How Bizarre

As many people are remembering the life of New Zealand Polynesian pop star, Pauly Fuemana, perhaps it is time that we looked at some recent events which could be termed “bizarre”.

First off, congratulations to the trustees of the TeMana o Ngati Ragitihi Trustees for obtaining an interim injunction preventing the Eastern Bay Energy Trustees from publishing results of a poll in which the Energy Trust is effectively asking consumers permission to go ahead with its takeover offer to minority shareholders in Horizon Energy. It would appear that the Energy Trust perhaps should have waited until the mandatory report requested by the independent directors of Horizon Energy was in the public domain.

It seems bizarre that the trustees would expect energy consumers to make what may be a crucial vote on the survivorship of a publicly listed company, without being provided full information. Some people see little or no value in the trust owning such a significant stake in Horizon Energy when they currently hold (77.3%). They could sell down and maintain say a 25% stake in Horizon which would still give them a controlling interest and allow them to have significant investment diversification, which is a normal requirement of trusts and trustees.

The trustees of the Eastern Bay Energy Trust had previously needed to rectify a notice provided to the New Zealand Stock Exchange regarding the takeover offer. Either the trustees lack commercial knowledge, or their advisors do not understand the takeover rules for publicly listed companies.

Another bizarre activity seems to be the total opposition to national standards within the education system. Up until now, there seemed to be little requirement for schools to report on Johnny’s progress relative to his peers. Indeed some schools seem reluctant to even provide reports on a timely basis. The attitude of one private school that we know of is that one report a year is more than sufficient, and then it is only provided some four weeks or so into the final term of the school year. Hardly time or scope for parents to try and obtain some remedial recovery for their dearly loved child. Imagine a publicly listed company not providing guidance to the market for virtually a full year. They would be totally ostracised by the investment community, and the New Zealand Exchange would delist them. Parents, just like investors, need to know if there are problems, and how they will be remedied. Remember our children are the largest investment we consciously or subconsciously make.

It also seems bizarre, that for many years, our governments have allowed property, especially residential real estate, to be a favoured investment taxation wise. Sure private landlords provide a vital public service in making accommodation available to the many people who cannot afford their own homes, or possibly those that are astute enough to capitalise on the benefits of renting accommodation. The much speculated property tax seems to have died a political death. In its place it seems that depreciation will not be allowed, instead repairs and maintenance will be deductible expenses in the year in which it occurs. The likely outcome is that many properties held in loss qualifying companies, will not necessarily be able to claim depreciation to offset personal taxes, or more importantly allow higher rates of working for families tax credits to be claimed. For those investors that lament this, they should reflect on the investment maxim, of do not invest simply for tax purposes. Tax laws are subject to change, and they do in fact change. It’s not bizarre; it is a fact of life.