Pokies deal, Manningham, Fairfax, profit season, SPPs, women directors, Cornwall, Rich List, sovereign debt and then some

September 17, 2010

Dear Mayne Report Readers,

Greetings for the first time since our post-election email edition on August 24.

To open this middle of the night missive, check out these five freely available stories for Crikey over the past week on the federal political scene. It includes yesterday's assessment of the landmark Wilkie-Gillard pokies regulation deal which we also discussed on ABC radio's PM program last night:

Gillard loving doing over the pokies-addicted NSW Right
Friday, September 3

Why we should only guarantee a minimum 18-month term
August 31, 2010

How Wilkie's decision will determine the government
August 30, 2010

Wilkie to make Gillard empathise with her pokies-addicted constituents

August 27, 2010

Campaign finance reforms need immediate balance sheet disclosure

August 26, 2010

Greens deliver substantial governance improvements

This ALP-Greens agreement is certainly an amazing document when it comes to locking in important governance and transparency reforms in the next parliament.

As a local government councillor, it is fantastic news that Julia Gillard has committed to holding referenda on the question of recognising Indigenous Australians and local government in the Australian constitution. It has been a long time coming but well done to the Greens for inking this commitment.

With Andrew Wilkie now on board and Treasury claiming a huge black hole in the Coalition's costings, you would have to think the pendulum has swung back in favour of Julia Gillard moving into The Lodge. Michael Gordon, who used to be Paul Keating's best mate in the press gallery, made the case quite persuasively in The Age today that only Julia Gillard seems to have cottoned on to the new political culture that will sweep Canberra with this hung parliament and some high quality independents.

Malcolm Turnbull will be sniggering away about Tony Abbott's financial troubles in the background. It was Andrew Robb who delivered the killer blow to his leadership and now it is Robb and Joe Hockey who have come a cropper on financial credibility at the worst possible moment.

Pokies and mining tax swing the balance in favour of Gillard

From my point of view, the pokies deal makes a Gillard Government worth backing. And with commodity prices soaring ever higher, surely it makes sense to pocket the estimated $10 billion a year of extra tax revenue that Xstrata (100% foreign), Rio Tinto (85% foreign) and BHP-Billiton (60% foreign) have agreed to stump up to Labor. And if the influence of the Greens delivers a carbon tax, that too would be a good thing which would generate plenty of revenue whilst taxing the polluters.

It is amazing that Australia is still running big current account deficits despite the commodities boom which saw our terms of trade improve by 25% over the past 12 months alone. One way of fixing this is securing a greater share of that mining boom.

If Tony Abbott was prepared to give away $1 billion for a new Hobart teaching hospital, surely he realises the $10 billion a year from the mining tax is vital if he's ever going to bring the budget back into surplus, let alone fix the current account deficit.

The commentariat have been most reluctant to make a prediction on the outcome, although I stuck my neck out and suggested an Abbott Government was more likely during the regular chat with Lindy Burns on 774 ABC Melbourne last Wednesday.

This, however, was before Wilkie's decision and Tony Abbott's costings blow out. My tip now is that at least two of the rural independents will back Gillard to form a government early next week.

Progress with female directors but still 95 ASX200 members in disgrace

The Australian Institute of Company Directors put out this press release on Wednesday trumpeting the fact that we've finally cracked the magical 10% mark for female representation on the boards of ASX200 companies.

In this year of record appointments, the likes of Virgin Blue, Woolworths, Onesteel, United Group and Boral have all added new female talent over the past 4 weeks.

However, there is still a staggering 95 ASX200 companies with no female representation. We've explicitly named and shamed them, along with details on what they do, where they are based and how many blokes are involved in this special new list on the site.

Similarly, check out this spreadsheet analysis of the ASX200 which shows Pacific Brands leads the way with 5 female directors, followed by the likes of Westpac and QBE with three each. After that, there are 30 companies with two female directors, 67 with 1 and the disgraceful 95 with none.

This job won't be fixed until a majority of ASX200 companies have at least 2 female directors and the overall ratio is up above 20%.

Our next edition will have a detailed preview of the coming AGM season and you can be assured that plenty of these boys only boards will be targeted in a similar fashion to previous efforts which can be seen in this compilation of transcripts.

Meanwhile, we haven't seriously updated these for a few weeks but check out our rankings of the top 100 female directors and the top 100 male directors.

Finally, I'll be participating in a debate on the topic "Feminism has failed" on September 22 at the Melbourne Town Hall. The board experience will be my special area and click here for more details on the excellent Intelligence Squared Debating format.

Fairfax delivers strong profit and improved board

Whilst I love most of what Eric Beecher and his partners have done for Crikey since they bought it in March 2005, one criticism is the never-ending stream of criticism that gets directed at Fairfax Media.

Whilst Crikey and its sister publications such as Business Spectator and Eureka Report are in fierce competition with Fairfax, sometimes the anti-Fairfax editorial campaign feels too much like a News Ltd-style vendetta.

This week Fairfax delivered a much better than expected profit result and then chairman Roger Corbett finished the week appointing two experienced directors with media expertise, namely Greg Hywood and former Austereo CEO Michael Anderson.

I'm no fan of Corbett and especially his baggage of getting Woolies into the pokies business, but sometimes you've got to put editorial competition to once side and actually credit good performance and sensible appointments.

The Fairfax board has lacked media experience ever since it re-floated in 1992 so these two latest appointments should be welcomed.

Hywood is a potential successor to CEO Brian McCarthy who has performed strongly cutting costs but doesn't appear to be skilled up to handle the challenges of the digital age.

Having shown that it is possible to lure a former executive like Hywood back into the fold, the Fairfax board should be targeting ABC boss Mark Scott to be its next CEO.

If Scott can't be shaken loose, then Hywood is probably another good option and the board will have a chance to examine his strategic skills as a humble non-executive director over the period ahead.

Reporting season wrap – only 10 companies join the $100m loss club

Whilst the political scene has been fascinating, we can't ignore Tuesday's finish to the 2009-10 profit reporting season. How about these statistical summaries from our master list tracking every loss exceeding $100 million over the past 20 years:

2007-08: a then record 29 ASX-listed companies reported losses of more than $100 million as the GFC hit.

2008-09: a then record 52 companies reported losses of more than $100 million, including 15 which exceeded the magical $1 billion mark.

2009-10: only the following 10 companies reported losses of more than $100 million:

Rivercity Motorway: traffic projections for this Brisbane tollway project fell well short of expectations so a $1.56 billion write-down was booked, delivering a $1.65 billion loss for 2009-10.

Asciano: reported a disappointing $976m loss in 2009-10 thanks to write down of its ports business.

Prime Infrastructure Trust: a massive loss on the sale of some businesses delivered a net loss of $948 million for the old Babcock & Brown Infrastructure in 2009-10.

Centro Properties:
reported an annual $652.7m net loss for 2009-10 which at least was better than the $3.54 billion loss in the previous year thanks to significantly lower property devaluations.

Alinta Energy: the old Babcock & Brown Power reported a $577 million loss for 2009-10 after a $670 million charge which largely related to its WA business courtesy of increased gas purchase costs.

Goodman Group: the industrial property giant came back from the brink with a monster capital raising but still delivered a $562.6 million net loss in 2009-10, largely due to one-off write-downs.

the health IT company took a big write down on its UK health business delivering a $382 million loss as founder and CEO Gary Cohen resigned.

reported a net loss of $225.3 million in 2009-10, largely thanks to write downs of $170.3 million related to its struggling Tasmanian operations.

the struggling wholesale distribution company foreshadowed a net loss of $126 million for 2009-10 after a write down of $133 million which also saw CEO Justin Ryan shown the door with an excessive $1.7 million cash payout.

Coote Industrial:
posted a $124.6 million annual loss in 2009-10 due to significant write downs on its assets for businesses which include technical services to industries using heavy machinery and rolling stock.

For the record, the 15 companies who notched up losses exceeding $1 billion in 2008-09 were as follows: News Corp, Crown, Dexus Property Group, Macquarie Infrastructure, Eircom Holdings, Macquarie Countrywide, Macquarie Office, Fortescue Metals, Centro Properties, Centro Retail, Stockland, Valad, ING Industrial, Goodman Group, Mirvac.

Terrible Tuesday - every loss in the last day deluge

Our multimedia producer and researcher Shane Marden slaved away for several hours on Wednesday producing this list tracking every company which reported on Tuesday, the last day allowed for listed entities with June 30 balance dates. This is how it unfolded in reverse chronological order:

7.33pm, Nexbis: $49.6m loss
7.32pm, Atlas South Sea Pearl: $3.2m profit
7.30pm, Transmetro Corporation: $744,000 profit
7.26pm, Cell Aquaculture: $985,000 loss
7.26pm, CEC Group: $12.4m loss
7.24pm, Avoca Resources: $57.8m profit
7.24pm, BKM Management: $552,436 loss
7.23pm, Global Masters Fund: $83,893 loss
7.19pm, AACL Holdings: $4.07m loss
7.12pm, Atlantic: $7.7m loss
7.12pm, Frankland River Olive Company: $1.09m loss
7.12pm, Joyce Corporation: $8.2m loss
7.11pm, El Corporation: $182,864 loss
7.05pm, Blue Capital: $1m loss
7.02pm, Icash Payment Systems: $4.5m profit
7.00pm, Adultshop.Com: $2.2m loss
7.00pm, AWH Corporation: $1.3m loss
7.00pm, Neo Resources: $931,000 loss
6.58pm, Ramelius Resources: $20.1m profit
6.54pm, Avita Medical: $5.8m loss
6.53pm, Quay Magnesium: $5.8m loss
6.50pm, Carbon Conscious: $347,030 profit
6.49pm, Mil Resources: $894,000 loss
6.45pm, Neon Energy: $2.3m loss
6.43pm, Humanis Group: $3.06m loss
6.41pm, Eco Quest: $2.1m loss
6.41pm, Powerlan: $13.9m loss
6.41pm, QED Occtech: $994,690 loss
6.40pm, Mnet Group: $712,583 loss
6.38pm, Advanced Engine Components: $3.7m loss
6.37pm, Landmark White: $954,901 profit
6.37pm, Select Vaccines: $167,000 loss
6.35pm, Environmental Group (The): $559,175 loss
6.33pm, Photo-Me Australia: $1m loss
6.32pm, Goconnect: $1.5m loss
6.31pm, TZ Ltd: $21m loss
6.30pm, Indago Resources: $24.9m profit
6.21pm, Holista Colltech: $1.5m loss
6.18pm, Redisland Australia: $601,611 profit
6.17pm, Pienetworks: $2m loss
6.16pm, Papyrus Australia: $2.6m loss
6.13pm, Quantum Energy: $8.4m profit
6.11pm, Beyond Sportswear International: $580,000 profit
6.10pm, Cougar Energy: $4m loss
6.08pm, Panorama Synergy: $957,000 loss
6.06pm, Anaeco: $7m loss
6.06pm, Electrometals Technologies: $1.4m loss
6.05pm, Coonawarra Australia Property Trust: $3.4m loss
6.05pm, Imugene: $1.5m loss
6.05pm, Webspy: $1.4m loss
6.04pm, Axiom Properties: $13.7m loss
6.02pm, Energio: $44,880 profit
6.01pm, Prince Hill Wines: $3.7m loss
5.54pm, Health Corporation: $3.1m loss
5.51pm, Entellect Solutions: $2.5m loss
5.49pm, Allied Brands: $35.2m loss
5.48pm, Automotive Technology Group: $4.3m loss
5.48pm, Future Corporation Australia: $2.5m loss
5.47pm, JV Global: $2.1m loss
5.46pm, Intermoco: $1.5m loss
5.46pm, Pelorus Property Group: $7.1m profit
5.44pm, Chapmans: $101,198 loss
5.44pm, Mobileactive: $81,556 profit
5.38pm, Blackcrest Resources: $757,000 loss
5.38pm, MDS Financial Group: $348,140 loss
5.36pm, Environmental Clean Technologies: $3.7m loss
5.34pm, Helicon Group: $858,000 loss
5.34pm, Real Estate Capital Partners USA Property Trust: $6.2m loss
5.33pm, Media Group International: $454,000 loss
5.29pm, Agricultural Land Trust: $1.9m profit
5.28pm, Phylogica: $4.5m loss
5.26pm, Robe Australia: $563,650 loss
5.25pm, APA Financial Services: $206m profit
5.23pm, Aurora Global Infrastructure Income Trust: $730,000 profit
5.23pm, Karmelsonix: $5.9m loss
5.23pm, Strathfield Group: $2.7m profit
5.22pm, Oriental Technologies Investment: $122,000 profit
5.19pm, Mission Newenergy: $86.2m loss
5.19pm, Transol Corporation: $32,694 loss
5.19pm, Xiaoxiao Education: $1.6m loss
5.18pm, Cape Range: $916,000 loss
5.18pm, Haoma Mining: $5.6m loss
5.18pm, Metal Storm: $4.8m loss
5.16pm, Every Day Mine Services: $4.1m loss
5.15pm, Van Eyk Three Pillars: $8.4m profit
5.13pm, M2M Corporation: $1.3m loss
5.12pm, AFT Corporation: $185,000
5.12pm, 3Q Holdings: $1.3m profit
5.11pm, Island Sky Australia: $2.1m loss
5.08pm, Vealls: $4m profit
5.06pm, Max Trust: $26.5m profit
5.03pm, Astra Capital: $5,683 loss
5.03pm, BBX Holdings: $9.3m loss
5.03pm, Boulder Steel: $7m loss
5.03pm, Charter Pacific Corporation: $3.68m loss
5.02pm, Phileo Australia: $1.7m profit
5.01pm, Global Resource Masters Fund: $531,916 loss
5.00pm, Aircruising Australia: $435,232 loss
5.00pm, National Leisure & Gaming: $3.8m loss
4.54pm, China Steel Australia: $25.9m profit
4.54pm, Mikoh Corporation: $5m loss
4.53pm, Agenix: $2.4m profit
4.53pm, Asian Masters Fund: $198,041 loss
4.49pm, Excela: $1.1m loss
4.47pm, Cl Asset Holdings: $119,509 loss
4.45pm, China Century Capital: $2.4m loss
4.43pm, Benitec: $4.6m loss
4.43pm, CVC Property Fund: $4.3m loss
4.41pm, CVC Ltd: $20.1m profit
4.40pm, Gold One International: $3.1m loss
4.40pm, Trinity Group: $50.3m loss
4.39pm, Mooter Media: $1.5m loss
4.38pm, Hamilton James & Bruce Group: $2.5m loss
4.36pm, Energy World Corporation: $20.3m profit
4.35pm, Green Invest: $339,412 profit
4.33pm, C@ Ltd: $506,601 loss
4.33pm, Money3 Corporation: $2.1m profit
4.32pm, Broad Investments: $252,000 loss
4.32pm, Norseman Gold: $3.1m profit
4.31pm, Advanced Surgical Design & Manufacture: $464,000 loss
4.30pm, Voltage: $232,178 loss
4.29pm, Aspermont: $1m profit
4.27pm, Rubik Financial: $16.3m loss
4.26pm, AMA Group: $4.7m profit
4.25pm, Global Gold Holdings: $3m profit
4.24pm, TPL Corporation: $1.1m loss
4.24pm, UXC: $2.8m loss
4.23pm, GLG Corp: $8m profit
4.21pm, Cervantes Corporation: $429,268 loss
4.19pm, Aurora Property Buy-Write Income Trust: $3.5m profit
4.18pm, Xtek: $1.4m loss
4.17pm, Aurora Sandringham Australian Equity Income Trust: $1m profit
4.17pm, Biotron: $1.8m loss
4.16pm, Austofix Group: $341,312 loss
4.12pm, TVN Corporation: $501,500 loss
4.10pm, Antaria: $2.56m loss
4.10pm, Oakajee Corporation: $170,582 loss
4.10pm, Pacific Environment: $1.06m loss
4.07pm, Caledon Resources: $7.1m loss
4.06pm, Authorised Investment Fund: $675,000 loss
4.01pm, Dyesol: $14.3m loss
4.01pm, Hunter Hall Global Value: $24.8m profit
4.01pm, Wallace Absolute Return: $2.2m loss
3.59pm, Garratt's: $1.65m profit
3.59pm, Superwoman Group: $5.8m loss
3.57pm, Eyecare Partners: $4.3m loss
3.55pm, Dulhunty Power: $13,000 profit
3.53pm, CPT Global: $3.1m loss
3.49pm, Thomas Bryson International:$2.8m loss
3.47pm, Stanfield Funds Management: $108,153 profit
3.39pm, Helix Resources: $6.8m loss
3.34pm, Farm Pride Foods: $5.7m loss
3.34pm, Rectifier Technologies: $1.8m loss
3.32pm, Iatia: $1.2m loss
3.32pm, Marine Produce Australia: $3.8m loss
3.31pm, SCV Group: $413,000 profit
3.31pm, TSV Holdings: $9.6m loss
3.23pm, Anteo Diagnostics: $2.24m loss
3.23pm, Telezon: $389,131 loss
3.22pm, NSX: $1.7m loss
3.20pm, Treyo Leisure And Entertainment: $1.1m profit
3.19pm, Advanced Magnesium: $4.05m loss
3.17pm, Becton Property Group: $84.3m loss
3.15pm, Cardia Bioplastics: $5.5m loss
3.13pm, Commstrat: $221,061 loss
3.10pm, Bisan: $536,206 loss
3.08pm, Careers Multilist: $1.4m loss
3.07pm, Questus: $14,000 profit
2.59pm, Alexium International Group: $2.06m loss
2.59pm, Shree Minerals: $308,743 loss
2.53pm, Enviromission: $4.9m loss
2.51pm, Bioprospect: $3.3m loss
2.51pm, Immuron: $1.9m loss
2.46pm, TMA Group Of Companies: $3m profit
2.44pm, QRSciences Holdings: $4.2m profit
2.42pm, Medigard: $400,158 loss
2.40pm, Agri Energy: $8.7m profit
2.40pm, World.Net Services: $56,691 loss
2.39pm, 4C Security Solutions: $842,000 loss
2.38pm, Malachite Resources: $4.1m loss
2.32pm, PTB Group: $1.6m profit
2.31pm, Ambertech: $1.6m profit
2.31pm, Flat Glass Industries: $1.1m loss
2.29pm, Pacific Mining: $713,986 profit
2.27pm, Chalmers: $2m profit
2.27pm, Realm Resources: $694,016 loss
2.26pm, Style: $6.1m loss
2.25pm, K2 Energy: $3.8m loss
2.24pm, Vesture: $612,869 loss
2.21pm, Coretrack: $3.2m loss
2.21pm, Virax Holdings: $1.82m loss
2.10pm, Norton Gold Fields: $32.8m loss
2.10pm, Quickstep Holdings: $10.9m loss
2.08pm, Aquacarotene: $905,000 profit
1.57pm, India Equities Fund: $3.3m loss
1.52pm, Adavale Resources: $2m loss
1.41pm, Linq Resources Fund: $35.3 profit
1.39pm, Trojan Equity: $11.4m profit
1.38pm, ASF Group: $2.75m loss
1.31pm, Rabinov Property Trust: $3.7m profit
1.29pm, Reclaim Industries: $1.25m loss
1.08pm, Solagran: $4m loss
1.06pm, Sirius Corporation: $35,859 profit
1.04pm, ITL Ltd: $12.3m loss
1.01pm, Viridis Clean Energy: $64.1m loss
1.00pm, Jervois Mining: $2.65m loss
12.56pm, Autodom: $1.6m loss
12.56pm, Hudson Investment Group: $3.5m profit
12.39pm, Van Eyk Blueprint Alternatives Plus: $2.65m profit
12.32pm, Strategic Pooled Development: $104,681 profit
12.30pm, Soil Sub Technologies: $5.5m profit
12.28pm, Euroz: $26.3m profit
12.26pm, Giaconda: $1.23m loss
12.25pm, Multi Channel Solutions: $1.5m loss
12.24pm, Dromana Estate: $103,779 profit
12.24pm, Structural Monitoring Systems: $822,000 loss
12.16pm, Straits Resources: $69.4m loss
12.06pm, Apollo Consolidated: $291,640 profit
11.54am, Ask Funding: $1m profit
11.36am, Global Health: $809,000 loss
11.35am, CBH Resources: $9.4m profit
11.34am, Investorfirst: $1.06m loss
11.31am, Clime Investment Management: $3.1m profit
11.30am, Calzada: $1.86m loss
11.30am, Ironbark Capital: $5.9m profit
11.30am, Shenhua International: $12.3m profit
11.29am, Resources & Energy Group: $1.1m profit
11.27am, Austpac Resources: $1.45m profit
11.27am, Objective Corporation: $2.1m profit
11.22am, Novarise Renewable Resources International: $5.3m profit
11.16am, Halcygen Pharmaceuticals: $3.3m profit
11.09am, Rubicor Group: $8.2m loss
10.54am, Datamotion Asia Pacific: $1.48m loss
10.54am, US Masters Holdings: $118,000 loss
10.47am, Viralytics: $4.8m loss
10.37am, Optiscan Imaging: $1.65m loss
10.32am, Primeag Australia: $5.7m loss
10.29am, Fluorotechnics: $4.47m loss
10.28am, Ezenet: $754,201 loss
10.28am, Inventis: $1.99m loss
10.25am, Biotech Capital: $5.7m loss
10.15am, Ocean Capital: $1.75m loss
10.14am, Paragon Care: $147,782 profit
10.12am, Stirling Products: $5.3m loss
10.07am, Katana Capital: $5.3m profit
10.06am, Amadeus Energy: $4.3m loss
10.03am, Clean Seas Tuna: $15.6m loss
10.03am, Isoft Group: $383m loss
10.03am, UScom: $1,757,677 loss
10.02am, Horizon Oil: $58.3m profit
9.47am, TFS Corporation: $41.37m profit
9.42am, Minara Resources: $39.3m profit
9.41am, Galileo Japan Trust: $62.2m loss
9.40am, Nomad Building Solutions: $63.6m loss
9.39am, Solco: $4.79m profit
9.31am, Cyclopharm: $769,203 loss
9.30am, Centro Properties Group: $653m loss
9.27am, ITS Capital Investments: $324,298 loss
9.25am, APN Property Group: $5.2m loss
9.20am, Success Resources Global: $728,000 loss
9.18am, Luminus Systems: $1,054,043 loss
9.17am, Marbletrend Group: $930,514 profit
9.16am, Peters Macgregor Investments: $3,937,119 profit
9.07am, Medical Australia: $1,3m loss
9.04am, Southern Cross Media Group: $81.3m loss
8.47am, Unilife Corporation: $28.7m loss
8.26am, Carpathian Resources: $2.8m loss
8.26am, Pulse Health: $1.3m loss
8.26am, Prime Infrastructure Group: $948,597 loss
8.25am, FTD Corporation: $123,415 loss
8.25am, Swick Mining Services: $10m loss
8.24am, Grange Resources: $42.2m profit
8.23am, Rivercity Motorway Group: $1.6m loss
8.22am, Dragon Energy: $1.5m loss
8.21am, Neurodiscovery: $1.7m loss
8.21am, Quickflix: $3m loss
8.20am, Artist & Entertainment Group: $1.2m loss
8.20am, KTL Technologies: $245,535 loss

The raw numbers finished with 188 losses and a surprisingly high 85 profits as 273 companies reported in a single day. You would think that a company with a profit would be better organised to get its numbers out early, although maybe this just demonstrates how tough it is to get everything sorted within two months of year end. Auditors are in peak demand through the winter and you need their sign-off before going public.

Westfield investors make $23m out of our threatened board tilt

A Westfield director told us last year that the company announced a belated share purchase plan a few weeks after a major institutional placement in order to head off a threatened board tilt by your correspondent. This meant Westfield was removed from our shame file of companies which did big end of town placements and then failed to follow through for retail investors with an SPP.

When the SPP finally came, Westfield's retail investors applied for 5.97 million shares worth $60 million as this ASX announcement explained. If they still held the stock today, the paper profit is $15.5 million, plus $7.5 million in distributions.

That $60 million investment has turned into $83 million, reflecting a 38% return over 18 months.

There will never be any public recognition of this effective pressure on a major company although the recent ISS capital raisings report did note the unexplained delay in Westfield's SPP announcement after the earlier institutional placement, suggesting there was a change of heart.

Transfield emerges as first public evidence of SPP triggered by AGM criticisms

A second example of shareholder activism delivering a share purchase plan has emerged with Transfield and this time the pressure is publically recognised in this statement to the ASX on August 27 when the company admitted its SPP "was offered to shareholders following requests by retail shareholders at the 2009 annual general meeting".

Have a listen to this audio from the Transfield Services AGM held on November 4 in Sydney last year. The full exchange with chairman Tony Shepherd can be seen in this transcript and the most relevant bit about the SPP was as follows:

Stephen Mayne: So as a class, retail have been heavily diluted by the lack of "overs" and by the discounted selective institutional placement, and I will put to you that you owe your retail investors a share purchase plan. Other companies like Boart Longyear and Asciano have, in similar situations, offered an olive branch to retail by coming through after the emergency raising with an SPP, and I cannot see the argument why you wouldn't follow that exact course of action.

Chairman Tony Shepherd: In terms of our future capital management, I take your point about whether we need to raise additional equity and whether we should have a share purchase plan, we'll take that on board, we'll take that into consideration as we go forward.

It was strange how Transfield took until just before the notice of meeting was due for the 2010 AGM to come through with this make-up $15,000 SPP. And it is a weirdly structured offer based around the average price in the five days leading up until the announcement. This meant the offer documentation went out spruiking a 5% discount but you had to check this subsequent announcement on the ASX website to find out the final price was $3.13 a share.

But the confusion gets worse, because those shares issued under the SPP are not entitled to the 9c final dividend. The stock only goes ex dividend on September 15 and the offer closes on September 21. With Transfield shares yesterday closing at $3.52, the offer is effectively 30c or 9.3% in the money. We've got two entitlements through the wife and I and put an initial $6000 down before stumbling upon the unique aspects of this offer.

How CBA and Transfield sneakily sold shares more cheaply to institutions

AFIC did something similar to Transfield last year with its SPP not being entitled to a forthcoming dividend but at least that wasn't following an institutional placement. The Commonwealth Bank was the worst tricky dividend dodger back in 2008 when it did a $2 billion institutional placement at $26 a share and then delayed the follow-up SPP for its 750,000 retail shareholders until after the stock had gone ex a $1.13 fully franked dividend.

We were outraged. Check out our letter published in The AFR at the time about half way down this edition from early 2009.

Given that Transfield's December 2008 institutional placement raised $59 million at $1.25, the lucky recipients of those 47.2 million new shares are today enjoying paper gains of $105 million. The biggest is believed to have been Schroders out of London, which will have also benefitted from the pound crashing.

Transfield went into that 2008 capital raising with a share register that was 38% owned by retail investors, excluding the founder shares held by the Belgiorno-Nettis family which didn't have the capacity to participate.

However, retail investors only took up $63 million of their $102 million collective entitlement, even though the offer was almost 50% in the money during its closing days in December 2008.

This was a classic example of the system shafting those investors without the smarts or financial wherewithal to look after their interests. Even if you were struggling for cash, it was a 1-for-1 offer at $1.25 so it would have made sense to sell out at $1.70 on market and use the proceeds to buy back in at $1.25.

That $39 million of applications which were not made by Transfield's 26,000 shareholders would today be worth $108 million, so this represents a direct transfer of about $60 million in value from the retail investors to the insiders who took up their entitlement and participated in the $59 million institutional placement.

To come up with a belated SPP at $3.13 - 250% above the original $1.25 placement price - and to overstate the 5% discount through this dividend ruse is a pretty poor attempt at compensation by Tony Shepherd and his fellow Transfield directors.

That said, it is better than nothing and there are many more issuers out there which still owe their retail investors a compensatory SPP as you can see from this list of companies which did institutional placements during the great $100 billion post-GFC capital raising binge.

The Cornwall collection

Former Fairfax and Crikey cartoonist Mark Cornwall has been contributing to The Mayne Report since March 2009. Here is a collection of his best cartoons and there are now also some amusing animations:

Audio highlights and summaries from a marathon council meeting

We had a marathon four and a half hour Manningham City Council meeting on Tuesday night with plenty of lively topics up for debate on the 20 item agenda. Here are links to the edited audio highlights with a brief description of the issues involved:

Moving approval for development on Whittens Lane
Was only approved 5-3 with mayor voting against officer-recommended 16 apartment development despite it satisfying policies and being in line with our strategy to add 4000 new dwellings on or near Doncaster Hill by 2020. Motoring journalist Bill Tuckey was clearly quite a persuasive objector with his detailed critique of the traffic implications.

Difficult Coptic Church debate (full 49 minute debate)

Officers recommended against this massive development in a low density residential part of leafy Donvale given it would be the biggest building in the city outside of Doncaster Hill. However, was only refused by mayor using casting vote in a 4-4 deadlock which is not ideal given deputy mayor Fred Chuah was an apology. I voted to knock it back, continuing a trend to always support the officer recommendation on planning matters, although it was a tough call given we need 8-10 new basketball courts in Manningham and the Coptics were proposing to build three courts which the public could access. There was a lot of community opposition so hopefully a negotiated outcome with a smaller development can be approved in the future.

VicRoads denies Westfield approval for big signs
A bizarre intervention by VicRoads to deny Westfield the opportunity to construct an iconic 120sq m electronic sign at the gateway site into Manningham on the basis that it might distract drivers. Our officers made some very strong comments about other major signs around Melbourne as you can hear in the audio. We're expecting Westfield to come back seeking separate approval for the other three proposed signs in this particular planning application.

Pines Activity Centre structure plan

We've increased the height limits for Stockland and other land owners around our second most important activity centre at The Pines in East Doncaster. The state government encouraged us down this path as Melbourne struggles to cope with up to 100,000 a year in population growth.

Strange debate about open space with cheap VicRoads acquisition in Esta Court
Labor councillors Ivan Reid and Charles Pick have been campaigning to save every last battle-axe site in Manningham from sale, yet here they were against spending $150,000 picking up a bargain basement pocket park from VicRoads which enhances the Koonung Creek linear trail. At least the mayor saw reason and changed his vote at the end.

Supporting tea room development at Ruffey Lake park
Labor councillor Meg Downie wants to "right past wrongs" and remove any mention of a study into a small 60 square metre tea room development at Ruffey Lake Park, the jewel in our open space crown. Meg is a passionate advocate for Manningham's 14,000 dogs and also lead the charge to ban fireworks at the Carols by Candlelight celebration in Ruffey Lake Park each Christmas on the basis that it frightens dogs. That was saved by Koonung councillor Fred Chuah and with Fred absent last Tuesday and the mayor preparing to knock off the tea room using a casting vote, we managed to secure a deferral and avoid a contentious vote along factional lines. Ivan Reid declared that he wanted a study and would like visiting such a cafe but was going to support his two Labor comrades in killing it off anyway. Most other equivalent parks in Melbourne have very successful cafes and with 300,000 visitors each year, you would think a harmless little cafe (which would be half the size of Westfield's proposed electronic sign in Doncaster) in Ruffey Lake Park wouldn't upset too many dogs.

Full debate over the Ruffey Lake tea rooms

DACs: handing over planning powers to the state on Doncaster Hill

Cr Graeme MacMillan fired up about handing over some of our planning powers to the state government. We are the first council to do this at our principal activity centre and are hoping for more than $1 billion worth of investment over the next few years to deliver those projected 4000 new dwellings by 2020. There were inferences about the controversy we've had over the proposed $15 million tripling of the On Luck Chinese Nursing Home in our Green Wedge but the mayor ruled any detailed response to Cr MacMillan out of order.

An excellent management model for the Civic Precinct
Our trail-blazing $38 million civic precinct building will be used by eight different community groups and our officers have done a great job working up an MoU to ensure maximum co-operation and utilisation.

Well done to past council for excellent Pines Learning facility
Congratulations to past councillors for their vision in developing the hugely popular $5 million Pines Learning Centre next to Stockland's shopping centre at The Pines. Manningham's U3A (University of the Third Age) is booming up there with 1500 members including 200 who are over 80 years old.

Moving to a majority of independents on audit committee
Governance is now up to speed on the audit committee with a clear majority of independent members and an independent chair. Now we just need to ensure it operates well and devotes time to issues other than our well run nursing home.

Summing up a strengthening council balance sheet as land values soar
The property bubble is benefitting all land owners and we're the biggest in Manningham with more than 600 holdings. No wonder the balance sheet has expanded by more than $100 million to almost $1.3 billion in the latest annual accounts. Well done to past councillors in retaining such a wonderful land bank when many councils flogged all surplus land during the Kennett era. Selling the most useless 1% of our holdings at the top of the property bubble would throw off a few million dollars to help expand our capital works program whilst keeping rate rises down. However, this will be a hard sell with the Labor councillors who would rather go into debt. At the moment the Auditor General rates Manningham in the top 5 councils in the state for financial management and it would be good to keep it that way by remaining debt free.

A note of caution on Mayor's regional council partnerships

Just making it clear that any collaboration with neighbouring councils on things like waste management, libraries and multi-cultural centres doesn't expand into an ambitious dream to establish telecommunications or electricity companies as has been advocated by some who sit around our council table.

The debate triggered by DRPA over process of briefing on Coptic Church proposal

The Donvale Rate Payers Association President had a point in complaining about councillors not hearing their arguments at the formal submitters meeting last Monday and then taking a strong position supporting the Coptic Church proposal when it was rejected by our professional officers. That said, councillors can't get to all meetings and are entitled to take soundings from whomever they like. If that involves a detailed briefing from a developer shortly before a council meeting, so be it.

Questioning the mayor about councillors being more accountable in reporting back

This is the latest attempt to improve governance at Manningham whereby all councillors spend a couple of minutes at the start of each council meeting reporting back to their community on what they've been doing over the previous month. We haven't had much joy with disclosure of individual councillor expenses or political donations and there's plenty of complaining about the one thing we have done - audio recordings of council meetings on the website - so don't hold your breath for any improvements with this latest transparency push.

Cr Reid attempts attack over sale of pocket parks

Labor councillor Ivan Reid used a series of questions to the Labor mayor to try and raise concerns about a so-called "hit list" of "family parks" to be sold off based on this recent edition of The Mayne Report. Strangely enough, Cr Reid had earlier in the night voted against spending $150,000 buying a pocket park from his employer, VicRoads, on the basis that it was a waste of money for a council with $1.3 billion in assets and $100 million in revenues. My simple position is that Manningham should expand both the overall size and quality of its public open space assets whilst partially funding such a portfolio improvement but selling off a few useless battle-axe sites. Can't see why anyone would be against that at a council which has 17% public open space - the highest ratio of any municipality council in the world.

Finally, in other council news check out this newsletter update from the Local Government Inspectorate which is cleaning up quite a few councils on governance and behaviour issues around Victoria.

Mildura Casino proposal killed by Ted Baillieu

Victorian Premier John Brumby has been pushing for a second Victorian casino to be built in Mildura but was insisting on bipartisan support. Liberal leader Ted Baillieu killed the proposal this week. Well done, Ted. The local community was rallying hard against Brumby's proposal and Ted clearly took notice of articles such as the following in the local Mildura paper:

Around the grounds on the pokies

It has been fantastic to see all the attention placed on the pokies by Andrew Wilkie this week. We gave a few grabs for this discussion on ABC radio's PM program last night and felt Fairfax's Kate Lahey produced one of the best summaries of the pre-commitment arguments in The Age today. There have also been plenty of other people weighing in with interesting pokies contributions over recent times.

For instance, Thomas Cummings posts at www.cyenne.com and we enjoyed this contribution regarding the ineffectiveness of regional caps for pokies in Victoria focusing on the City of Hume, plus this broader examination of regional caps.

It's especially interesting that, while regional caps are supposed to protect areas of high socio-economic disadvantage and high losses, 10 of the top 12 earning venues in Victoria are located withing regionally-capped areas.

Meanwhile, James Guerin's Canberra blog, www.the-riotact.com, periodically does a rundown of the local pokies players in the ACT based on local government reporting. The latest set of figures are due shortly and should attract more attention than usual given that the ALP itself is the biggest pokies player in the national capital.

Indeed, the Canberra Labor Club has been looking to purchase even more licenses in the near future, something that will surely now be stopped given the Wilkie-Gillard deal.

Go here to see a package of Riotact articles on this issue.

Finally, check out the latest from Paul Bendat's Pokieact website and this package of our past pokies coverage.

And try watching this 30 second anti-pokies ad made by Paul Bendat in 2008 featuring our daughter Alice, who was 6 at the time:

Gabriela Byrne's Free Yourself Program

Gabriela Byrne is a well-known anti-pokies campaigner and respected motivational speaker. She is a reformed pokies addict who managed to fight the addiction, and in the process, designed the Free Yourself Program.

The Free Yourself Program is a holistic approach to gambling addiction and teaches skills that can be used “in the moment” when the urge to gamble strikes.

Moreover, Gabriela authored the “Free Yourself Program” book which has sold more than 10,000 copies since it was launched by the Reverend Tim Costello.

Gabriela's particular expertise is in teaching people how to overcome the things that get in the way of making change. She shows people how to take control of their mind and to turn off the automatic pilot so that they can expand their comfort zone and successfully implement change.

In 2001 she founded the not-for-profit Chrysalis Insight Inc. Chrysalis Insight is committed to rebuilding and connecting the community to lessen the destructive effects of problem gambling.

Right now Gabriela project manages a pilot project (Re)Making Meaning. This is a funded partnership project of Chrysalis Insight Inc, Gamblers Help Eastern and the Victorian Local Government Association. This pilot project aims to support recovering problem gamblers to re-imagine and to rebuild an alternative, gambling free life. It provides a model of engagement to address the social void that arises when the individual stops gambling.

Gabriela has just re-launched her website www.freeyourself.com.au which describes how she beat the “beast”, and there is a blog so that she can keep you up-to-date with her projects and the happenings on the pokie front.

For those who care about taking action on the pokies, it is definitely worth supporting Gabi in her endeavors to fight the evils of gambling addiction.

Get on board with the Australian Shareholders Association

I'll be working more closely with the ASA this AGM season, even attending a couple of gatherings as the formal ASA monitor.

There is clearly more impact working in numbers so readers of this newsletter are encouraged to click on the image below and support the ASA.

Meanwhile, click on the image below to read the latest publication from the ASA:

The big debt issues continue under hung parliament

It was very strange to hear Reserve Bank governor Glenn Stevens make the following statement during the election campaign: "There is virtually no net public debt in the country at all in contrast to much of the developed world."

The Federal Government's own debt management website puts the gross debt figure at $152 billion and the bond issues continue to come as follows since our last edition:

Wednesday, September 1, 2010: $500m tender of 12 year bonds expiring in July 2022 were sold for an average yield of 4.86% and was over-subscribed 2.3 times.

Friday, August 27, 2010: $700m tender of 3 year bonds expiring in December 2013 were sold for an average yield of 4.38% and was over-subscribed 3.7 times.

Wednesday, August 25, 2010: $500m tender of 10 year bonds expiring in June 2020 were sold for an average yield of 4.81% and was over-subscribed 4.4 times.

Meanwhile, Alan Kohler linked to this fascinating article by a Morgan Stanley analyst in his Eureka Report email update last Saturday and it was the most intelligent analysis of sovereign debt I've ever seen. Take the time to have a read.

If anyone needs assistance on the debt questions, this list tracks all bond and treasury note issues by the Labor Government since it was elected in November 2007. However, as the Morgan Stanley analyst points out, there are many other variables to measure for a true picture of national solvency.

For instance, the massive level of foreign ownership in Australia, as demonstrated by this list, reduces the fiscal flexibility of our public sector.

More gems from Cornwall

The Mayne Report Rich List

BRW magazine does a great job with its various Australian Rich Lists but we've broadened their efforts to track any Australian who has ever been worth more than $10 million. We've got more than 1400 names with those who've fallen back below $10 million now italicised. Below are our latest new or updated entries:

Peter Kotzias: a developer in Sydney's eastern suburbs who listed his four bedroom harbourfront penthouse in Rose Bay to sell for $6.5 million in mid-2010.

Mitchell family: own 50% of the Mitchell transport business which handles remote transport logistics for big miners, especially in the Pilbara, and reportedly delivers EBIT of almost $20 million a year.

Billy Singh: a wealthy Queensland banana grower who in 2010 added to his portfolio with the $3 million purchase of a plantation near Bundaberg which Timbercorp had bought for an inflated $9 million in 2006.

Nick Van de Merwe: a former Pacific Brands marketing guru who bought the Golden Fleet surfwear label in 1999. Listed his Armadale mansion in Melbourne's leafy suburbs to sell for $5.5 million in mid-2010.

Mark Worrall: was worth an estimated $30 million on paper at the top of the boom when a senior executive at Allco Finance Collapse but after the collapse wasn't forced into a fire sale of assets and moved on to Beacon Asset Finance Corp. It wasn't until mid-2010 that he listed his North Shore mansion to sell for $6.8 million, suggesting a degree of financial wealth remains.

Manningham Community Profile

The hard working officers at Manningham have just updated the City of Manningham Community Profile which is designed to inform community groups, investors, business, students and the general public about life in our municipality.

Here are a few basic insights. The City of Manningham is located in Melbourne's north-eastern suburbs, about 12 kilometres from the Melbourne CBD. Manningham is named after Manningham Road, which is thought to be named after a region in West Yorkshire, England.

As of 2009 there were 118,544 people living in Manningham with 51% of those females. The indigenous population makes up 0.1%, and 16.1% of the community are over the age of 65.

The 2006 Census suggested that 51,158 people actually working in the City of Mannigham. The largest cohort of workers in Manningham are professionals at 21% but the largest percentage of average pay is from $400-$599, and 54% of workers are female.

Forty eight percent of the community own their houses with 13% renting, and 52% of households are parents with children. Couples without children still make up 34% and 11% are single parent families.

Theologically, 65% of the community are some kind of Christian denomination, 18% were recorded as having no religion, and the largest non-Christiam group were Buddhists at 3.7%.

Last night I attended a delightful dinner at our local Mosque in East Doncaster hosted by the United Muslim Migrants Association and it was tremendous to see 7 of the 9 councillors helping celebrate the end of Ramadan next week.

The great political relationships list

Our political relationships list continues to attract attention with new entries such as the following:

Russell Wortley: a Justice of the Peace and former head of the Gas sub-branch of the TWU in SA, he was elected to the South Australian Legislative Council in 2006. He is married to Senator Dana Wortley.

Tracking former federal government staffers

We're still tracking former political staffers in Canberra since Bob Hawke's election in 1983. Updates rely on emails to Stephen@maynereport.com or use of the anonymous tips box.

There have been a few updates so check out the three lists below and send through any corrections or feedback:

Tracking the former Hawke Keating staffers

Where Howard staffers finished up

Where Rudd government staffers went

A mixed time punting the market

Firstly, check out all the trades so far this year. This is how things looked as of August 31, 2010: portfolio of 701 holdings worth $37,806. The overall paper loss of $7,309 and average holding worth $54.

In terms of recent capital raising plays, the following four capital raising plays generated about $1600 in much-needed gains over the past month as you can see from this list tracking such plays since the beginning of 2009:

August 24
SAI Global: sold 1,388 at $4

August 17

Mirrabooka: sold 9,375 at $1.63

August 16
Slater&Gordon: sold 3,661 at $1.39

August 2
GUD Holdings: sold 768 at $9.43

Donate to help keep us going

The Mayne Report costs almost $100,000 a year to run and we moved to a free model in June last year after struggling along seeking subscriptions for the first 21 months racking up almost $200,000 in losses.

It has been nice to receive more than $10,000 worth of donations over the past few year and if you fancy giving us a hand to help fund our activism and keep us going on the political and AGM circuit, just click on the image below:

Around the grounds on radio plus hitting the faceless men in Darwin chat

Below are the links to the audio from seven radio appearances since the last edition:

ABC Radio's PM program -
contributed to a story about poker machine restrictions on September 3, 2010.

612 ABC Brisbane - discussing the exorbitant bonuses paid to the Rivercity Motorway CEO on September 3, 2010.

774 ABC Melbourne - discussing the Greens-Labor deal and strong economic growth on September 1.

ABC Adelaide -
discussing the David Jones court case on August 30, 2010.

RRR Melbourne - discussing the election wash up with The Breakfasters on August 25, 2010.

774 ABC Melbourne - wrapping up the election and discussing the economy on August 25, 2010.

ABC Darwin - discussing political spin doctors on August 25, 2010.

Ripping into Labor's faceless men on ABC Darwin

Below is an excerpt of the transcript from the Darwin discussion which we enjoyed.

Annie Gastin: We might see a little less power from the faceless men, next time round you reckon?

Stephen Mayne: Well you would think so. We have the world's most powerful union movement they've got a gerrymander control over the Labor Party, where they are guaranteed through the constitution to have 50% of the votes at all party forums.

So you do end up with this strange situation where 6 or 8 union bosses from around the country, most of whom finish up in the parliament themselves, guys like Bill Shorten, end up being able to totally kneecap leaders and control things, and control the debate and do the preference deals.

It is a case of too much power being put in the hands of these power hungry, string pulling, factional apparatchiks who over time become very jaded and cynical in their tactics, and lose their idealism for policy and these sorts of things.

So anything which breaks down their power, and opens up political parties to mass membership again, not just very narrow membership bases, would help politics. Hopefully the rise of the independents and the breakdown of the rigid party discipline we've seen, might actually open up politics a bit and distribute some of that power more widely in the community.

Click the link below to get the latest radio and AGM audio:

More gems from Mark Cornwall

U3A, British historians, ship owners and other tales from the talk circuit

The talk circuit is getting pretty busy at the moment. There's a political round up for the Australian Shipowners Association next week, along with a leadership forum with the Victorian tourism industry.

It was fun addressing the AGM of Manningham's U3A last week and there is also a trip coming up to Sydney soon to discuss women on boards.

One recent highlight was chairing a Melbourne Writers Festival lunch on Tuesday featuring British historian Stephen Bungay. This guy provided fascinating comparisons between corporate and military leadership down the ages.

Meanwhile, click here to read feedback after some speeches and click on the image below if you fancy an engagement as the talk circuit helps offset the losses of our activism and The Mayne Report:

Sign up for campaign and governance Tweets

Click on the image above to join more than 2100 followers on Twitter. Here are some of the more recent Tweets:

7.01pm September 1: Regular chat on 774 ABC Melbourne discussing profit season and the deal between the #Greens and #Labor: http://urlm.in/fkvd

2.34pm September 1: Wow, Greens have negotiated lots of concessions with Gillard. Read the detail: http://greensmps.org.au/webfm_send/448?source=cmailer

2.13pm September 1: Big win. Transfield announced retail share offer in respose to this AGM exchange: http://video.maynereport.com/audio/transField09AGM_Q1.mp3

3.26pm August 31: Back from chairing Melb Writers Festival lunch with British historian Stephen Bungay whose lines on military and corporate strategy were fab

1.27pm August 30: Why Andrew Wilkie's early pokies-driven decision will determine who governs. See lead story in Crikey today: http://www.maynereport.com/

12.29pm August 27: Have written Crikey story today explaining Gillard needs pokies deal with Wilkie-Xenophon to win power. See http://www.maynereport.com/

11.23am August 27: Jeepers, Fairfax reduced net debt by $347m to $1.435bn over past 12 months from cash flow. No wonder shares up 4%. Old media not dead yet.

m August 26: Stephen Mayne All this kerfuffle about releasing Treasury red book updates ignores the fact Seven's Michael McKinnon got most of the last version on FOI.

m August 26: Stephen Mayne Does Ken Henry have a conflict advising the independents? He knows Tony Abbott and the Liberals wants to sack him for alleged Labor bias.

6.08pm August 25: ‎"The independents want changes to political donations, electoral funding, and truth in advertising reforms." Go the independents!!!!!!!!!!

6.01pm August 25: ‎Regular spot on #774ABC Melbourne talking about the election and the economyhttp://video.maynereport.com/audio/774_250810.mp3

m August 25: ‎ABC Darwin this afternoon http://video.maynereport.com/audio/1057_Darwin_250810.mp3 discussing political spin doctors

3.13pm August 25: On #RRR this morning http://video.maynereport.com/audio/RRR_250810.mp3 discussing election wash up #auswaits

That's all for now.

Do ya best, Stephen Mayne

* The Mayne Report is a multi-media governance website published by Stephen Mayne with occasional email editions. To unsubscribe from the emails click here.