superllc 31 dec 2010 analysis

Hi all,

I have done some analysis on how Super LLC's financial position will most likely have looked as at 31 Dec 2010.

SuperLLC overall will most likely be in a marginal negative net equity position, which will require CER to writedown its entire stand alone equity in SuperLLC to zero but the situation going forward from Dec 2010 will mean any further writeups in SuperLLC will result in a double bonus to the NTA of CER:

the impairment charge will be scaled back and
CER will begin to realise its own equity in Super

In my analysis, I scaled back CER's underlying profit of AUD$100m in SuperLLC for FY10 back to the USD profit it would have realised during the same period. The annual report converts all USD earnings and fin position in AUD terms. I reverted the AUD profit of $100m to USd using a rate of 0.8824 (avg rate used pg 9 annual results presentation).

I then made the assumption that SuperLLC underlying profit for CER for HY Dec 10 would be approx 3% lower than FY10. CER has said NOI is approx (0-2% lower) than the corresponding time last year and I have also allowed for higher interest costs as a result of the refinancing that occurred during the HY.

To be conservative, I assume CNP and CMCS40 generated no underlying profit during the HY. Therefore, the liabilities that the two entities hold in SuperLLC would not be reduced during the HY.

I did a sensitivity analysis showing how writeups of 2%, 4% and 6% would affect the LVRs and equity of the individual entities and the overall equity within Super.

Assuming we have writeups of 4% in SuperLLC, CER would hold 23.7c of equity within Super and would hold another 1.2c of equity within SUper via its investment in CMCS40. It holds a 14.6% investment in Super, that many probably dont know.

These would need to be written down to zero for now.

However Super's LLC overall leverage would be around 102% so any further writeups are going to be affected favourably in a big way.

Im happy to email my spreadsheet to you if you provide me with your email address.

Its great to see the market giving CER the dignity it deserves. It deserves alot more. In time it will get there, in the meantime let's enjoy the ride.

Cheers