Sky City set to lose National Convention Centre bid

For all intents and purposes the possibility of Sky City Entertainment Group Ltd [SKC.NZX] getting the go ahead from politicians for the right to build and operate a National Convention Centre with the benefit of taxpayer money and all the business that would bring to the SKC gaming floor is pretty much dead and buried.

I have easily come to this conclusion because over the last week Mayoral candidates John Banks and Len Brown have both come out and backed the new Auckland "Supercity" and its bid for a convention centre in and around the Aotea Centre.

The Sky City and council bids are 2 of 5 that are bidding to build the national Convention Centre, at a cost of around $400 million, but politics has taken over sense in the Mayoral race because it wouldn't be seen as "fair" to subsidise a company like SKC for them to build an asset that they would benefit from - after all it is a big bad casino!

The thing is though, any winner in the race to build a convention centre would get the benefit of the taxpayer subsidy so the issue of favouritism would only be one of Council vs private business and this argument was won by private business many decades ago. Private business always does it better.

The only other arguments that remain are which is the best site and what will be the running costs be.

I agree with the NZ Herald that the best convention site would be a central city one, so that rules out the the ASB Showgrounds bid at Greenlane. A Ngati Whatua proposal for Quay Park, alongside the Vector Arena, and an Infratil Ltd [IFT.NZX] bid for the Wynyard Quarter .

The Herald is wrong about picking the council development though.

Sky City is the most appropriate site in terms of its centrality to the city and its amenities.

It is close to all the best hotel rooms, including Sky's almost 1000 rooms and its 3000 carparks, close to the tourist area of the Viaduct harbour, close to the best restaurants in Auckland, central to most public transport routes and motorways and the easiest to develop because of the sites undeveloped nature.

The big plus though will be the ongoing subsidisation by Sky City for the running costs of the convention centre, which will run into many 10s of million per annum. Of course if the council bid wins, these costs will be bourne by the Auckland ratepayer and they are clearly substantial.

Convention Centres do not make money as a standalone businesses and the justification for them being built is that they "bring custom to the city and surrounding businesses". This is the main reason that both Sky City and the council want to build their respective convention centres.

In my opinion then, the best place for a National Convention Centre is at the Sky City Complex. It will cost the taxpayer and ratepayer less initially and the ongoing cost savings would be the biggest advantage. It is also is in the best most central site, that is probably the most recognised man made icon in Auckland from just about every part of the city.

It looks like the Auckland City Council bid is locked and loaded though and that is a missed opportunity that will cost Auckland ratepayers dearly for many more years to come.


Disclosure: I own SKC shares in the Share Investor Portfolio


Sky City Convention Centre @ Share Investor
Share Investor discusses Convention Centre proposal with CEO Nigel Morrison
Sky City Convention Centre Expansion a Money Loser: Part Two
Sky City Convention Centre Expansion a Money loser
SKC Convention Centre power-point slide illustrations & SKC submission to Auckland City Council


Sky City Entertainment Group @ Share Investor

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Sky City Entertainment Group Ltd: 2010 Full Year Profit Analysis
Sky City Entertainment Group 2010 Full Year Profit Preview
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Share Investor discusses Convention Centre proposal with CEO Nigel Morrison
Share Investor Q & A: Sky City CEO, Nigel Morrison
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Sky City Convention Centre Expansion a Money Loser: Part Two
Sky City Convention Centre Expansion a Money loser
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Sky City Entertainment 2008 Full Year profit results , NZX release, 2008 full year presentation, result briefing webcast, financial statements
Sky City 2008 profit preamble
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Why did you buy that stock? [Sky City Entertainment]
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NZX Press release: Sky City profit to HY end Dec 2007
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Discuss SKC @ Share Investor Forum

Download SKC Company Reports

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c Share Investor 2010

Intolerant Muslims

Here we go again.

Showing a complete lack of a sense of humour while having an intellectual lobotomy at the same time should reduce the holder of theses traits into a blob of nervous mental energy but if you are from the Muslim faith this apparently gives to the right to issue veiled (no pun intended) threats.

I am talking about the reaction to harmless jokes about Muslims made by Maurice Williamson a few weeks back:

These are the "offending" jokes:

"What is the difference between Muslims and Kiwis? Muslims get to commit adultery and get stoned, Kiwis get stoned and commit adultery."

Mr Williamson also quipped about the weather being "Shi'ite in the morning and Sunni in the afternoon," a reference to the two main denominations of the religion.

The problem now is though that the Islamic community don't share Williamson's sense of humour.

"Islamic community leaders have written to Prime Minister John Key demanding Building Minister Maurice Williamson apologise for jokes he made about Muslims.

The Federation of Islamic Associations New Zealand sent the letter more than a week ago but has yet to receive a response. At the time Mr Key played down the jokes, saying Mr Williamson was known for his humour.

President Anwar Ghani said New Zealand Muslims were "very upset" about the intolerant remarks and were happy the federation was raising it officially.

The federation had written to Mr Key on the advice of the Human Rights Commission and would wait for his response before deciding to take further action, he said." Stuff.co.nz

Anwar is very upset huh? Well, if Anwar has had a humour bypass that cant be helped but getting unnecessarily offended just to make your religion noticed isn't a good look.

The Muslim faith has a habit of doing this overseas, complaining for no particular reason and forcing apologies from those who do not need to do so because there is an implied threat of "further action" should groveling to Muslims doesn't happen forthwith.

One can rail against every other religion it seems and intentionally offend but to get offended by a harmless joke isn't acceptable.

Williamson's jokes came in the same week where Sakineh Mohammadi-Ashtiani was due to be stoned to death in Iran for committing adultery. She is of course a Muslim and stoning is acknowledged in the Muslim faith by some.

Now I am offended by that. Why doesn't Anwar come out and defend this woman?

c Darren Rickard 2010

Kathmandu Holdings Ltd: 2010 full year profit analysis

The Kathmandu Holdings Ltd [KMD.NZX] 2010 Full Year Profit result out this morning is hard to fathom clearly because last years profit as disclosed in the 2009 Prospectus was a corrected pro -forma figure and this year profit figure has been impacted by IPO costs and associated listing costs.

The headline net profit of $25.2 million before IPO costs compares with the 2009 pro-forma net profit of $10.3 million. likewise the headline sales figure for FY 2010 was $245.8 million compared to 2009 $215.6 million.

Key Points

* Headline profit of $25.2 million compares well with $10.3 million (before adjustments for IPO costs and adjustments for comparison of 2009/2010)

*Missed most key prospectus forecasts.

*15 stores opened.

*Gross margins down.

*Dividend of 7c per share.

*Debt well down on last year (paid off from partial proceeds of IPO)

*Capital expenditure up on 2009.


Lets go by KMDs own preferred comparison though (hidden at the bottom of their release), which while hard still to get an accurate comparison year to year, because both 2010 and 2009 figures have been "adjusted" is probably the most relevant way of looking to see how they did in 2010.

2010 | 2009

Sales 245.8 240.0 5.8 2.4%
EBIT1 47.5 50.6 (3.1) -6.1%
NPBT pro-forma2 41.2 44.8 (3.6) -8.0%


1 Excluding IPO costs

So we can see that even with their own adjusted figures (which are not 100% accurate) that Kathmandu failed to hit key targets listed in their prospectus, only just beating last years sales figures by round $6 million.

The 2010 net profit then, along with other financial indicators in today's release make it hard to compare 2010 with 2009. For shareholders this means uncertainty on how well the company is accurately doing and they will only get some certainty in 12 months from now when figures can be more easily compared like for like.

On the year ahead and much like Briscoe Group Ltd [BGR.NZX] & The Warehouse Group Ltd [WHS.NZX] last week, CEO Peter Halkett concluded the 2010 profit release by saying that:

“Kathmandu is confident that given reasonable economic conditions there will be further improvement in profitability in the year ahead. The impact of the economic environment on consumer confidence, and cost pressures both domestically and internationally are a challenge, however given our market position and brand strength we remain well placed to continue our growth."

Unfortunately for shareholders Halkett seems to favour more store building over organic growth and this will come at the expense of higher capital costs, increased rental payments and possibly impact on gross margins as the company looks to focus on volume rather than quality.


Kathmandu @ Share Investor

Chart of the Day: Kathmandu Holdings Ltd
Kathmandu Holdings: Market Update Misleads
Kathmandu's 2011 Results Under Pressure from Jan Cameron
Kathmandu IPO: Prospectus Analysis
Kathmandu IPO: Jan Cameron lands a blow to IPO
Kathmandu IPO: What is it worth?
Kathmandu IPO: Retail Interest High
Kathmandu IPO: A tough mountain to climb
Kathmandu No.1 but IPO should get the Bullet
Download the detailed Kathmandu Value Cruncher Report - Requires free registration at Share Investor Forum to download
Download Kathmandu IPO Prospectus
KMD Investor Presentation to Macquarie

Discuss Kathmandu @ Share Investor Forum
Download KMD Company Reports


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c Share Investor 2010

Allan Hubbard Saga: No Longer Bothered by Botherway

The following is a meaculpa of sorts to Simon Botherway, a man entangled in what was perceived as a conflict of interest on his part over the Statutory Management of a couple of Allan Hubbards financial entities back in June 2010.

I wrote this back in June:

Mr Botherway and his SEC have been of course behind the statutory management of Allan Hubbard and his Aoarangi Securities, a crackdown which has apparently come out of the blue and inconsistent with the SECs track record in terms of the aforementioned bus ticket slapping.

It turns out that this is where things get really interesting in terms of Mr Botherway and his capacity as the a SEC board member. Stuff.co.nz has reported this morning that Mr Botherway has a conflict of interest of his own when it comes to his recommendation to send Mr Hubbard to Coventry:

A member of the Securities Commission (Mr Botherway) which recommended Allan and Jean Hubbard be placed in statutory management is also the brother of a businessman placed in receivership by South Canterbury Finance (SCF) last year. Stuff.co.nz

Allan Hubbard is the owner of SCF.

Mr Bothwerway only disclosed his conflict yesterday:

Commission member Simon Botherway yesterday declared he had a "potential conflict of interest" in the Hubbard case as the brother of businessman Jonathan Botherway.

Jonathan Botherway's hospitality empire collapsed in July 2009 after SCF, which was then owed $7.8 million, put him in receivership.

Simon Botherway would not comment yesterday and instead referred questions to the commission. Shareinvestor Blog, June 25, 2010

Well, it turns out stuff.co.nz and by implication myself, was wrong and wish to apologise to Simon for implicating him at all.

I am now aware of the facts over this perceived conflict and am now convinced that there is very little to it. My anonymous source assures me the following is accurate and I have no reason to doubt this source.

This is why:

* South Canturbury Finance did not put Mr Botherway's brother into receivership as is widely accepted in the majority of media reports.

NZB (NZ Breweries) appointed a receiver on Friday 26th of June 2009. Their receivers sent a fax to SCF about 11am that morning giving them until 2pm to respond, SCF had no option but to appoint their own receivers to Merivale Ale House (Auckland Bars).

A week later PWC advised SCF to place the South Island bars in receivership so they could control all the businesses.

Read the publicly available Receivers Report

* Botherway did not receive the anonymous letter of complaint (from an Aorangi investor to the Securities Commission) and has not actually seen it. Hubbard's supporters have claimed he has.

The investigation was led by the Companies Office and to the knowledge of my source* there were no Sec Com staff involved in it, and there were no Members of the Commission involved).

*Botherway didn't author any report on Aorangi or any of the other parties recommended for Statutory Management as widely reported and pushed by Hubbard supporters.

This apparent conflict has been the red hearing for Allan Hubbard supporters, and they have been using David Cunliffe, in parliament and on his own facebook page to go after Botherway. It has turned into a political muck-raking situation now for Labour in their pursuit of National over South Canterbury Finance but as we know the facts of the case in David Cunliffe's eyes are only as good as the information being supplied to him from Allan Hubbard Supporters. That information is clearly inaccurate at best and a complete fabrication at worst.

Cunliffe is of course using parliamentary privilege to divulge this stuff and he is clearly misleading the house.

* Wishing to remain anonymous but a credible source.

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Download Grant Thornton Report 1
Download Grant Thornton Report 2

Allan Hubbard Saga: 60 Minutes Interview, Sept 23 2010
Allan Hubbard Saga: Supporters head to the exit door
Allan Hubbard Saga: Threats & the Mysterious PWC Report
Allan Hubbard Supporters: Conflict of Interest
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Allan Hubbard Statement on SCF Receivership
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Allan Hubbard: Full TV3 Interview - July 16 2010
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c Share Investor 2010