Michael Pascoe writes:

What a wonderful mob you Crikey readers
are, helping out a simple lad who was having trouble understanding Macquarie
Airports’ accounts yesterday. Indeed,
this poor boy from the Queensland bush was beginning to wonder if the MAp numbers might be
intentionally obfuscated.

Help
is at hand though from two subscribers. The first was anonymous:

To the Macquarie Airports writer. A couple of points:

1. Check out amount of revaluations of assets in contribution to profit (that’s
how they do it, then borrow more on the increased valuation.

2. Check out tax. They’ve been sold a monopoly and although lifting the fees
have managed to book a tax expense of either 6 mil or 17 mil (depending on which
figure you like to use) on that $1 bil gross profit. Nice work from the Feds. Check the Macquarie Bermuda sub.

The
“Macquarie Bermuda sub”? I rang the local Subway shop and they’d never heard of
it – and one of the sandwich hands had been working there a whole five weeks. The
second piece of correspondence was much easier to grasp, as you would expect,
seeing it came The Intelligent Investor‘s managing director, Steve
Johnson:

I saw your article on MAp this morning and thought we might be able to clear
things up a little for you. The way they construct their accounts is not
complicated, it is just useless. They work out what they think the airports are
worth, compare that figure with the value the previous year and book the
difference as profit, or loss. It’s similar to the way in which a listed
investment company presents its accounts but where the listed investment
companies use market price, the directors of MAp get to construct their own
valuation. Investors should ignore it.

Instead, it is better to focus on the cashflow statement. It presents us with a
conservative but more accurate picture. From the latest accounts, operating
cashflow was $165m (note the $91m “responsible entity and advisor fees paid”
… ouch). Subtract $59m in financing costs and you are left with $107m for the
owners. Simplistic but more accurate than directors’ valuations.

If you want to get a more accurate picture you need to value each of the
airports individually, and there is enough information presented to do this. We
did such an analysis about a year ago and Crikey readers can read it on our
website
if they wish.

Well that’s a relief – the MAp figures
aren’t complicated, just useless. We can all rest easier. But I’m still wondering where all the money
goes from the higher fees, rents and charges they’ve been imposing on any and
everything at Sydney Airport.

I’m also waiting to see how long it will be
before they introduce pay toilets there. You can bet it won’t be a matter of
“spending a penny” – I’d tip at least a
gold coin.

Peter Fray

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