Brian Gaynor provides some excellent analysis:

One of POA’s biggest issues is its wage bill of $54.9 million compared with POT’s total employee expenses of $25.3 million, even though the latter is now the larger port.

Port of Tauranga was miniscule when it listed 20 years ago, but today has higher revenue, earnings and dividends than POA.

POT is an excellent model for the proposed partial sale of the Crown-owned electricity generators and Solid Energy.

The port company had a 10 per cent ownership restriction, a strong board and management and has performed exceptionally well as a listed company under the public/private ownership model.

In 2002, the company had a capital return of $7 per cancelled share on the basis of one share for every eight shares held, and the following year it had a two-for-one share split. Thus an investor who bought 1000 shares for $1050 in the IPO has had $875 of capital returned, and the remaining 1750 shares are now worth $17,850 at $10.20 a share. These figures do not take into account total dividends of more than $370 million over the two decades.

In other words, POT’s sharemarket value has surged from $80 million to $1368 million over this 20-year period and the Bay of Plenty Regional Council, which still owns 55 per cent, has been a major beneficiary of this.

Stunning results. And the key thing to note is a mixed ownership model can result in the public’s stake being worth more at (say) 55% than if they had retained 100% ownership.

As the accompanying figures show, POA has been hammered by POT in recent years: POA’s ebitda has fallen from $92.6 million in 2003 to $74.4 million, whereas POT’s has increased from $69.5 million to $95.0 million; POA’s ebitda margin has fallen from 55.3 per cent to 40.5 per cent while POT’s has increased from 47.6 per cent to 51.2 per cent; most importantly, POA’s dividend has declined from $34.5 million to $17.6 million while POT’s has increased from $22.8 million to $40.2 million.

This is a huge concern to Auckland ratepayers as the $17.8 million POA dividend represents a return of only 2.1 per cent on POA’s $848 million 2005 takeover value.

Mike Lee should be held accountable for this.

In 2010, POA had total employee expenses of $51.9 million compared with only $18.5 million at POT and last year employee benefits plus pension costs were $54.9 million at POA compared with POT’s $25.3 million.

This is what happens when people get paid for 43 hours, despite only working 28 hours. I am presuming the POT costs included contracted labour.

Lee made the ridiculous statement that POA and POT should act in an anti-competitive way by working together to get better rates from shipping companies. He went on to say that the shipping cartel Maersk and Fonterra “have kept prices right down by playing Tauranga off with Auckland” – yet Lee was primarily responsible for stopping merger talks between POA and POT.

We want competition between ports. That drives efficiency and productivity gains.

Tags: Brian Gaynor, Maritime Union, Ports of Auckland

Brian Gaynor writes:

However GPG’s New Zealand shareholders still have some influence and the May 7 annual meeting is an important one for the company.

It is 20 years since GPG was reconstituted by Sir Ron Brierley and this is the year he has vowed to return value to shareholders.

This promise seems to be waning and shareholders need to give a strong message to the directors that procrastination is unacceptable.

The best way to do this is to vote against Resolution 2 (the directors’ remuneration report), Resolution 3 (the re-appointment of Tony Gibbs as a director) and Resolution 4 (the re-appointment of Ron Langley to the board).

Why does Gaynor say this?

GPG’s annual report shows the company had a loss of £36 million for December 2009 compared with a loss of £50 million for the previous year.

These figures are not overly important as the key issue as far as investment companies are concerned is their sharemarket performance and that has been fairly dreadful in the case of GPG.

The company has underperformed the benchmark NZX50 Gross Index in four of the past five years and had a negative 2009 return of 4.9 per cent, including dividends and 1 for 10 bonus issue, compared with an 18.9 per cent appreciation in the benchmark NZX50 Gross Index.

GPG has had a negative return of 28.6 per cent since the end of 2004 compared with a positive 6.6 per cent return by the NZX benchmark index.

Pretty bad results, to say the least.

The directors have been extremely well paid even though the company has underperformed the NZX by a wide margin. Since the end of 2004, Tony Gibbs has had total remuneration of $23.1 million.

Blake Nixon, who is based in London, has earned $17.7 million and Gary Weiss $21.7 million.

The company’s performance does not justify these huge remuneration packages.

Many company directors are underpaid, but I don’t think that is a description one can apply to GPG.

These three Directors have been paid around $63 million for a result of wiping out 29% of the company’s worth.

It is time for shareholders to say enough.

Tags: Brian Gaynor, GPG, Tony Gibbs

Two separate columnists in two separate papers have used the “Muldoonist” tag in relation to Dr Cullen’s overnight secret law change regarding overseas investment in private companies.

Brian Gaynor in the Herald writes:

Finance Minister Dr Michael Cullen’s decision to effectively stymie the partial takeover offer for Auckland International Airport (AIA) is an unwanted reminder of the meddling policies of former Prime Minister Robert Muldoon.

Dr Cullen’s edict was so appalling, and so inconsistent with his policies of the previous eight years, that one can only conclude it was strongly influenced by political considerations ahead of this year’s general election. …

Cullen’s decision was announced nearly a decade after the Crown sold its 51.6 per cent controlling interest in the airport and more than seven months after the first offer for AIA was revealed. As a result the offer has been a terrible waste of resources – the airport had already spent $5.8 million on the process by the end of December.

Meanwhile Garry Sheeran in the SST says:

The crudely political nature of the government’s late-night move to block the Canadian bid for 40% of Auckland International Airport is highlighted by a barely cold, two-year review of the Overseas Investment Act.

That review, enacted into law in August 2005, was supported by a government “committed to maintaining a liberal investment regime”.

The legislation’s sponsor, Finance Minister Michael Cullen, said at the time that New Zealand needed foreign capital to develop the economy.

No surprise, then, at the collective gasp which greeted the same minister’s announcement late on Monday that the same act would be amended to send the Canadians packing, once and for all.

Political commentator Chris Trotter said the use of an order-in-council to rewrite the law harked back to the 1980s. “It would have been just another day under Rob Muldoon,” he said, “but using the governor-general and most of the cabinet to rewrite the rules is not something we are used to any more.

Also the NZ Herald Editorial calls on Cullen to name the assets covered by this new law:

Dr Cullen suggests the infrastructure he has in mind comprises only a “narrow” group. The inclusion of Auckland airport means it could be narrower. But, hopefully, dams and ports are the other ingredients. Certainly, there is no need for the likes of Television New Zealand, which can, in an emergency, be easily replicated.

The other factor in this equation is xenophobia. That is the unspoken reason for the obstacles installed by many overseas jurisdictions. It should not be an issue here. Dr Cullen must list what the Government considers strategically important infrastructure. That should be the prelude to a reasoned debate. From that, it should not be difficult to reach bipartisan agreement on strategic assets, and the degree of protection they should be afforded.

Indeed Dr Cullen has resorted to Winston’s old trick of xenophobia. And it is quite unacceptable for people not to know which assets or companies the Government now deems strategic. Why would people spend money investing in a company when the Govt by overnight whim can declare it is strategic and off limits.

Tags: Auckland Airport, Brian Gaynor, foreign investment, Garry Sheeran, Michael Cullen, Muldoon, xenophobia