re: are these calculations fair? from page 36 of 2003 MAp annual...

re: are these calculations fair? from page 36 of 2003 MAp annual report:
----------
A guide to the financial report

MAp is a triple stapled security. This means that the MAp securities trading on ASX consist of three separate legal entities’ securities which are stapled together and trade as one security. Other examples of stapled securities include toll road entities Transurban Group, Hills Motorway, and Macquarie Infrastructure Group and property developer and owner Mirvac. Stapled securities are an efficient structure for entities that invest in long life physical assets like airports, toll roads and property.

The three entities that make up MAp (two Australian trusts and a limited liability company incorporated in Bermuda) effectively combine to form one investment vehicle. The entities are managed by Macquarie Bank Group companies and hold direct and indirect interests in airports.

In the financial report that follows, MAp’s airport investments are recorded at net market value in accordance with Australian Accounting Standard AASB 1030. Market value accounting is used by most traditional unit trusts, life companies, general insurers and super funds because it is the best way to show changes in the market value of their investments in
any period.

The use of market value accounting may produce large positive results in the Statement of Financial Performance because increases in asset values are recorded as profits. Conversely, it may produce losses as a result of asset write downs.

Consequently, care needs to be taken when interpreting the net result attributable to MAp security holders shown in the Statement of Financial Performance. Certainly, most commentators believe that investors should place less weight on the net result attributable to MAp security holders than they would for a typical industrial company. Instead, more emphasis should be given to the net asset backing of each security and to MAp’s operating cash flows.

MAp management believes the most meaningful accounting measure of the performance of MAp is the change in the net asset backing of each security. This shows the increase (or decrease) in the directors’ valuation of each MAp security listed on ASX and is a measure of additional wealth which has been created (or lost) for security holders during the period.

MAp’s Statement of Cash Flows and, in particular, the cash flows from operating activities, will give investors another indication of the performance of the assets during the period. The cash flows from operating activities will indicate the level of cash flow received by MAp from its airport investments. As MAp invests in its assets through various instruments, these cash flows may be in the form of interest received, distribution and dividend income received or investment income received.