At 30 June 2009 the total Net Assets stated by LLP Board were $559m. That is Total Assets less Total Liabilities. The Total Assets were reduced by the Valuations which reduced assets by $178m as a result of reductions in property values, interest rate swaps valuations, and impairments. This reduction in assets is mainly paper entries, but has the result of depressing the book value of our assets. It is this book value benchmark that LLP directors use to decide if the LLC offer is reasonable.
From that reduced Total Asset figure of $559m we deduct Intangibles of $239m and get a Net tangible Asset figure of $320m. Divide that by 966m shares and we get an NTA of 33c. If we also deduct Deferred Tax assets of $62m we get an NTA of 27c ps. I am unclear as to what NTA the directors refer to.
The issue is that when the LLP directors recommend the offer to US they give the reason that it is above the NTA figure.
But they ignore several very crucial points: 1. the NTA figure is at its lowest point- it has been heavily marked down by low asset valuations, impairment provisions and accounting hedge writedowns. 2. by using the NTA as the benchmark for their recommendation, they completely ignore that the NTA figure ignores any value for goodwill and management rights and bed licences. These Intangibles MUST be worth something, because the R/V and Aged Care are still operating with positive cash flows of $40m+.
Everyone knows that Aged Care Bed Rights are Govt allocatted and are worth gold. Management rights also of these properties are readily saleable. We just gave PTN an Option to repurchase mgt rights over some R/V for $40m+.
This is a big issue because these intangibles which the Independent Directors ignore are worth *** 25c *** per share extra!!
cheers
LLP Price at posting:
30.0¢ Sentiment: None Disclosure: Held
