February 2, 2010
Dear Mayne Reporters,
it's show time again for Macquarie Group as we get ready for the annual AGM extravaganza at The Westin in Sydney tomorrow morning from 10.30am. Anyone awake at 7.45am on Saturday could have heard this 10 minute interview with Geraldine Doogue on Radio National previewing the annual debate-fest with the Millionaires Factory.
Last year we managed 13 visits to the microphone over 3 hours at Crown Casino and the best of the action was broken down in this subscriber edition at the time. The favourite exchanges from Macquarie last year were as follows:
C'mon, don't be evasive, give us some answers and let's hear from the auditor on mark to market accounting
Go ahead and make our day by selling Sydney Airport for more than $12 billion
Why don't we internalise the management of MIG and MAP?
Why does our CEO own a banking magazine that gonged us last year?
Why does PwC audit the head stock and most of our satellites and let the auditor speak on mark to market accounting?
We also made a video after last year's AGM which is at the top of this special playlist of Macquarie videos from over the years.
Live Tweets throughout Macquarie AGM
We'll have an update for you tomorrow afternoon and, for the first time at an AGM, will be twittering throughout the meeting so join out 523 followers today. The best action should be between 11.30am and 1.30pm so do keep track of our Tweets.
The webcast should also be worth listening to given the enormous amount of issues that ought to be raised. We'll be editing down the relevent audio and getting it to you by email in the next edition - have a listen here. There was also the regular chat with Lindy Burns on 774 ABC Melbourne from the Sydney studio, with all the Macquarie action being the main topic.
Given that Macquarie's co-founder and long-standing chairman David Clarke is on sick leave until the end of August, senior independent director Kevin McCann will be stepping into his big shoes to chair tomorrow's meeting. Let's hope he is a lot tougher on the ravers and wafflers than David Clarke has been over the years.
As for the territory to be covered, Macquarie's forever cheerful spinner Lisa Jamieson called yesterday to politely inquiry about topics of interest and I broke with the usual protocol and rattled off the following:
* Brisconnections fiasco
* Huge Macquarie Airports farewell fee
* How lack of write-downs propped up the bonus pool
* Losing the defamation battle against The Australian
There'll be plenty more and we're even contemplating handing out some suggested questions to the others shareholders in an attempt to maximise the issues covered.
Indeed, the following written question has already been submitted to Macquarie's auditor, PwC partner Ian Hammond:
“Could the auditor please explain the process he went through to understand the relationship between the book value of various investments in Macquarie listed funds and the bonus pool for Macquarie executives and explain why it was acceptable not to take larger write-downs to get those investments closer to the prevailing market values as at the March 30 balance date.”
We're only talking about hundreds of millions of dollars in bonus payments to staff, so it will be very interesting to hear the reply, especially given that other PwC partners audit most of the satellite funds which were equally slow in writing down the previously massively written up book values of various property, tollroad and airport assets.
BHP's secret ballot to confirm further decline of corporate Melbourne
The Australian's John Durie got a great scoop this morning when he revealed that the next BHP-Billiton chairman would be decided by a secret ballot, conducted by auditor KPMG, at the end of next week's three day board meeting.
Neither of the candidates, Sydney-based ComBank chairman John Schubert, or Detroit-based former global Ford CEO Jac Nasser, live in Melbourne in what will be another blow to Melbourne's prestige as a corporate centre.
Indeed, with ANZ now appointing Sydney-based John Morschel to replace Charles Goode as its next chairman, it really is hard work finding a prominent Melbourne-based CEO or chairman who actually comes from Bleak City.
I can well remember Don Argus fronting up at a breakfast with John Kirner's Treasurer Tony Sheehan in 1991 gloating that Melbourne was still home to 8 of the 10 largest Australian companies. These days it is down to 4 out of 10, but two of them have CEOs based in Sydney (Telstra's David Thodey and NAB's Cameron Clyne) and the other two (ANZ's Mike Smith and BHP's Chip Goodyear) are expats.
This list tracking the background of the chairs and CEOs of our 15 largest companies highlights just how dramatically Melbourne has fallen back in its quest to deliver top corporate institutions and people to run them.
1. BHP Billiton: CEO Marius Kloppers, South African living in Melbourne; chairman Don Argus, Queenslander living in Melbourne.
2. Rio Tinto: CEO Tom Albanese, American living in London; chairman Jan du Plessis, South African living in London.
3. CBA: CEO Ralph Norris, Kiwi living in Sydney; chairman John Schubert, Sydneysider gunning for BHP chair.
4. Westpac: CEO Gail Kelly, South African living in Sydney; chairman Ted Evans, Queenslander living in regional NSW.
5. NAB: CEO Cameron Clyne, Sydney boy running Melbourne bank from Sydney; chairman Michael Chaney, living in Perth.
6. Telstra: CEO David Thodey, Kiwi living in Sydney; chair Catherine Livingstone, Sydneysider living in Sydney.
7. News Corp: CEO and chairman Rupert Murdoch, Melbourne-born lad living in New York.
8. ANZ: CEO Mike Smith, Pom living in Melbourne; chairman-elect John Morschell, Sydneysider living in Sydney.
9. Woodside: CEO Don Voelte, American living in Perth; chairman Michael Chaney, Perth boy living in Perth.
10. Woolworths: CEO Michael Luscombe, Melbourne boy living in Sydney; chairman James Strong, Sydneysider.
11. Wesfarmers: CEO Richard Goyder, Perth boy living in Perth; chairman Bob Avery, Sydneysider.
12. Westfield: chairman and CEO Frank Lowy, Czech-Hungarian migrant living in Sydney.
13. QBE Insurance: CEO Frank O'Halloran, Albury boy living in Sydney; chairman John Cloney, Sydneysider.
14. CSL: CEO Brian McNamee, Melbourne boy running Melbourne company; chairman
15. Newcrest: CEO Ian Smith, Australian living in Melbourne; chairman Don Mercer, Scotsman living in Melbourne.
Fiery Asciano EGM
We managed 3 detailed questions about special deals for insiders and the dilution of retail investors at the Asciano EGM on Wednesday last week.
However, none of it went to the various issues raised in the last edition of The Mayne Report on July 17. You see, Asciano spinner Marie Festa called after reading the edition and had pretty good answers for most of the criticisms.
The scale back to 2.1 times the entitlement in "overs" was done to ensure retail investors retained their percentage stake in the company. Everyone was treated equally and there simply wasn't enough stock available to come up with a minimum allocation. This is why our $61,159 in applications was scaled back to just 79 shares worth $86.90. Here are extracts from the allotment advice:
Stephen Mayne, owner of just 52 Asciano shares
Paula Piccinini, owner of just 22 Asciano shares
The first two exchanges at the Asciano EGM included elements about the size of the vote which was explained after the meeting by Festa who pointed out that the circa 700 million shares in the 1-for-1 entitlement offer had been allotted the day before the meeting and therefore included in the voting figures. Most people automatically vote all their stock, so the size of the vote suddenly doubled. That said, getting 520 million shares voted when any institution which participated in the placement was conflicted out, still seems a very high figure. Why would institutions that declined to take up a discounted placement then vote so emphatically in favour of being diluted. Very strange.
CEO Mark Rowsthorn elected to vote his 150 million shares in the poll and chairman Tim Poole also pointed out that there was 82% in favour of the withdrawn resolution proposing to place an additional 176 million shares with the company's embattled chief in order to keep the family's stake at 10.7%.
Rowsthorn wouldn't have said anything for the whole meeting but for my final question inviting him to deal with numerous issues.
His reply was very interesting and still hasn't been properly reported in the media. It was a long and detailed explanation of his personal financial situation, the deal with UBS and why he didn't take up the placement entitlement, which concluded with the following swipe at your correspondent:
I can assure you that a couple of things that you said before about me resisting any capital raising in the past is just a nonsense. My shareholding and my directors' duties I take incredibly seriously and I wouldn't jeopardise any decision that the company made on the basis of personal gain. I find that quite offensive. I just don't do that.
Finally, here are the audio link to the three main exchanges:
Can you expand further on the exclusion vote, how shares have been struck out and is Mark entitled to vote?
The numbers just don't stack up and let's vote this special insiders deal down
Getting Mark Rowsthron to engage
Fire disrupts Manningham's operations
Fire broke out at the Manningham City Council offices in Doncaster at about 8.30pm last Friday and it was quite disturbing to watch this story on the Saturday night ABC TV news.
Thankfully, no-one was hurt and only a small proportion of the building was seriously damaged. However, the smoke damage was substantial, the cleaning process will be painstaking and it is estimated to take 1-4 weeks before the building can be fully occupied again.
Tonight's public council meeting has been cancelled and the staff have been working over-time maximising business continuity in very difficult circumstances.
Gambling giant donates to Beyond Blue whilst Big Pharma banned
Crikey has this interesting story on July 20 pointing out that Beyond Blue, chaired by former Victorian Premier Jeff Kennett, refuses to take donations from pharmaceutical companies.
The following comment was posted on Crikey by anti-pokies campaigner Paul Bendat, although the last line was edited out:
While Beyond Blue takes no donations from pharmaceutical companies, it has no problems with receiving donations from Australia's largest pokie operator, Woolworths. Its disclosed right here on Consumer Affairs Victoria's web site. Could this donation have a connection with Jeff Kennett's Hawthorn Football Club's outrageously profitable pokies palace Vegas At Waverley Gardens? The Victorian Gambling Commission's web site discloses Woolworths association with Hawthorn at this venue. Depression caused by addictive pokie gambling is another group of people Beyond Blue seems to ignore. Mr Kennett is horribly conflicted and should resign.
Bendat has been making huge strides in his campaign to have children completely banned from pokies venues. Check out the latest updates from his pokieact website. A confronting full page ad challenging Wesfarmers CEO Richard Goyder in his local newspaper led to this story in The West Australian, an appearance on Today Tonight's WA version last night and an interview with Geoff Hutchison on ABC local radio in Perth.
Goyder thought he could get away with distributing a flyer promoting a wine and cheese night to oppose what he considers to be an inappropriate development near his home in Peppermint Grove. Now his community knows all about the appalling practices Wesfarmers pursues through the 2000-plus pokies run by Coles across Australia.
Australia hasn't seen an activist quite like Bendat before as he uses all the tricks of the trade learnt whilst being a media proprietor, combined with the ability to commit some resources to his campaign.
Scheduling the 2009 AGM season
We've made some progress in our attempt to pre-schedule the 2009 AGM season such that major clashes can be avoided. Click here to see the current major clashes. As usual, the last week of October is the busiest time and at this point the biggest problem appears to be the following days:
Wednesday, October 28
Macquarie Media, 11am, Sydney, venue to be determined
Billabong on Gold Coast
Boral and Dexus - likely morning clash in Sydney
Crown, 10.30am, River Room at Crown in Melbourne
Consolidated Media Holdings, probably at Crown in afternoon
Thursday, October 29
Toll Holdings morning in Melbourne
Newcrest Mining 10.30am Melbourne
GWA International - Brisbane
AGL 10.30am Sydney
Here is an example of an email that went to Toll and Newcrest yesterday in an attempt to avoid uncessary clashes:
Hi Bernard and Daryl, as you can see from this AGM diary I'm putting together, Newcrest and Toll look like they will be holding clashing AGMs in Melbourne on the morning of Thursday, October 29.
If you divide each day into a morning, afternoon and evening session, there are literally 144 different slots available considering that Mirabooka kicks off the season on Thursday, September 24, and all companies with June 30 balance dates must hold their AGM by Monday, November 30.
Whilst major company clashes in different cities will be hard to avoid, surely the retail shareholders of Melbourne deserve a little bit of co-ordination by two companies which are both in our top 10 companies.
All it would take is for one of you to arrange a 10am start and the other to opt for 2pm (like Bluescope this year) and the clash will be avoided.
I look forward to your reply and hope this request can be accommodated.
Sincerely
Stephen Mayne
Newcrest and Toll shareholder
We haven't heard back from News Corp company secretary Laura O'Leary since emailing her last week, but we did discover something quite amusing on the media giant's website.
Whilst most companies offer a "calendar" button for investors which includes the 2009 AGM details, the News Corp "calendar" button goes chapter and verse into film release dates. Sadly, there is nothing about the AGM. Rupert's corporate culture still leaves a lot to be desired - even on these most basic of issues.
Speeches feedback
The talk circuit continues to keep us busy and I was a little nervous about speaking to my alma mater at the University of Melbourne Commerce Alumni Society (UMCAS) annual dinner on July 16.
However, it all went very well and official feedback was as follows:
Stephen, your keynote address at our Annual Reunion Dinner was simply fantastic. You had 200 people totally tuned in for the best part of an hour. You tailored your material to suit the market, you had fun with the audience, took questions, enjoyed a few laughs, you won a few arguments and also took a few blows and loved every minute of it. And your willingness to be on your feet for that length of time was first class. It was a superb effort. Thanks again
Ross Cameron
President
University of Melbourne Commerce Alumni Society
Go here to read other testimonials from past speeches.
Capital raising plays continue to deliver
After a $13,000 gain yesterday courtesy of Macarthur Coal and Karoon Gas, July is shaping up to be another strong month of capital raising profits, although this surely cannot last much longer. The gross gains, before profit share and financing costs of about $30,000, is now up above $193,000 and the monthly break down has been as follows:
January: broke even
February: broke even
March: $10,170 profit
April: $36,996 profit
May: $31,639 profit
June: $86,600 profit
July: $28,293 profit
Gross paper profits for year: $192,698
Here is the detail of all the individual plays since the last edition on July 17:
July 20
Fantastic Holdings: bought 2173 through $5000 SPP at $2.30 and sold for average $2.681 to make $828 profit.
July 21
Atlas Iron: applied for $5000 SPP at $1.39, scaled back to 1600 shares which were sold at $1.81 to make a profit of $672.
July 27
Macarthur Coal: bought 7500 shares at $6 each for $45,000 through 3 different $15,000 SPP offers. Sold 1000 at $7.464, 2500 at $7.36 and 2575 at $7.355. Retain 1500 so gross profit about $10,500.
Karoon Gas: bought 746 at $6.70 in $5000 SPP and sold 800 at $11.16 for SPP profit of $3327.
July 28
Austen Engineering: bought 3448 at $1.45 in $5000 SPP and sold 3458 at $1.65 for profit of $690.
Offers we're currently committed to
At the moment we've placed $68,000 worth of bets on the following four discounted offers but are expecting to get savagely scaled back by Macquarie Leisure after telling the world they left the door open in this recent article for the Fairfax websites:
Cockatoo Coal: applied for $15000 SPP at 33c which closes on July 31.
GME Resources: $3000 into entitlement offer at 5c which closed July 20 and trades July 28.
Macquarie Leisure: applied for $45,000 in three $15,000 SPP offers at $1.15 a share which closes today.
Northern Energy: $5000 into $10,000 SPP at 35c which closed on July 22 and trades on August 4.
Asciano delivered the much-needed $61,000 back into the bank account last Friday so now there is only one major refund outstanding being the $21,000 that Westpac's Australian Infrastructure Fund owes after a savage scale back.
Assessing the capital raising pipeline
Here is the list of other known offers in the pipeline which remain open and we're considering:
Asciano: three entitlements to $10,000 SPP at $1.10 which is capped at $100m and will probably be scaled back. Closes August 12 and trades August 20.
Australand: 7-for-10 entitlement offer at 40c which closes on August 21 and trades on September 2.
CBH Resources: $15,000 SPP at 10c which closes July 31 and trades September 1.
Energy & Minerals Australia: $15,000 SPP at 21c with dates still to be released.
Every Day Mining Services: 1-for-5 offer at 6c which closes on August 18 and trades on August 24.
GBST: $15,000 SPP at 65c which closes on July 31 and trades on August 13.
Innamincka Petroleum: $15,000 SPP at 20c or 15% discount which closes August 7 and trades August 17.
National Australia Bank: two $15,000 SPP entitlements at $21.50 a share which closes August 21 and trades August 31.
Roc Oil: $15,000 SPP after $80 million placement at 78c or 5% discount to market which closes August 7 and trades August 17.
Virgin Blue: 1-for-1 offer at 20c with unlimited ability to apply for extras. Closes August 28 and starts trading September 9.
Cornwall cartoons for The Mayne Report
Former Fairfax and Crikey cartoonist Mark Cornwall has been contributing his satirical commentary to the Mayne Report since March 2009. Here is a collection of his best cartoons and there are now some amusing animations he has begun. Go here to see his animations and below are some new offerings:
All the recent share trades
We've continued with all this tax-loss selling of late after a run of wins from capital raisings. Check out all the trades so far this year. Click here for various snapshots of the the portfolio over the past few months, with spreadsheets available if you click on the dates. The latest is as follows:
July 16, 2009: portfolio of 722 holdings worth $76,834. Overall paper loss of $23,447 and average holding worth $106.
And here are all the trades since the last edition:
July 28
Austen Engineering: bought 3448 at $1.45 in $5000 SPP
Austen Engineeering: sold 3458 at $1.65 for profit of $690.
Macarthur Coal: sold 1,490 at $7.66
July 27
Macarthur Coal: bought 7500 shares at $6 each for $45,000 through 3 different $15,000 SPP offers.
Macarthur Coal: sold 1000 at $7.464, 2500 at $7.36 and 2575 at $7.355.
Karoon Gas: bought 746 at $6.70 in $5000 SPP
Karoon Gas: sold 800 at $11.16.
Payce Consolidated: sold 240 at 70c
July 24
Bathurst: sold 5,953 at 4.6c
BC Iron: sold 380 at $1.10
Central Petroleum: sold 4,990 at 9.2c
Clive Peeters: sold 2,890 at 15.5c
Cooper Energy: sold 685 at 42.5c
Deep Yellow: sold 1,080 at 37.5c
Euroz: sold 248 at $1.02
Kairiki Energy: sold 2,770 at 14.5c
NSX Ltd: sold 2,174 at 22c
Peet: sold 320 at $1.68
Platinum Capital: sold 276 at $1.46
Saracen Mineral: sold 2,430 at 17.9c
Sonic Healthcare sold 30 at $11.75
Sultan Corp: sold 119 at $4.01
Tower Australia: sold 177 at $2.56
West Australian Met: sold 2,120 at 21c
July 22
Adelaide Brighton: sold 188 at $2.24
Australand Assets: sold 8 at $57
Bank of Queensland Pref: sold 6 at $83.55
Bathurst Resources: sold 4,990 at 5.8c
Every Day Mine: sold 5,952 at 7.9c
Gunns Ltd Forests: sold 7 at $59.50
Macquarie Bank Ltd: sold 8 at $66.90
Multiplex Sites: sold 9 at $54.30
Nufarm Finance: sold 6 at $78.50
Preferred Capital Perls: sold 3 at $168
Ramsay Health Care: sold 16 at $95
Seven Network pref: sold 6 at $91.70
Stockland Stapled: sold 100 at $3.08
Suncorp-Metway: sold 8 at $62.01
July 21
Atlas Iron: sold 1,791 at $1.81
KS Corp: sold 140 at $1.83
July 20
Adamus Resources: sold 1,181 at 41c
Amcil: sold 637 at 57.5c
Arafura Resource: sold 546 at 66.5c
AWB: sold 402 at $1.19
Biota Holdings: sold 290 at $1.60
Citigold: sold 3,140 at 16.5c
Fantastic Holdings: sold 2,173 at $2.68
Hastings High Yield: sold 390 at $1.16
Hill End Gold: sold 2,990 at 18c
Hutchison: sold 2,023 at 10.5c
Intermoco Ltd: sold 20,000 at 1.8c
Jumbuck Entertainment: sold 748 at 38c
Pepinnini Minerals: sold 748 at 33c
Strategic Pooled: sold 2,990 at 14c
Apology for indiscreet Tweet
We only joined Twitter a few weeks back but have already collected 523 followers thus far. Indeed, a brief tweet about a tour of possible venues for new basketball stadiums in the City of Manningham led to this front page story featuring the Bulleen Boomers in a recent edition of The Manningham Leader. No damage done but this could have been a major problem so I apologised to the other councillors. The episode was a good example about the increased disclosure we're seeing by those who use social media.
We encourage you to join our tweet stream to see up to the minute what we are up to, especially the various capital raising plays as they unfold and forthcoming AGM action.
Press Room
Have a listen to the guest appearence on RRR Melbourne discussing the end of the 2008/09 financial year and why not sign up for our video and audio podcasts to hear and see much more. Also, check out these special packages for our other regular media spots.
Listen to this exchange from The Party Show with Robert Gottliebson from Business Spectator and the Eureka Report. Listen to the rest of the show here: The Party Show, June 27, 2009
Other recent radio appearances have included:
ABC Radio National - with Geraldine Doogue on ABC Radio National previewing Macquarie Group AGM on Wednesday, July 22.
774 ABC Melbourne - regular chat with Lindy Burns on Wednesday, July 22, discussing a rising market, getting older and BHP.
936 ABC Hobart - chatting with Tim Cox about Caterpillar worldwide announcing a profit and retrenchments.
The Mayne Report Rich List
Since we began compiling the Mayne Report Rich List documenting every Australian currently or previously worth more then $10 million, it has grown in numbers and popularity such that no other feature on our website can match it for traffic.
We're now up to 1370 entries, although some are italicised, denoting that they are no longer worth more than our $10 million cut off. Send us through any tips or suggestions of anyone you think deserves a spot on the esteemed Mayne Report rich List Here are our latest entries, some of which have come courtesy of the latest edition of BRW's excellent Rich List:
John Dalley: a share market investor, he sold a property at Point Piper in Sydney, in 2008 for a reported $18.45 million after being advertised for $25 million.
Adrian Fonseca: a Singapore-based banker who sold his home in Vaucluse, Sydney, for $7m in April 2009.
Andrew Kemeny: sold his house in Vaucluse, Sydney, to Socceroo Luke Wilkshire, who paid $6.3m. The property was passed in at auction a year ago when the asking price was $8.2m, but still made a decent profit of nearly 100%.
Deborah Lei: owner of the East West Group of companies which has several major developments around Ipswich, Queensland. She is also involved in international trade and investment consultation and is Ipswich City Council's honorary business ambassador to China. A financial contributer to the ALP, she has pursued political connections which is common among developers.
Robert and Jennifer Reardon: cotton and macadamia farmers from Talwood, Queensland, they own a five-bedroom Liberty Panorama penthouse at Main Beach valued at around $15 million.
Christopher Rosch: investment strategy director, he bought the Gold Coast riverfront property known locally as the Flintstones house, but officially as Casa Albero, for $4.6m in 2004.
Glenn Willis: high-profile investment banker for 25 years, and co-founder of Grange Securities before it was taken over by Lehman Brothers in 2007, now the chief executive of corporate advisory firm Moss Capital. He previously headed the Australian arm of Lehman Brothers - the New York-based investment bank that collapsed last September in the biggest bankruptcy in US history.
That's all for now and if you've got this far, I may as well disclose that the 40th birthday was last Thursday. Old man Mayne is now thinking about growing up and professionally getting back inside the tent.
That said, we'll still be the outsider throwing a few rocks at Macquarie tomorrow but this coming AGM season may well be the last as a full time shareholder activist.
Do ya best, Stephen Mayne
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