Macquarie Airports - buyback

Buybacks as a means of capital structure management: Macquaire Airports announce a buyback in conjunction with asset sales. Note that MAP's 'preferred (earnings) measure is "proportionate earnings before interest, tax, depreciation and amortisation".

Can the ASX stay a monopoly?

It's long been argued that there's no compelling reason (or even good reason) for ASX to remain a monopoly provider. Here's another; an ROE of 70% for it's latest results. Have a look at Adele Ferguson's story.

Babcock and Brown's profit warning

B&B shocks the market with a profit downgrade, only a few months after affirming previous guidance. B&B are unable to provide a precise estimate of the likely write down ("between 25 and 40% below (the previous guidance)" - and they're still in discussions with their auditors as to the extent of the write down..

One fund manager said it was "just terrible" that Babcock was producing such a wide range of possible numbers so close to the August 24 date when it had to report for the six months to June 30.

"Why now? Where have they been that they give us a range of between 25 and 40 per cent below the previous corresponding period?" he said.

"It's a month and 11 days past the book's close date for the half year number. It's pathetic."

Obvious questions will be asked about compliance with disclosure obligations.

Any impact on restrictions based around debt agreements?

Deutsche Bank said: "While non-cash impairment provisions are disappointing, we note they are excluded from calculations pertaining to the group's three times interest coverage covenant, suggesting (yesterday's) announcement is unlikely to compromise BNB's position with its bankers."

The sub-prime mess still has an impact

Today, the National Australia Bank announced an increase in its provisioning by $830 million for exposure to CDO (collateralised debt obligations) which house some of its exposure to the US sub-prime market. NAB's share price dropped by over 10% on the announcement. The disclosure related question, of course, is when did they know about this?

Rights issues - disappearing?

Possibly, according to Bryan Frith in The Australian. They are being replaced by "accelerated renounceable entitlement offers". Primarily it seems to reduce the risk faced by underwriters.

Audit fees and earnings quality

This is a bit of a twist on the usual story. The 'concern' about audit and advisory fees is usually expressed like this: higher fees (either absolute or at a relative level) can be thought of as akin to a 'bribe' to the auditors, who will then sign off on financial statements that present a company in a better light than they perhaps should. That's how the regulators seem to view the problem. It's been harder for researchers to 'prove' that this is the case: think about the difficulties in measuring both "earnings quality" and also the level of the 'economic bond' between auditor and client.

In this example (Diverseport Fixed Income), it looks like the auditors and advisors were going for the $ just before a collapse.

St George Westpac takeover

Seems not all St George shareholders are happy with Westpac's proposed takeover. Here's one of the major shareholders, Orion Asset Management's Dushko Bajic, reported in The Oz.

St George had not indicated its opinion of its value. "I find it frightening that the board has not identified its own valuation of St George as a stand-alone entity. How can you be sure of the value of Westpac's scrip and, even more outlandishly, the value of a merged St George/Westpac scrip, when you haven't established your own valuation of your own stock?

"And by the way, it's not good enough to draft in an independent expert after the event -- you've already set the goalposts," he said.

Seems a fair complaint. Note though that simply providing an independent expert's report will not solve everything. See prior posts here.

NAB's pro forma earnings

Adele Ferguson takes apart National Australia Bank's "cash earnings" figure. Once again, the issue with firms reporting non-GAAP, or pro forma earnings, is that of comparability. Comparing NAB's results with those of competitors for this reporting season, and comparing NAB's results over time.

Blame ASIC?

ASIC's chairman argues that ASIC should not be blamed for recent upheavals in the market (oh, other than the short selling stuff). It's an interesting one, though. To what extent should we, and can we, regulate against bad business decision, and bad investment decisions? However, even acknowledging that we can't protect all against all of their bad decisions doesn't mean that companies should be able to go around breaching disclosure rules and the like, seemingly without any meaningful penalty.

Nyles lowers earnings forecast

As reported in The Oz, Nylex lowers its earnings forecast. Note the focus on EBIT and EBITDA numbers, and in particular the 'normalised EBITDA' nubmers. It's not until the end of the article that net income (or net loss) gets a mention!