Really good point MLC.If you ever wanted a reason to believe...

Really good point MLC.
If you ever wanted a reason to believe that the "Independent" Directors were not giving the LLP s/h a fair go - here it is.

at 30 June 2009 NAB was 55c p/s (page 26 A/R 2009).

Total Assets : $3041m
Total Liabilities : $2512m
EQUITY : $529m
#shares : 966m
Net Asset Backing $0.55 ($529m / 966m)
Intang $239m
Net Tangible Assets : $228m
NTA / share = $290m / 966 = $0.30c p/s
(that ignores Deferred Tax Asets of $62m)

They give the reason as to why they recommend that we accept the offer, because the offer price of 31c is at a "premium" to the NTA (which seems to be 30c).

The NTA strips out Intangibles. The NTA figure is supposed to represent that figure that the real tangible assets represent at market value.

The point is, it strips out "intangibles" such as goodwill.
If you purchased a McDonalds franchise, you would pay a huge sum for goodwill. If the McDonalds franchise stopped trading, the Goodwill would be worth zilch.
LLP is trading with a good EBITDA and is generating cashflow, with good prospects. At 6/09 LLP was generating $40m cashflow - how can goodwill be worth zilch?
*** The premise for quoting an NTA figure is based on the assumption that the business has no goodwill - ie that it will not be trading !
Clearly that is not the case with LLP.
If it was, why would LLC want to buy it?
LLP has value (significant value) in its goodwill/intangibles.
The benchmark figure the directors should refer to is the NAB - not NTA. ie 55c not 30c !
The only reason the NAB is low, is because the Directors commissioned the Valuers to revalue the assets at CMV - they know that this figure represents a really low point in the economic cycle, and that in maybe 1-2 years, these very assets will be re-valued ie upwards!
If LLP was loss making, and with no prospect of making a profit, one could argue that the NTA should be the figure referred to.

If there was no goodwill, and the business was only vased on the realisable or m/v of the assets, how can the Directors sign off the accounts and say that LLP was a "going-concern"?????

Why do LLP directors ascribe no value to the Intangibles when, in the A/R, they say this (page 24):

"Market Outlook
The fundamentals of the Australian residential property market (as a proxy for the Retirement Village market) remains strong (source:
ANZ Housing Snapshot, June 2009):
• Australia is under built currently by approximately 200,000 dwellings. By the end of FY10, the housing shortage is expected to be
in the region of 280,000 dwellings.
• Rental vacancy rates remain low across the nation, currently sitting at an average of 1.5%.
• Housing affordability is currently at its highest level since the start of the decade, driven by low interest rates.
Australia’s changing demographics also confirm the long term fundamentals for retirement remain strong, with the next 15 years set
to see:
• Australian population projected to grow by 23%;
• 65+ age group population projected to grow by 64%;
• 65+ age group is the fastest growing segment of population; and
• Life expectancy continued increases.
A solid upward trend in sales during the last 4 month of FY09 reflect an improving outlook which LLP expect to continue in FY10."

It is clear that the outlook for LLP is positive, and that LLC is taking advantage of this, and striking when LLP is at a low point.
It is easier with an agreeable Board.
Whilst the direcors are declared as independent, it is obvious that they would have been offered the position at the behest of LLC, and that they only occupy the seat due to the vote of LLC's 43%.

If anyone has not sent in an email to Andrew Love, please send it, before it is too late. remember, they need to win the votes of small s/h too.

cheers