2nd Auckland EFB Protest(UPDATED)

Auckland march protesters 17 Nov, 2007


There is another protest march against the Electoral Finance Bill planned for December 1 2007 in Auckland.

The march kicks off in Aotea Square at 2.00pm heading off down Queen St to Britomart.

It is being organised once again by John Boscowan.

There is also to be a march in Christchurch Wednesday November 28 2007, details to follow.

C Political Animal 2007

Border's decision an indicator for Warehouse takeover outcome

A very interesting decision by the NZ Commerce Commission on Tuesday to give Whitcoulls the go ahead to buy the Borders book chains in New Zealand and Australia.

Border's Auckland Queen St Store

Given this outcome one could be forgiven for not thinking that either Foodstuffs or Woolworths should be able to get similar approval to buy The Warehouse chain. when a decision in the appeal to the High Court comes to light.

The approval for Whitcoulls to buy the 5 store chain in NZ is a similar scenario to the possible Warehouse buyout.

In Whitcoulls you have a dominant player wanting to takeover the superstore format that Borders is modelled on even before it has been given a chance to flourish under another independent player. Paper Plus is another dominant NZ player that is also interested. Dymocks, with quite large format stores and a much NZ smaller business has dropped out of the running for some reason.

Dymocks would have been the natural partner for Borders in NZ simply because of its small size.

As has been covered ad nauseum, Foodstuffs and Woolworths twin bids for The Warehouse are being made by two dominant grocery players in New Zealand and the Warehouse has recently kicked off development of a superstore format along the lines of Walmart's "supercenters" that include grocery lines and with three of these stores the format is in its infancy.

In Auckland City CBD the purchase of Borders by Whitcoulls will allow the combo company almost a monopoly in the superstore format, with the Whitcoulls store only a block away from Borders, you will see price rises for stock. In the rest of the country Whitcoulls and Paper Plus dominate the book and stationery industry.

If you use the CC rationale for allowing a Whitcoulls or Paperplus buyout of Borders and apply it to a possible Warehouse takeover by two dominant grocery players the similarities are spookily parallel ones. The Warehouse extra format is in its infancy, as is the Border's format and allowing Foodstuffs or Woolworths to purchase would by the CCs own standards be acceptable.

The nub of the Commerce Commissions argument in the Borders case seems to be that their large format stores don't lessen competition in the hands of a dominant player, so the same measuring stick must be applied in the Warehouse decision before the High Court. Extra format stores are unlikely to be a threat to other competition if purchased by a dominant player if you apply the Borders decision or they cant be much of a threat in themselves as a successful format in anyones hands. Therefore a positive outcome must be applied otherwise consistency in decisions at the Commission will be threatened.

The wait and outcome will be interesting and the High Court have a tough decision to make. However, they must apply the same rules to the Warehouse decision as the Commerce Commission have made this week in regard to Borders.

Disclosure: I own Warehouse shares

C Share Investor 2007

Auckland Airports new directors must focus on shareholders

After yesterday's vote at Auckland International Airport [AIA.NZ] AGM a number of the original board was gone and replaced by a motley crew of local politicians, individuals with axes sharpened and ready to grind and a couple of incumbents only just scraping in.

The amount of mud slinging by the current elected directors aimed at each other in the media recently could well leave one thinking that turbulence in the board room will be de rigeur.

Individual agendas are likely to be the order of the day, with newly elected Lloyd Morrison the person with the most to gain. Through his company Infratil [IFT.NZ] and a partnership with the NZ Super Fund, Morrison owns around 9% of AIA. He also owns a majority stake in Wellington Airport and is behind the proposal to build a second airport in Auckland.

Morrison's conflict of interest is clear but his agenda isn't. He made a bid for the Airport earlier this year at a share price of less than what Dubai Aerospace was prepared to pay but said in the meeting yesterday that NZ companies had been "undersold in the past".

Auckland businessman Richard Didsbury, a director nominated and acting on behalf of Auckland City Council and John Brabazon, nominated by Manukau City Council but now stood down, are two individuals with political direction with Didsbury acting on behalf of his council to keep the airport in "New Zealand hands", whatever that means because it is currently a publicly owned company with shareholders living in many countries and Brabazon still possibly imbued with Manukau's don't sell at any price strategy.

Chairman John Maasland is going to have a difficult job getting anyone to agree on a single defined direction for the company as it goes forward because they all seem to have their own ideas as to where the company should go. Ego has raised its ugly head in the lead up to the directorship elections yesterday but it has no place in the board room.

What these individuals seem to have forgotten is that there are shareholders out there who haven't had decent representation over the last 6 months or so during a possible sale of the company. The 2 offers that were turned down outright by the board, Dubai Aerospace and the original Canada Pension Plan scenario should have been put to shareholders and then put to the vote.

Instead directors fell to local and national political interference and public opinion when the property rights of AIA shareholders should have been given preference for it is they who own the company.

The new board need to keep this uppermost in their minds every board meeting and business dinner and lunch that they have.

Disclosure: I own AIA shares


Auckland International Airport @ Share Investor

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c Share Investor 2007

Pumpkin's expansion comes at a cost

The mood at today's Pumpkin Patch Ltd [PPL.NZX] AGM seemed a little dire.

Talk of extra expenses due to expansion seemed the main theme of the day and a weaker US dollar and stronger Kiwi having a big impact on profit repatriated back to New Zealand.

The "Patch" is expecting earnings growth to come from local markets, increased interest charges, store opening costs and market development costs in the USA and UK continue to have an impact the on the company's results short to medium term.

Like Burger Fuel Worldwide Ltd [BFW.NZX] the initial costs of establishing a sustainable global brand are a necessary evil and in my opinion will increase before they start to decline. If you are invested in Pumpkin Patch to make a buck short term unfortunately the big bucks for this investment are more likely to be realised long term.


A 3,200 ft² shop at 77 Clarence Street, Kingston, UK
leased to Pumpkin Patch Ltd on a new 10 year lease
at a headline rental of £333,330 p.a.x.


If you unhappy with that as an investor then clearly you should have your money elsewhere.

Quite often, when establishing a brand such as this, companies make losses, so it is to the credit of the management of Pumpkin Patch that as yet this hasn't been the case.

Carefully building up a profitable Australasian business before moving to new overseas markets has put the company in a great position to use cash flow to allow them to borrow to grow their new business.

Michael Hill International Ltd [MHI.NZX] has used the same strategy in building their brand in Canada and like PPL they are still running at a loss there.

Store numbers are now at 200 and management look to add around 20 new stores this financial year, down from last years 35 stores, so associated costs should be ameliorated.

The only real threat seems to be from the currency swap from the strong Kiwi dollar if it continues long term but it is something management will have to deal with if it stays strong, perhaps make it a side issue and not give it the significance they seem to every reporting season, simply because there is nothing they can do about it.

Short to medium term though shareholders like me could be in for a bumpy ride.

The market punished the gloomy outlook by cutting the share price by 16c to NZ$2.72 on good volume.


Disc I own PPL shares in the Share Investor Portfolio




Pumpkin Patch @ Share Investor

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Discuss PPL @ Share Investor Forum




c Share Investor 2007