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.