Thursday, December 17, 2009

November unemployment

Statistical gyrations of the last few months up, then down, returned to somewhere in the middle in the latest ABS Labour Force numbers for FNQ released this morning. The official unemployment stat returns to double digits at 10.3%.

The gender divide remains the notable feature. In the 2 years since the series commenced in November 2007 total male employment has fallen by 2.4k while total female employment has risen by 4.7k. The female participation rate has also increased over that period to a new high. Spouses seeking work to fill the income gap from unemployed partners or just more statistical noise in low sample numbers?

Regional stats table has been updated down at Far North Unemployment Debacle.

Saturday, December 12, 2009

Ex Hedley pub fund still in the news

What used to be Tom Hedley's ASX listed HLG has now been renamed Redcape (RPL) but is still making some interesting news. The Sydney Morning Herald reported last Wednesday that "The chairman and chief executive of the debt-stricken pub property trust Redcape could pocket up to $8 million in bonuses between them as reward for the sale of the funds' hotels."

This report included apparent direct quotations from chairman Colin Henson that the banking syndicate involved in debt restructuring negotiations was ''keen for the management team to be properly remunerated''. Really?

The only other report I can find on this is a response which appeared in the Compost on Friday under the headline "Redcape denies bonuses claim". Redcape has relocated fropm Cairns to Melbourne to distance itself from Hedley and most of Tom's former holding is in the hands of the receivers. This report quoted Henson as saying:

"I don’t want to talk about it, but (the report) got it all wrong," he said.

"We’re ignoring it (the report). There is nothing like that on the table."

However the Compost then goes on to say that 'It is understood that management has been talking to banks about moving to a "performance-based" arrangement for senior executives.'

Most interesting however are references to comments from a 'Cairns financial analyst, who asked not to be named, (who) accused management of being "disingenuous" with shareholders' and went on to say:

"They are hiding behind a performance bonus that really just involves them selling properties at heavily written down values," he said. He said the board should "resign or be sacked over this arrangement".

How curious, and I cant help but wonder on who the analyst could be? Could they even be associated with the previous Cairns based management we wonder? KS is off out for Christmas drinks but will fill more in on this later along with some comments on the recent Redscape AGM ........

Thursday, December 3, 2009

Hedley Bankrupt?

The SMH has reported that Tom Hedley "has appointed a trustee who will hold a meeting of his personal creditors before Christmas to nut out a personal insolvency agreement under the Bankruptcy Act."

The story, filed by Eliabeth Knight, contains some interesting references including that "Hedley is the stuff of legend in his home town of Cairns, where he apparently lives most of his life in a lean-to attached to one of his pubs." I presume the pub is the Red Beret but hadn't noted the "lean-to". Perhaps this is the perception of Queenslander architecture from the perspective of the Sydney McMansion?

Knight comments that "A formal statement of his financial affairs to be produced by the trustee will outline just how little he has left in the tin, how much he owes and to whom it is owed. Typically, these kinds of documents make for fascinating reading because businesses like airlines, hire car companies, florists and credit card providers tend to feature."

Kitchenslut is still curious about his partner Jeanine Cooke popping up on the HLG (now RPF) register at June 30 as the 3rd largest shareholder. He also notes that Tom would appear to have been in breach of the Corporations Act by not disclosing a change in substantial holding in RPF for some time, although this has become almost standard for Hedley.

Wednesday, December 2, 2009

Sex in the City

The Compost has reported today that one of the two legal brothels in town is on the market! Interesting that the $300k indicated price for 5 brothel rooms corresponds closely with the price of each room similar to a poker machine under current Qld legislation and prices!

Thursday, November 19, 2009

Cairns unemployment stats update

Detailed ABS unemployment data released this morning shows a big turnaround with the ‘official’ unemployment rate for FNQ falling from 13.8% to 8.1%. Again the action is all in male employment stats. Would have to expect greater data volatility and statistical error I guess in smaller regional samples relative to national data, obviously in the real world unemployment hasn't fluctuated that wildly within a month and perhaps last months was overstated? More detail on the population benchmark for the data would be of some interest.

However some of these stats reverse not just last month but some months prior. Points to note in the data:

1) A substantial increase in the total number employed back to levels last seen earlier in the year (Feb & April).

2) A sharp fall in the measured unemployment rate especially male unemployment.

3) However, an offsetting slump in the male participation rate ie people left the workforce, gave up or didn’t bother to look for work.

My techie attempts to embed a new google spreadsheet have been an abysmal failure however the monthly employment stats for FNQ since 2007 compiled from ABS data have been updated down at Far North Unemployment Debacle ......

Update: Reporting and commentary on Cairns unemployment and commentary in the Compost and the Weekend Oz.

Saturday, November 7, 2009

the story of the australian economy

Peter Martin has posted six graphs ... ok one is a table ... to explain the australian economy in recent years from the RBA quarterly statement released on friday. The story really is pretty clear.

I will only post the international arrivals and departures trend for recent years as the one most directly applicable to Cairns perhaps. Departures swamp arrivals .......

What observations can be made from this?

1) Both arrivals and departures during the GFC have been much more resilient than in recent past shocks such as 9/11, the Asia crisis, the mild early noughties US recession, Iraq, internet bubble collapse and 2003 bear market.

2) The trend turnaround between arrivals and departures, correlate with other key trends such as currency, commodities and terms of trade related to China and emerging economies etc etc. Although any small impact from boosted immigration arrivals doesn't show up in the arrivals.
3) International arrivals were stalling long BEFORE the GFC!

Note here that the international arrivals for Cairns in the more recent past, at least as shown in the most recent graph in Cairnswatch from Rick Carr at HTW, show a far more severe downturn on internatinal arrivals in Cairns (ex transits) than apparent in arrivals nationally. Some events very specific to Cairns have impacted locally.

P.S. Amateur economists and chart addicts should also always keep an eye on the excellent monthly RBA chartpack.

Wednesday, November 4, 2009

more funny things in this years annual reports

The very last page of the NLG annual report where Stephen Scott Donnelly pops up as a holder of unquoted options securities? Stephen was the one who quickly disappeared from Hedley and HLG as CFO shortly after some unauthorised transactions earlier this year and a few months before the Hedley collapse!

NLG is the largest tenant of the HLG (ex-hedley) pub fund where the corporate shenanigans attracted the interest of some prominent journo’s some time back such as Bryan Frith in The Oz! Hedley himself holds smack on the 19.99% takeover limit as a holder of NLG (now with receivers) lly?

These options were issued to Hedley back in 2007 as part of the deal that created NLG as the leaseholder and HLG as the pub freeholder. The options are conditional on Hedley buying more pubs and leasing them to NLG which I would have thought now unlikely. Just another of te many conflicts inherent in the HLG float that should have flashed warning lights.

Curious how and why the options ended up with Donnelly ...,,,

Unquoted equity securities
Options expiring 22 June 2011 with an exercise price of $0.48
There are 4 holders with more than 100,001 options, holding a total of 18,000,000 options. There are no other
holders in this class of options.
Holder Number %
Stephen Scott Donnelly 9,000,000 50.00
Options expiring 22 December 2011 with an exercise price of $0.53
There are 4 holders with more than 100,001 options, holding a total of 6,000,000 options. There are no other
holders in this class of options.
Holder Number %
Stephen Scott Donnelly 3,000,000 50.00
Options expiring 22 June 2012 with an exercise price of $0.58
There are 4 holders with more than 100,001 options, holding a total of 6,000,000 options. There are no other
holders in this class of options.
Holder Number %
Stephen Scott Donnelly 3,000,000 50.00

Vote AGAINST Entsch

CEC performance with Wazza as a director. He is the only director up for re-election at this months AGM.

Former Liberal pollies have a lousy record as directors and you can almost slap a sell on as soon as they announce the appointment. CEC lost its Chairman Rob Borbidge, ex coalition premier, and our mate Greg Kern also resigned. The board positions haven't been replaced leaving a rather small and not particularly well structured board.
The outlook from current chairman Tony Hartnell is actually quite upbeat on forward work flowing mostly from infrastructure.

Tuesday, October 27, 2009

Aussie aussie aussie oi oi oi?

Kitchenslut Rationalist Economics is highly disposed to open borders and migration however the externality of migration impacts has become interesting as the Copenhagen driven ETS climate hype intensifies!

Australia has now achieved numero uno per capita carbon emmitter status! Aussie aussie aussie oi oi oi oi!

So! What happens for each low emitting Tamil or Afghan imported into a high carbon lifestyle? Have you noticed that with recent upgrades to currently record immigration and population numbers that policymakers have been dead keen to fully inform us on this, NOT? Yes, for every migrant our carbon targets get harder!

The laws of unintended consequences remain immutable .....

Friday, October 23, 2009

geography of a daylight saving stimulus

The Compost has published an article on the proposition that daylight saving could be an economic stimulus and report the notion has been rejected by local industry leaders. The basis of the research does seem to yet again be based on temperate rather than tropical zones.

A simple explanation of some of the latitudinal geographic differences relevant to daylight saving cam a few years ago now at

Monday, October 19, 2009

KitchenSlut Global Markets

The muscular Australian dollar has grown as a topic of conversation almost to the extent of almost becoming the proverbial BBQ stopper. The conversation used to be property values and now it's currency and potential international travel destinations. While the $AUD is not back to pre-crisis levels against many major currencies it is well above where could have been expected and closing in on previous highs.

So, just on currency which are the countries we most strongly resemble. There has been some comment on the comparison with Canada which as a fellow 'developed nation' has a substantial commodity based economy also, but with a higher manufacturing exposure and a large exposure to the USA. Even there though as against the anything from the $US, the impoverished pound sterling, the euro and on to the Indian Rupee and the Chinese Renmimbi / Yuan, the hegemony of the $AUD has been complete!

But no, the countries we have most strongly tracked over the last year are ....

Brazil, where the stock market is a global best performer and back to 2007 levels.

and South Africa

Yes there were some volatile moves a year ago when the shit hit the fan but otherwise these are the two we track most closely in recent months! So Carnivale, in Rio not Port Douglas, is off the travel agenda for next year anyway with Europe, UK and most others cheap as chips. It was a year ago now that economics nobel laureate Paul Krugman coined the phrase "we are all brazillians now" in a different context.
Well KS Global Markets may not seem to have a local theme, but with currency the theme du jour we noted extensive advertising on Sea FM promoting get rich schemes from an obscure currency trading promoter with the prestigious web address

Oh dear, does this still work or has not the average Sea FM punter out there not worked out that what will be most heavily promoted will be the current themes and headlines? We may look into and post further on this.

Update: No sooner do we post than Brazil whacks a surprise 2% tax on all capital inflows to try and stem the rising real with consequences for markets and exchange rates. This Bloomberg report with comments on consquences of a 'currency bubble' in Brazil as the exodus from $US assets continues is also interesting. Meanwhile, The Australian has reported on currency related impacts on overseas student numbers .....  

Saturday, October 17, 2009

"I murdered the state"?

As a consequence of not owning a television KitchenSlut missed the entire first series of Masterchef as well as the celibrity version this week featuring Anna Bligh. Apparently Bligh's contribution to the Far North was, in tune with KS, an attempt to highlight our magnificent local vanilla beans! Although it would seem the vanilla bean featured in a less than cameo role being tossed in whole in a blink with scant regard and no theatrical slicing to arromatically excite the senses!?

But did Anna really mumble the line "I murdered the state" ...... errrr or was that steak(?) as she presented her downfall meat dish? Was the detraction of a flawed main from a "cracking" fnq vanilla enhanced dessert an ironic metaphor for the state's political economy?

Friday, October 16, 2009

Far North Unemployment Debacle

Kitchenslut is struggling somewhat here with his google docs embeddedment into blogger but will persist and, perhaps, one day triumph! Although a retreat into the culinary uses of vanilla beans may also be an option?

Whatever! These are the percentage unemployment percentages from the ABS for the Far North statistical region since the series commenced in 2007. Total numbers of unemplyed have risen to around 20,000. The participation rate, the percentage of working age people actually seeking work, has been quite stable generally throughout this period. I will try to update and improve the table and add graphics if possible!

These numbers are still little reported even in Cairns, let alone beyond, but should be regarded as unacceptable. When i stop dabbling with techie issues will try to update with further comment .....

''Sure I love the dollar at the moment. It has reaffirmed my faith in humanity.''

Somehow there is a moral disconnect somewhere in this quote?

Friday, February 27, 2009

More curious Hedley transactions

A quick scribbled post which again will try to update and edit later just looking at Hedley’s HLG half yearly released to ASX this morning and page 2 has this:

“Unauthorised payments to the manager (Tom Hedley's private interests-ed) during the half-year amounting to $1.144 million as set out in note 2 to the financial statements were repaid with interest by the manager immediately after the manager became aware of them”

It seems from note 2 they only became aware of this rather recently post year end so maybe the auditor did actually look at the numbers ....... no wonder Hedley CFO Donnelly is no longer on the HLG board having resigned on 5 February. Todays announcement also reveals that Donnelly also resigned as CFO of HLG (which presumably means the management company) on 18th February. There was no ASX announcement of this resignation at the time.

Hmmmmmmmmm ......

Also of interest in a market update from NLG, the NSW pub tenant of HLG, where Tom has seen the value of his 20% stake diminish to a number disturbingly close to zero, is that they are to take on the outsourced management of all Hedz pubs.

Having dropped into the Hedley property sales office last week to confirm that there are no new projects currently planned beyond those currently going, and that the Aplin St block at the end of the Oasis is back on the market after Tom backed out and didn’t settle on it last year, we wonder if there is much work left for the boys to do down in Aumuller St now that Tom is no longer CEO of the HLG manager either?

Update: We have email confirmation direct from the bunker that Hedley's financial wunderkind Stephen Donnelly departed on Feb 16. Curiously 2 days before indicated in the official ASX announcement today? Maybe nobody noticed him missing for 2 days? Can't wait to see the Cairns Post report .....

Wednesday, January 21, 2009

Compost & Other Bulls**t

We will be posting here hopefully sometime today on the utter rubbish that appeared on page 5 of todays Cairns Post in their report on the Tom Hedley management change.
I specifically refer to the following journalistic comment from the 'ComPost':

"While HLG has been battered in the sharemarket, along with every other property trust, it has delivered what it promised in it's prospectus in terms of dividend and profit"

Compost!In the opaque murk that comes out of HLG this appeared buried in the Chairman's address at the last AGM:

"in the prevailing world financial climate and following reduced asset values it is considered to be contrary in the best interests of the company overall to pay distributions from equity, or any implied increase in equity due to increases in rent. This has resulted in HLG amending its distribution policy to a level of approximately 70% of free cash flow until the balance sheet of the fund is at a level which is consistent with the balance sheets of other property trusts. The company board forshadows a distribution during the 2009 calendar year of 8c per stapled security."

I had to type this out, given poor quality info provided again, so sorry for any minor errors. The official projection in the offer document was based on @27c per unit (?) not the 8c buried in the Chairmans last AGM address. So go and compare that difference with the official quote above on meeting prospectus dividend forecasts from the Cairns Post royal family today? Utter bullshit? Go and compare what comes out of HLG with the quality and timeliness of info provided by the comparable Woolies pub entity LEP.

NTA has been diluted from the initial $3.50 down to a last official book value $2.38 but this still hasn't been adjusted for the last dilution which takes it closer to $2. The 'professional' local brokers who flogged the thing still have analysts who are paid presumably for gushing out rubbish on this last I saw.

But does the average investor understand why? The dilution on the DRP's and management fees has been criminal? If you have any faith in the asset values of the pubs and have not been reinvesting your dividends under the DRP then it can be easily shown that you are financially naive, and i'm so sorry to say so.

If you don't understand why then you should be asking critical questions of your advisor. You should under those circumstances also be asking why you were flogged the product in the first place given that the prospectus labelled it as an income investment.

Saturday, January 3, 2009

Cairns Inc 2008 Report Card

It has been an interesting year for the listed entities of the Cairns business elite:

Hedley Leisure & Gaming (HLG)

It's hard to know what more to say about this mob. A poor and hopelessly conflicted structure, a weak board, incompetent administration and corporate governance. Maybe there's a reason it's trading so far below claimed asset backing?

National Leisure & Gaming (NLG)

The key tenant of Hedley's pubs where Our Tom has a 20% stake and has managed to lose almost all of it so far. The stupidity of their financial structure has been matched by the stupidity of their banker. Insider corporate shennanigans have destroyed trust.

CEC Croup (CEG)

CEC was rightly crucified by the market after the surprise half yearly bombshell on Feb 29. Having said that they deserve some credit for their efforts since in restructuring and especially transparent corporate governance. This could have easily been dead by now.

Early Learning (ELY)
The childcare plaything of Cairns business identity Greg Kern (also on the Hedley board and until recently CEC). This was floated in 2007 at $1 on the eve of the ABC debacle. Contracts to acquire Tom Hedley's childcare centre's subsequently fell over. Punters have no reason to feel sorry for Kerny who pulled some robust advisory fees from their float proceeds.

Reef Casino Trust (RCT)
A comparative pillar of stability in a decimated sector. However punters would be advised to have a look at the recent 'shock' pokie tax hike estimated to hit earnings by 25%. We await an announcement from Desley Boyle that all proceeds from the tax hike will remain in Cairns and be directed to construction of a new hospital in 2099.