Forum Archive Index - February 2002

["Kuripapango Investments Limited" <jmcvmc1955@free.net.nz>]

As this topic has generated so many comments, I'd like to reply to some of them

1) My decision to sell TWR was made on the basis that I did not like their accounting policy of counting as income the $17M of "increase in directors valuation over net tangible assets of subsidarys"  ( IMHO this was nothing less than treating as "profit" an internal revaluation of Goodwill, that would not be represented by cash flow in the future and was merely an "accounting entry"  )   I realise this is permissable persuant to some AUS accounting standard, (But not in NZ ? )  However the results of the AUS sub that adopts this standard are consolidated into the results of the NZ parent Co.  This is why the $17M mentioned above, includes only

-- 100% Bridges

-- 1/3rd  Tower (Aust) Limited

but not any increases in valuation of NZ owned subs, or the remaining 2/3rds of Tower(Aust).   Getting confused ???  I sure was, hence my "sell"  decision !!  There is a webcast available on the Tower site, regards announcement of 2001 results with more detailed financial analasys if anyone wishes to confirm details.          How good would PE/PEG be, once this item was excluded ?? (One would assume there would be no tax effect to this revaluation, so $17M would have gone directly to bottom line !!)

2)  I to, doubled my shareholding in TWR shortly after the Sept 11 tragedy, albeit out of sheer speculation, however I think it unfair to label the decline in value at the time "herd mentality"  as there were valid reasons at the time for prices to decline (ie increased chance of worldwide recession/depression) 

3)  Sure, I am unhappy that I didn't make any spectulactor gains out of TWR during my tenure,  however SELL decision was made on "accounting"  grounds (dodgy)  rather than discontent with share price. (However lack of movement did help my decision ) 

4) Given that TWR had a balance date of 30/09, and  the advance in equity markets, since then, will probably give "rocket fuel" to the 30/09/02 result. 

 

Thanks for comments etc

John