Step was liquidated, putting around $150 million of total funds invested at risk of being flushed away.


The NBR had this to say about First Step back in February 2002:

First Step's own financial statements showing related party lending at 29.58%.

There is still no information on where the money finally ends up, what the rate of return is for those related parties, and the level of risk to which First Step investors are exposed.

Among the questions Mr Somers-Edgar has refused to answer:

Could that expertise not be provided within First Step, thereby providing more transparent accounting for funds?

Are the returns in line with the level of risk investors are taking?

Why will Money Managers not open up to independent scrutiny?

What is the total "cost on funds" (how much money the investment is generating compared with how much investors are getting back)?

What are the total fees charged?

The National Business Review has revealed how the First Step structure puts walls between investors and their money, with no clear account of what happens behind the walls.

First Step has had a chequered disclosure history; the Securities Commission suspended its prospectus when it was first issued in February last year.

Presumably Money Managers didn't inform clients of the concerns of the likes of the NBR and myself and continued to take in client's funds in a dishonest, calculated and deceptive way.

This part of the NBR article is revealing:

First Step's own financial statements showing related party lending at 29.58%.

One would have to ask, if there is interrelated lending from First Step, as there is with every other "product" Money Managers peddle-Doug is known as "Mr Clip, Clip" for every time there is an inter-company loan or transfer he clips the ticket with a fee-why don't the more profitable areas of the business lend money back to First Step to bail out Money Managers 7000 clients?

I know it is a dumb question but it had to be said.

I urge anyone considering investing in any of Doug Somers-Edgar's companies to take a deep breath, Google his name and see what you come up with and then make your decision.


What has Somers-Edgar been up to lately?

Doug has mysteriously disappeared from his former high profile, since stepping down from Money Managers in 2006 but seems to have been busy suing people for critiquing his investment style.

From
27 June 2004, Somers-Edgar-related CTT companies in receivership (CTT Finance Holdings, CTT Financial Services, CTT One, Dental Finance, Paragon Factors and involved in numerous other liquidations of his own, related and other parties companies

Owning a dodgy Ginseng business.


Related Share Investor Reading

The "New" Money Manager's Investment Vehicle still tainted by its past
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Every Bastard Says No: The 42 Below Story

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c Share Investor 2007 & 2009

Thursday, December 13, 2007

Can the Joneses keep up with the market?

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The Joneses will have to work hard to satisfy stockmarket
investors that theirs is a company worth investing in to
make the IPO a success.



A dearth of IPOs in New Zealand so far this year and what we have had has mostly been unmitigated garbage.

News released yesterday that The Joneses , the cut price real estate agent, is going to list on New Zealand Exchange's alternative market, in mid-February 2008 piqued my interest somewhat.

Now I guess your initial reaction might be hell, I don't trust real estate agents, and you could be forgiven for thinking that but I can see some promise in the idea that the owners of the Joneses', TJRE Holdings and director Chris Taylor have.

Kiwis have no listed exposure to the residential property market and we just love to invest in residential property, at the expense of the sharemarket mind, but what an opportunity to combine the two aspects.

The company is very small and has been operating since last year, with offices in Dunedin, Christchurch, Auckland and Wellington, so the possibility for good growth is there.

Revenues from house sales commissions are estimated at NZ$1.2 billion, with Barfoot and Thompson in Auckland taking up the bulk of that. The revenue is certainly there so it is a case of the Joneses upping their ante to keep up with the Barfoots and LJ Hookers of this world.

In the absence of more details of how the company is structured and how revenue is made, presumably through a cut of the sales commission, one cannot make a serious decision to plunk any shekels down yet.

Time to look at the industry and see how this model might work/fail if you want to invest.

Bring on the prospectus.


Related Share Investor reading

IPO quality indicative of poor economy
The Joneses Real Estate business fails to keep up with market conditions



C Share Investor 2007

Wednesday, December 12, 2007

Burger Fuel results and commentary

Once again Burger Fuel came out on top for Google search results on Share Investor today, so you might have been looking for the profit result that they posted today(see below story for detail)

http://www.eguides.co.nz/directory-home/after-dark-new/ponsonby/burger-fuel/image_large
But no free lunch, or dividends yet
For BFW shareholders.


Not happy reading but it is early days yet of course.

One of the biggest reasons for the $1.9 million loss for the last 6 months was the 900 thousand odd spent on an IPO to raise a measly 8 million bucks, which management still has just under half of it in the bank left.

Having the $1.9 million "combined" loss stated at the bottom of the announcement isn't a good indicator for clear disclosure in the future.

The headline figure should be $1.9 million, not $1.3 million because the company is incurring the cost of the IPO regardless of management differentiating "pre" and "post" float numbers right at the bottom of the press release.

The announcement is titled as a 6 month result and last time I looked at my own personal accounts I had to take into account all figures positive or negative, even though I might have wanted to ignore any overdrafts.

According to their own figures the company's "one-off" costs of the IPO and a store opening in Sydney sent the loss higher than expected.

All that cash in the bank is very tempting but not much considering the level of expansion the small company seek in the next financial year, 4 more stores.

The positive news is that same stores sales were up 4% and that really is the only meaningful figure to comment on as we don't have a previous year revenue figure on hand for a comparison.

Josef Roberts should have some pause for optimism considering the same store figures on which Burger Fuel, as the Franchisor, reaps royalties from individual store sales.

Shares were up 4c to 64c on less than $700 volume.

C Share Investor 2007




BFW
12/12/2007
HALFYR

REL: 1419 HRS Burger Fuel Worldwide Limited

HALFYR: BFW: Burger Fuel Worldwide Ltd Preliminary Half Year Results

Burger Fuel Worldwide Limited

Results for announcement to the market

Reporting Period 3 and a half months to 30 September 2007
Previous Half-year Reporting Period N/A

Amount (000's) Percentage change
Revenue from ordinary activities 1,400
Profit (loss) from ordinary activities after tax attributable to security
holders (1,355)
Net profit (loss) attributable to security holder (1,355)

Interim/Final Dividend Amount per security Imputed amount
per security

Record Date -
Dividend Payment Date -

Comments: See attached Directors commentary and following

To be followed by the balance of the information required in the report
pursuant to Appendix 1.

BURGERFUEL WORLDWIDE RESULTS TO 30 SEPTEMBER 2007

The directors of BurgerFuel Worldwide Limited (BFW) today reported an
un-audited loss of $1.35 million for the three-and-a-half month period to 30
September 2007, of which $991,000 represented costs associated with the
company's Initial Public Offering (IPO).

Of the remaining loss, the amount of $203,000 related to BFW's investment in
Australia, where the company opened its Kings Cross store on 7 October 2007.

BFW results for period 14 June to 30 September 2007

$(000's)

Operating Revenue 1,400

Operating Expenses * (2,755)
Loss (1,355)

* includes $991,000 of non-recurring costs associated with the IPO.

Directors say the loss is in line with the Boards' expectations after costs
associated with the IPO, as outlined in the company's prospectus.

They say continued losses of $50,000 per month are anticipated, but expect
these will progressively reduce as additional stores are opened.

Four additional BurgerFuel stores have opened since the incorporation of BFW
on June 14, one of which is company-owned. Total stores now number 24, of
which two are in Sydney, Australia. Of the 24 stores two are company owned
and the remaining 22 are franchised.

A further four new BurgerFuel stores are planned to open in this financial
year, at sites currently under negotiation.

BFW has four main areas of revenue: up-front franchise fees, on-going royalty
fees, sales of certain proprietary goods and store income from company-owned
stores.

System sales up 40%

For the 6 month period 1 April to 30 September 2007 (which included
pre-listing trading)

BurgerFuel's total system sales for all stores, from which BFW derived
franchise royalties were up 40% from $7.8 million to $10.9 million compared
with the previous corresponding period. Comparative results for same store
sales for the 6 month period were up 4%.

Following the company's NZAX listing, management has been firmly focused on
new store development and continued sales improvements and that in accordance
with the prospectus, BFW will continue to invest and expand the chain in New
Zealand as well as other potential markets.

To obtain an understanding of the overall consolidated trading results of the
BurgerFuel group of companies pre and post IPO for the 6 month period to 30
September 2007 the results are set out below:

Combined results pre and post IPO for the 6 month period, 1 April to 30
September 2007

($000's)

Revenue 2,336
Expenses * (4,284)
Loss (1,948)

* These results include non-recurring expenses of $1,321,000 for the
IPO.

A further amount of $298,000 relates to the costs associated with entry into
Australia.

BFW was incorporated on June 14, 2007. It raised $8M in its IPO. Funds have
been used for IPO costs, repayment of all loans and further capital
investment, such as the Kings Cross store.

BFW's cash reserves as at 30 September were $3,987,000. The company has no
borrowings.

For further information contact:

Josef Roberts
Director

021 444-786

Bollard sits on his hands

Alan Bollard rattled his sabre again last week.

Keeping the cash rate at 8.25% while telling us inflation was a risk down the road.

Well helloooo! could one of the reasons to the risk of inflation be your 4 rate hikes this year and multiple ones over the last few years?

The short answer is yes but the less interesting answer is that Bollard is clearly out of his depth.

Barely able to see over the rims of his accountant style glasses, he rarely has the vision to see further than what happens from day to day..

Instead of dropping the cash rate, as he should have, he risks putting the New Zealand economy at the sort of risk the Labour Government has put it under for the last 8 stifling years.

Labour did it with world record breaking high taxes, removing cash and investment from the economy and Bollard did it with the worlds highest interest rates outside the worlds other banana republics, ditto removing cash from street level and strangling productive investment, savings and business.

World economies are cutting rates to stimulate economies and Bollard sits on his hands. It looks like he will only move once the economic cycle we are in is in the middle of a meltdown.


Related Share Investor reading

Alan Bollard's indecision over OCR a worry to NZ INC


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c Share Investor 2007

Restaurant Brands: No reason for optimism in latest sales figures


Frankly if Van Arkel doesn't know why 2007 3rd quarter sales at Restaurant Brands Ltd [RBD.NZ] Pizza Hut are sliding and surmises that one reason might be that Pizza Hut customers are now shopping at KFC because of the marketing then I'm surprised if he knows what day of the week it is.

Has van Arcle ever ordered a Pizza from his own company?

I don't think so, because if he did he would find out the reason why Pizza Hut sales are doing a Hindenburg.

Its truly a horrible experience getting a pizza from this company. With phone customers there are inaccurate orders taken and the in-store experience with waiting times, if you can get past the surly staff, is quite often something akin to waiting for Led Zeppelin reform(OK, hang on they have, The Beatles then)

Customers are simply voting to go elsewhere, mostly Dominoes, where they get better food, service, prices and a ten minute wait.

A new "cheesy crust" pizza is picked to rescue sales in the coming quarter!

There is also talk of a "new look" for Pizza Hut next year. More capital expense and suffering shareholders as a result.

It really is the same crap from this management every sales/profit announcement, some lame excuse why sales are bad and promises that some new marketing scheme or food item will reverse fortunes.

Never a finger pointing at bad service, at themselves.

Increased KFC sales through the "transformation" of stores are being disingenuous to say the least.

Management are siting "record" sales at its fried chicken restaurants but the facts are that the year they might be comparing this latest result to, 2002, KFC did $177.1 million in sales.

If you add the 2007 cumulative 3 quarter total of $151.8 Million to say a generous $48 million final quarter, you are still just shy of $200 million, an approximate 12% rise in dollar sales since 2002. Factoring in a generous 3% annual inflation since then though and sales are 3% down since their record listed year in 2002.

If you add in the increased wages bills, power, ingredients and store refurbishment costs you can see management are still way behind the 8 ball.

And they have Red Rooster, Nandos and Oporto nipping at their heals. Red Rooster will be a big problem for them in the future as their food and service levels are far higher in my experience and they are a full service QSR, with drive through takeaway and sit down.

What can one say about their Starbucks units. Sales are increasing but still yet to turn a profit on top of horrendous overheads, especially lease arrangements.

Regular readers of my columns on this subject will have heard this before. Restaurant Brands needs a clean our from the top, a new head and associated management and a new service focused direction.

Dressing up stores is only going to last song long, putting the S back in service will keep customers coming back for more.

On a more positive note for the company, its shares were up by 1c today to 91c.



Restaurant Brands @ Share Investor


Finger Lick'n Good Management
Chart of the Week: Restaurant Brands Ltd
Long Term View: Restaurant Brands Ltd
Stock of Week: Restaurant Brands Ltd
Restaurant Brands: Buy or Sell ?
Pizza Hut sell-off provide opportunities all-round
Danny Diab & Restaurant Brands
2008-2009 KFC sales figures mislead investors
KFC Finally Flying
Starbuck's New Zealand Cup doesn't runneth over
RBD gives KFC a push
McDonald's playing chicken with KFC
Restaurant Brand's Pizza Hut faces increasing competition
RBD sales analysis
RBD saga continues: CEO leaves
The secret recipe is out
2007 FY profit analysis
Delivering increased profit in October 2007
No reason for optimism in latest sales figures

Discuss RBD @ Share Investor Forum

Download RBD company reports

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Fishpond



c Share Investor 2007